New Jersey revenues tumbled 7.3% in May compared to a year earlier, according to acting State Treasurer Ford M. Scudder.
Scudder reported late Friday that the revenue decline was attributed largely to reduced corporate, personal and sales taxes. He noted that declines in capital gains and other forms of volatile tax revenues are impacting New Jersey along with other states like California, Connecticut, Massachusetts and Pennsylvania as well as the federal government, who have all reported drops in personal income tax receipts this year.
In May 18 testimony to the Assembly Budget Committee, Scudder said state revenues for fiscal 2016 will grow $603 million less than previously predicted due to a "national phenomenon" of personal income tax drops facing multiple states.
The state Legislature's nonpartisan budget office reported in May that New Jersey is facing a possible $1.1 billion revenue shortfall for the current and next fiscal year with the revenue gap for Gov. Chris Christie's proposed $34.8 billion 2017 budget projected at $621.6 million.
Revenue from the largest revenue source, gross income tax, fell 2.8% in May compared to May 2015 and is down 1.5% for 2016 after it was projected to grow 1.2%.
The second largest revenue source, sales tax, was off 1.3% for the month but figures for the first 11 months of the fiscal year are still up 4.4% year-over-year. A 5% growth rate had been projected.
The Garden State's corporate business tax was off 62.9% year-over-year in May and is off 14.3% for the fiscal year, which ends on Jun 30. The state had projected a 12% yearly decline.
Year-to-date revenues for fiscal year 2016 are off 0.2% compared to the same period in fiscal 2015, according to Scudder, who noted that results were partly impacted by an increase of $615.8 million in tax refunds from 2015. Scudder said there was a 50% refund rise in the Earned Income Tax Credit that resulted from a state initiative by the Division of Taxation and the Division of Revenue and Enterprise Services to process tax returns faster.
New Jersey has the second lowest credit ratings of the 50 U.S. states due largely to underfunded pension liabilities. Moody's Investors Service rates New Jersey Bonds at A2 with Standard & Poor's, Fitch Ratings and Kroll Bond Rating Agency all rating the state A.
