If the Legislature approves the proposed $31.7 billion FY13 budget and the tax cut that Gov. Chris Christie is demanding, New Jersey will face a built-in $2.5 billion hole in the following year’s FY14 budget – a gap almost twice as large as the combined increase in income, sales, and corporate taxes that Christie is projecting for the year ahead, a NJ Spotlight analysis shows.
Even if the Democratic-controlled Legislature decides next year that the state cannot afford the controversial tax cut, the state would still need to come up with $2 billion in revenue growth in Fiscal Year 2014 just to cover the required increases in pension costs, transportation borrowing and already-approved business tax cuts, and the more than $1 billion in one-shot revenues built into the Fiscal Year 2013 budget.
In short, with or without a tax cut, New Jersey is facing a net budget shortfall of $500 million to $1 billion next spring.
It gets worse. That’s actually the best-case scenario. That analysis assumes that Governor Christie’s projections of 5.9 percent growth in income, sales and corporate taxes – the most optimistic in the nation – will come in on target.
If David Rosen, budget officer for the non-partisan Office of Legislative Services, is correct, Christie’s revenue projections will prove to be $724 million to $824 million too high. And as Rosen noted, OLS’ revenue projections are bullish: Moody’s Investors Service pointed out that if New Jersey’s economy continues to grow at the same pace as this year, revenues could be off as much as $2 billion.
Read the rest of the article here on NJ Spotlight.