New Jersey is facing a possible $1.1 billion revenue shortfall for the current and next fiscal year following weaker than expected income tax collections in April, according to the state Legislature's nonpartisan budget office.
Office of Legislative Services budget officer Frank Haines said in testimony to the Assembly Budget Committee Wednesday morning that income tax receipts for fiscal 2016, which ends June 30, are $486.6 million below what Gov. Chris Christie projected. He said the revenue gap for Christie's proposed $34.8 billion 2017 budget is projected at $621.6 million.
"The revenue weakness stems from the annual variability of revenue collections," said Haines in his remarks.
New Jersey Acting Treasurer Ford M. Scudder said in his testimony Wednesday that state revenues for fiscal 2016 will grow, but $603 million less than previously predicted. Scudder said the Christie administration is lowering the 2017 budget revenue projection by $241 million to $34.591 billion. He pointed to other states also facing similar challenges with California, Connecticut, Massachusetts and Pennsylvania al reporting annual declines in personal income tax receipts in the past few weeks.
"I would love to be here to report that New Jersey is an outlier to the national phenomenon of reduced personal income tax revenue, which seems primarily attributable to a decline in unearned income, but unfortunately that is not the case," said Scudder in his remarks. "In fact, the revenue declines have been largest in those states like ours with highly progressive tax systems, and smallest in states with flatter tax structures."
New Jersey has the second lowest credit ratings of the 50 U.S. states due largely to underfunded pension liabilities. The Garden State is rated A2 by Moody's Investors Service and A from Standard & Poor's, Fitch Ratings and Kroll Bond Rating Agency.
