TRENTON – “The difference,” according to Office of Legislative Services budget officer David Rosen, “is entirely the income tax.”
OLS is projecting $914 million in revenue windfalls, while state Treasure Andrew Sidamon-Eristoff told the Assembly Budget Committee Tuesday the administration is banking on $511 million in additional revenue.
In March, both OLS and Treasury had a much smaller gap in projections.
State Sen. Paul Sarlo, (D-36), of Wood-Ridge, asked at today’s Senate Budget Committee hearing, “How did their difference grow so fast?”
“Back in March,” Rosen said, “we thought that their income tax forecast was reasonable…Then we were both surprised by the volatility that occurred this April. That was a major change, and we’re both trying to understand that,” which has lead to “slightly different conclusions.”
“Those will get played out over the next…14 months, I guess, as the revenues come in,” Rosen said.
The projections for the income tax boil down to four components, Rosen said: yearlong withholding activity, which spikes every two months as tax payments are made; quarterly estimated payments, which are estimated by month, yet vary from projections; an ongoing stream of tax refunds, which draw down from the revenues; and the “April surprise,” the largest concentration of tax payments that come in after the tax filing deadline. “That’s the most volatile piece,” Rosen said, and the guiding factor in the state’s overall income tax picture.