Moody’s Investors Service said on Monday that New Jersey missing its revenue targets is a credit negative for the state.
New Jersey, rated Aa3 with a stable outlook, released a report last week that showed it missed year-to-date revenue targets through April by $230 million.
The state’s Treasury Department reported that revenue collections through April were $19.3 billion, which is up from the same period last year, but below expectations.
“While the revenue shortfall only comprises 1.2% of budgeted general fund revenues, its timing near the state’s [June 30] fiscal year end means New Jersey may have to rely on reserves or other one-time resources to close the gap,” said Moody’s analyst Baye Larsen in a report.
The state budgeted a year-end reserve balance of $588 million, but using a portion of this would tighten the state’s liquidity, the Moody’s report said.
However, the shortfall is relatively small and the state could still balance the budget with a combination of expenditure cuts, deferrals and other one-time revenue resources, as alternatives.
Gov. Chris Christie proposed his $32 billion budget for fiscal 2013 in February, which includes an across-the-board 10% cut in income taxes and represents a minimal growth from last year.
Moody’s said that New Jersey’s fiscal 2013 revenue growth will likely remain muted, given recent tax revenue trends and an expectation that the state’s economic recovery will lag the United States’.