STAR LEDGER - Worst year for N.J. tax collections, budget analyst says

May 19, 2009 14:00PM

TRENTON -- New Jersey's revenue collections will come up nearly $3 billion short of planned spending in the next 15 months if pending budget adjustments aren't made, according to a new revenue forecast reviewed by lawmakers today.

The revenue update was presented to the Assembly Budget Committee this morning by David Rosen, budget and finance officer for the nonpartisan state Office of Legislative Services.

"This is certainly the worst revenue report that I've ever given to the Legislature," Rosen said.

Gov. Jon Corzine has already announced $1.2 billion in spending adjustments to ensure the state closes the current fiscal year on June 30 without a deficit, something that's required by the state constitution.

State Treasurer David Rousseau is scheduled to appear before the committee this afternoon to outline ways Corzine's new budget will be trimmed by about $2 billion, down to roughly $28 billion, to offset the projected revenue shortfall.

An initial analysis of the new budget Corzine presented in March found a $600 million gap between what the governor planned to spend between now and the end of next fiscal year, and what would actually come in based on updated revenue projections.

Rosen said the latest information -- including April tax collections that were more than a $1 billion less than the previous year -- indicates the state will collect $2.9 billion less in revenue through the end of the new fiscal year than Corzine anticipated in March.

"The income tax collections in April were extraordinarily and unbelievably bad," Rosen said.

The committee, meanwhile, also voted this morning to advance a bill that will allow school districts to borrow money to offset a delay in state aid payments that Corzine has proposed as part of his plan to put the current budget back in balance before the end of June.

The measure passed along party lines, with Democrats approving and Republicans voting no.

STAR LEDGER - N.J. Treasurer announces steps to plug $2B in budget deficit

May 19, 2009 14:39PM

TRENTON -- In an effort to meet "the most daunting challenge of any budget in state history," Gov. Jon Corzine plans to eliminate property tax rebates for everyone except seniors and the disabled, raise taxes on those earning more than $400,000 a year, and delay the expansion of preschool programs to plug a $2 billion deficit in his spending proposal, state Treasurer David Rousseau said today.

During testimony before the Assembly Budget Committee, Rousseau stressed that many of the moves would be temporary, but necessary in a climate of recession and drastic drops in state revenues. He said the income tax changes -- higher rates on earned income over $1 million and between $400,000 and $500,000 -- would affect one percent of New Jersey taxpayers.

Rousseau said the budget still reflects "the values we share," such as protecting spending on children's health care and education, senior citizens and those hit most by the economic collapse.

Full Star-Ledger coverage of the N.J. budget

But there were significant changes from Corzine's initial proposal. In March, the Democratic governor proposed keeping property tax rebates for people making less than $75,000 annually in addition to seniors and the disabled. He also had planned to spend $25 million on incentive grants for school districts that commit funding to new preschools.

Both of those moves will have to change in the revised budget proposal, which now totals $28.6 billion instead of $29.8 billion, Rousseau said. He said the proposed 2010 budget started out with a $7 billion deficit that grew to $9 billion after dismal April income tax collections.

In addition, the state will only be able to contribute $100 million, about one-tenth of what is needed, for its pension program next year and may not have enough cash to avert automatic business tax increases because its Unemployment Insurance Trust Fund is running dry, the treasurer said. Corzine still plans to deposit $120 million into the fund, which would reduce the amount of payroll taxes triggered, Rousseau said.

"I can't sit here today and say it will definitely be made," Rousseau said. "Right now our intent is to make that payment."

The governor and Legislature must agree to a balanced budget plan by July 1.

The adjustments were announced hours after David Rosen, the budget officer for the nonpartisan Office of Legislative Services, told lawmakers it could take until 2014 for the state to reach pre-recession budget levels. "This is certainly the worst revenue report that I've ever given to the Legislature," Rosen said.