New Jersey would have had about $3.3 billion more revenue last fiscal year if its economic recovery had mirrored the nation’s, according to the legislature’s chief budget officer.
The state’s tax collections remained 12.1 percent below their peak by the third quarter of 2013, when combined receipts for all 50 states turned positive for the first time since the recession that ended in June 2009, David Rosen of the Office of Legislative Services said. New Jersey’s recovery has trailed those of New York, Pennsylvania, Maryland and Massachusetts, he said.
“Our budget discussion would be very different if we had an additional $3.3 billion in revenue,” Rosen told lawmakers yesterday in Trenton. “For the third year in a row, revenues have fallen significantly short.”
Governor Chris Christie, a 51-year-old Republican who began a second term in January, has proposed raising spending 3.5 percent to a record $34.4 billion for the year that begins July 1 to pay for health benefits, pensions and debt. His budget relies on a revenue-growth forecast more optimistic than those of all but eight U.S. states.
New Jersey’s underperformance is partly attributable to other states’ increasing taxes, while others were helped by boosting energy production, Rosen said. Still, New Jersey’s growth in jobs, personal income and gross state product has lagged behind the nation’s, he said.
For 2012 to 2014, collections are $1.6 billion to $1.8 billion below the amount anticipated by Christie, Rosen said. For next fiscal year, Rosen is projecting $309 million less than Christie assumes in his budget proposal.
“Without the luxury of the revenue growth experienced elsewhere, you face even harder choices than your counterparts in some other state capitals,” Rosen told lawmakers.
Rosen said he calculated the $3.3 billion figure with help from research by the Pew Charitable Trusts, which examined quarterly tax data for the 50 states through the second quarter of 2013.
One of the biggest differences between projections from Christie and Rosen is assumptions about the 15 percent tax on Internet gambling, which began in the state in November. Collections may be less than a tenth of what Christie budgeted for this fiscal year, Rosen said.
Christie had originally projected $180 million in 2014. In June, the administration reduced that to $160 million. Rosen is estimating $12 million.
For 2015, the analyst predicted Internet gambling revenue would climb to $48 million. Christie’s administration hasn’t provided a specific 2015 estimate.
Treasurer Andrew Sidamon-Eristoff told lawmakers he remains confident online gambling will become a solid revenue source.
“The results so far have not met our expectations,” he said. “It was my responsibility. I own it. I’ll eat it. I’ll eat as much crow as you want.”
Sidamon-Eristoff and the administration’s chief economist, Charles Steindel, said job growth between December 2012 and February was also lower than in neighboring states.
“The increase in jobs has been very minor,” Steindel said. “Part of it is just general economic circumstances.”
Since February 2010, the state regained 120,200 jobs in private industry, about half those lost in the slump. New York added back all it lost by 2012, while Pennsylvania had recovered 65 percent of the jobs it lost as of December.
Sidamon-Eristoff said he anticipates the shortfall will narrow as income tax returns come in, and he said a cold, snowy winter has so far depressed collections of the sales levy.
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