The New Jersey Office of Legislative Services Monday said its fiscal 2012 revenue estimates are similar to the governor’s projections, but cautioned that next year’s budget may need to include additional spending for schools.
OLS budget and finance officer David Rosen testified before the Senate Budget and Appropriations Committee as part of his annual budget report for the Legislature.
The office projects that the state will collect $72 million less revenue in fiscal 2011 compared to Gov. Chris Christie’s budgeted estimates.
For fiscal 2012, Christie’s budget proposal includes $29.37 billion of anticipated total revenue, $53 million more than OLS’ fiscal 2012 revenue estimates. Fiscal 2012 begins July 1.
The office is a nonpartisan legislative agency that provides fiscal and legal analysis for New Jersey’s General Assembly and Senate.
State Treasurer Andrew Sidamon-Eristoff had also been set to speak before the Senate committee, but a scheduling conflict forced officials to postpone his testimony.
Gov. Christie earlier released his $29.4 billion fiscal 2012 budget proposal on Feb. 22.
While OLS’ and the governor’s revenue projections vary for this year and next, the difference is minimal.
“The combined difference — $125 million — is less than one half of 1% of the governor’s recommended budget appropriation level,” Rosen said Monday in his testimony before the Budget and Appropriations Committee.
For fiscal 2011, both the OLS and the administration are relying on strong corporate income tax returns in the last few months of the year.
Christie’s budget includes a 24% boost in business-tax receipts from March through June, which the agency views as plausible but said it “contains risk.”
“OLS’ forecast is slightly more cautious than the executive’s, but would also require significant growth and a return to a strong fourth quarter,” Rosen said. “We are both banking on the [corporate business tax] reaching a turning point this spring; a turning point which is not yet clearly visible in the data.”
In looking at fiscal 2012, both the administration and the OLS project next year’s revenue will increase year-over-year by roughly 4%.
The office believes the state in fiscal 2012 will collect $50 million more in personal income taxes than the administration’s budgeted estimates but the office projects that corporate tax receipts will come in $20 million below the administration’s calculations.
The OLS’ sales tax estimates are in line with Christie’s fiscal 2012 budget proposal.
Rosen mentioned other factors that could influence next year’s budget. For one thing, Judge Peter Doyne last week wrote in a special master’s decision that the Republican governor’s cuts in school funding do not meet the state’s constitutional requirement for school spending. New Jersey’s Supreme Court will weigh in on the case.
If the court rules that the $1.6 billion of underfunding is unconstitutional, that would force lawmakers to allocate more towards schools in the fiscal 2012 budget.
“It now appears likely that the New Jersey Supreme Court will decide the most recent iteration of the school funding case before the fiscal 2012 budget is adopted, and their decision could certainly be consequential,” Rosen said.
In addition, as Congress works on the federal spending plan, the state should prepare itself for even less federal assistance than the $10.2 billion included in Christie’s fiscal 2012 budget plan, Rosen said.
“Many of the dollars that we receive are in the very discretionary programs that seem to be most in play,” he noted.