New Jersey’s nonpartisan Office of Legislative Services now expects the state to collect nearly $4 billion more than it estimated just last month for the current and upcoming fiscal years, according to an email obtained by NJ Advance Media.
David Drescher, OLS section chief for revenue, finance and appropriations, sent policymakers an advance copy of updated revenue forecasts that it will present to the Senate Budget Committee Monday and to the state Assembly Budget Committee Wednesday.
“Over the two fiscal years combined, the OLS forecasts for all State revenues are about $3.7 billion higher than our estimates in April,” Drescher said in an email to lawmakers Friday evening. “This increase is primarily due to an unprecedented surge of payments in April from the Gross Income Tax.”
When Gov. Phil Murphy unveiled his $48.9 billion budget proposal in early March, his administration said it would likely collect nearly $5 billion more in taxes than it initially thought at the beginning of the fiscal year last July.
During budget hearings in April, OLS said it expected the state to collect more than $48 billion this fiscal year, which was about $2.5 billion higher than Murphy’s estimates.
Analysts from OLS now expect New Jersey to rake in about $51 billion by the end of June, according to the advance summary obtained Friday by NJ Advance Media.
During his testimony last month, OLS Budget and Finance Officer Thomas Koenig warned lawmakers that Murphy’s budget proposal could not be sustained by tax dollars in the long run given its reliance on surplus revenue to remain balanced.
“A budget that relies on $1.7 billion in surplus to be balanced is not sustainable in the long run, when the surplus is $4.6 billion,” Koenig said.
The latest boost to revenue projections may ease some of those concerns, but tax and budget experts have repeatedly told state leaders to proceed with caution as they negotiate state budgets this year.
Most states across the country are experiencing double-digit revenue growth that won’t last, said Lucy Dadayan, senior research associate with the Urban-Brookings Tax Policy Center and head of the State Tax and Economic Review Project.
Over the past few years, a swirl of short-term accelerants, including unprecedented federal stimulus and soaring prices on consumer goods “seem to be temporarily driving growth” in state tax revenues, Dadayan told NJ Media.
“To make things more complicated, the economic and political indicators (full employment, high inflation, volatile stock market, geopolitical crises, etc.) are all alarming and indicative of a recession on the horizon,” Dadayan said.
Koenig and Drescher will appear before the Senate budget committee Monday followed by New Jersey Treasurer Elizabeth Muoio, who will deliver her annual report on April tax collections.
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