Consumer spending after superstorm Sandy helped boost New Jersey
tax collections in January, marking a second month of revenue growth
after five straight months of missed targets and growing shortfalls.
Tax collections are now 3.9 percent ahead of where they were this time last year. They are not, however, where Governor Christie said they would be. And that difference must be closed by cuts in spending or continued increases in tax revenues.
Despite recent improvements, Christie faces a shortfall of roughly $350 million as he readies a new state budget to be unveiled next week, and Democratic lawmakers continue talk of possible cuts.
Treasury officials said Thursday that sales tax collections improved last month, likely as a result of spending tied to the recovery from Sandy, which hit the state on Oct. 29. Income tax collections, which have been healthy throughout the fiscal year that began on July 1, also remained strong in January.
"What is most striking is the resurgence of sales tax revenue, which appears to be a combination of catch-up spending deferred by Sandy, additional spending coming in line to make up for losses to Sandy, and the strengthening of the underlying trend in spending late last year," said Charles Steindel, the state's chief economist.
In all, the revenue update released by Treasury officials on Thursday showed tax collections beat Christie's budget projections by $75 million in January.
The gains in January follow slight improvement measured in December, the first month that saw tax collections match the robust budget projections Christie put in the $31.7 billion spending plan he signed in June.
The revenue shortfall stood at $451 million after November tax collections missed targets by more than 10 percent, but narrowed some, to $426 million, after December tax collections were counted.
The governor projected more than 7 percent growth and a "Jersey Comeback" while calling for a new income tax cut in early 2012. Though he shelved that proposal after the months of missed budget projections in 2012, and after Sandy hit, Christie has warned lawmakers not to write off his budget this year even as they've held hearings to begin talking about possible spending cuts.
The governor, a Republican who is running for reelection, has maintained that income taxes from Wall Street and corporate bonuses, and other revenue from the Sandy recovery, could boost tax collections enough to keep the budget in balance by June 30, the end of the fiscal year.
He also said during a campaign event in Sea Bright on Thursday that he's just about done with the new budget, which he will lay out during a joint session of the Legislature on Tuesday.
"I can tell you that the essential framework of the budget is completed and signed off on by me," he told reporters. "We're now in the midst of creating the documents that we need to create in order to introduce the budget.
"I don't believe I have any major decisions left to make in the budget."
But Democrats who control the state Legislature said there is still reason for concern when it comes to the current budget. It's still unclear how much of the gains in December and January were related to federal income tax policy changes.
Also, a $123 million shortfall was rolled over from the prior fiscal year because the state constitution doesn't allow deficits.
"The income tax numbers are definitely promising," said Senate Budget and Appropriations Committee Chairman Paul Sarlo, D-Wood- Ridge.
However, he added, "We still have a $480 million shortfall that we have to deal with."
Staff Writer Melissa Hayes contributed to this article.
Tracking the gap
More than halfway into the current fiscal year, tax collections are short of Governor Christie's budget projections by $350 million. A closer look at how the budget hole grew and is now narrowing:
July 2012 : $46M
August 2012 : $100M
September 2012 : $175M
October 2012 : $264M
November 2012 : $451M
December 2012 : $426M
January 2013 : $350M
Melissa Hayes contributed to this article.
Most Popular Stories
- SEO Traffic Lab Celebrate Wins at Digital Marketing Event 'Internet World 2013' in London
- Social Media Initiatives Should Follow Customers' Lead
- Apple CEO: Offshore Units Not a 'Tax Gimmick'
- U.S. Senate Accuses Apple of Large-scale Tax Avoidance
- UTEP Water Recycling Project Wins Venture Titles
- Marketo Makes a Mint in IPO: Stock Shoots Up More than 50 Percent
- Bieber Booed at Billboard Awards
- Crude Oil Up, Gasoline Down
- Austin Startup Compare Metrics Raises $3.5 Million for Expansion
- Why So Many Top 'Car Guys' Are Actually Women