New Jersey legislative budget and finance officer David Rosen is projecting the state will collect $700.6 million less in the next two fiscal years than the state’s executive branch has predicted, potentially leaving Gov. Chris Christie with an inadequate cushion against possible financial problems.
Rosen projects the state would collect $259.4 million less revenue in fiscal year 2014 than the treasurer, who is part of the executive branch, has predicted, he told New Jersey Assembly Budget Committee. This would be 0.8% of the treasurer’s current revenue prediction. Rosen, who based his projections on current sources of revenue, also told the committee that he projects $441.2 million less in fiscal year 2015 than the treasurer.
The New Jersey treasurer recently predicted that the state will end with a surplus of $410 million at the end of fiscal 2013 and a surplus of $301 million in fiscal 2014.
The state does not have a “rainy day” fund, as some states do, Rosen told The Bond Buyer. Instead, it uses its projected surplus.A $301 million reserve, equal to 0.9% of fiscal 2014 expenditures would be small, Rosen said. A recent nationwide study has shown that revenue forecasting errors have been averaging 3.5% in recent years, he said.
If Rosen’s estimate is correct, the state would end with $41.6 million at the end of fiscal 2014, just 0.1% of expenditures, an even narrower reserve.
The legislature is currently working on approving a budget and does not necessarily have to adopt either Rosen or the treasurer’s revenue projections.
Gov. Christie will have to approve the budget and a revenue expectation. If Christie uses a lower revenue expectation than the legislature, he has the power to use a line item veto to reduce expenditures.
“At this time last year [our] revenue forecast for fiscal year 2013 was $474 million lower than the executive’s,” Rosen told the committee Tuesday. “As of this week, the executive has reduced their fiscal year 2013 forecast by a total of $539 million.”
The state government has to adopt a budget by June 30.