OLS tells budget panel it foresees $500M shortfall

TRENTON – The Office of Legislative Services is projecting that fiscal year 2012 and fiscal year 2013 revenues will be $536.9 million short of the estimates Gov. Chris Christie predicted for the upcoming fiscal year.

Specifically, OLS anticipates a $144.9 million shortage in fiscal year 2012 and a $392 million shortfall for fiscal year 2013.

“Both the OLS and the Executive project modest growth for the remainder of Fiscal year 2012 and accelerating growth of Fiscal year 2013,” OLS budget officer David Rosen said in prepared remarks. “However, the Executive’s growth assumptions are somewhat more enthusiastic than those of the OLS.”

For the current fiscal year, the Christie Administration is projecting $29.691 billion, or $144.9 million less than the $29.546 billion OLS is projecting.

The big difference is in the upcoming fiscal year 2013, in which the Christie administration is projecting revenue growth of more than 7 percent. The OLS is projecting revenues of $31.466 billion, or $392 million less than the $31.858 billion the administration is forecasting.

In particular, it is forecasting strong growth in the corporate business tax, specifically 7.6 percent, mirroring recent trends.

“Over the last two decades, the CBT has averaged about 7.6 growth and the OLS believes performance at that level is a reasonable expectation early in the economic recovery.”

Growth is also expected in the gross income tax, specifically 7 percent. However, the Christie Administration is predicting a rosier 8.4 percent.

The OLS also noted the budget relies on one-shot infusions to beef up the revenues, such as $200 million in the Clean Energy Fund, $200 million from Affordable Housing and $75 million from the federal foreclosure settlement.

“This budget proposes to use $642 million of non-recurring ‘revenue-related initiatives,’ up from $96 million in the current year (fiscal year 2012),” Rosen said.

There is growing evidence that the national economic recovery is taking hold and New Jersey is participating in the upturn, OLS stated. And revenue collections have moved in sync with economic developments.

Rosen warned in his speech that despite growth in revenue, “we are not out of the woods.” He made note of future “spending demands” by the state that could follow in the years ahead, due to structural budget problems the state has. Those were highlighted in a report that came out last month, titled “Facing Our Future.”

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OLS tells budget panel it foresees $500M shortfall