Budget Cuts Loom as Shortfall Tops $700 Million
OLS: Sandy reconstruction, income tax surge will help, but not enough
by Mark J. Magyar
With New Jersey facing a $705 million budget shortfall that could easily double by June, the Senate Democratic budget chairman yesterday called upon the Christie administration to lay out a plan to close the gap before the size of the deficit becomes virtually unmanageable.
Senate Budget Committee Chairman Paul Sarlo (D-Bergen) urged Gov. Chris Christie “to face up to the realities of the growing shortfall” and make the necessary midyear budget cuts.
“Every month that we delay, the options grow more limited,” Sarlo warned. “Certainly, we don’t want to be where the House [of Representatives] was, falling off a fiscal cliff” at the end of the budget year.
David Rosen, budget officer for the nonpartisan Office of Legislative Services, told Sarlo’s committee yesterday that it would be “optimistic” to expect the current $705 million gap not to grow over the next six months.
“Every month that revenues fail to grow by the 8 percent that Treasury projected adds to the deficit,” Rosen noted, and no state in the nation is experiencing consistent 8 percent growth.
Proclaiming that the “New Jersey Comeback has begun,” Christie last year insisted upon enacting a $31.7 spending plan that anticipated the highest budget growth in the nation. He branded Rosen the “Dr. Kevorkian of the numbers” and charged that he was serving Democratic interests when he projected in May that state revenues for the 14 months ending June 30, 2013, would come in $618 million below Christie’s certified projections.
Christie spokesman Michael Drewniak dismissed Rosen’s analysis, saying the nonpartisan budget expert has been “persistently negative and persistently wrong about the state’s revenues.” Citing strong income tax receipts and an expected revenue boost from Hurricane Sandy reconstruction efforts, Drewniak insisted that there “are far too many unknowns as our state begins to recover to jump to any conclusions that the sky is tumbling down on us or engage the Democrats’ desire in making this a partisan game.”
Nevertheless, revenues have now come in below Treasurer Andrew Sidamon-Eristoff’s projections for 10 consecutive months stretching back to last March, and Rosen yesterday said his own projections will most likely turn out to be optimistic. With current revenues down $451 million and last year’s budget ending up $250 million short, hitting Sidamon-Eristoff’s original revenue projections is now virtually out of the question, Rosen said.
“As a result of revenue underperformance to date, the state would need spectacular revenue acceleration to hit the Executive’s budget targets,” Rosen testified. Where revenues have grown at 0.2 percent for the first five months, they would need to grow by 11.9 percent over the remaining seven months. Nothing in the national or state economic picture suggests that such growth is likely.”
At the current anemic 0.2 percent growth rate, the state’s revenue gap would be $2 billion by the June 30 end of the fiscal year, Rosen acknowledged under pointed questioning by Sarlo. But Rosen emphasized that he does not expect the final figure to be anywhere near that high.