TRENTON – Senate Democrats turned a skeptical eye toward what it called the administration’s overly optimistic economic projections for fiscal year 2013, but the state treasurer said they remain comfortable with their data for now.
Committee Chair Sen. Paul Sarlo referenced a forecast made in March by the Office of Legislative Services that projected a revenue shortfall of $537 million, and pointed out how Gov. Chris Christie reacted by calling OLS a partisan tool of the Democrats.
“I find it quite interesting today that your office has now embraced OLS’ revenue estimate from March, which the governor declared dead on arrival, and today you just added another $139 million to that,” Sarlo said to Treasurer Andrew Sidamon-Eristoff.
Sarlo asked Sidamon-Eristoff how he reconciled the fact that two months ago OLS’ projections of a shortfall were criticized and now the administration has accepted OLS’ number and added to it.
Sidamon-Eristoff said that both his office and OLS adjust estimates as they move forward. OLS, he said, was working with an extra month and a half of data at that time.
He also pointed out that going back even farther, OLS since May of 2011 has moved its figures a full $800 million whereas the administration has moved about $464 million.
Sarlo said that the difference between OLS’ and Treasury’s estimates of revenue is the largest discrepancy in a decade. “I recognize it’s 1 percent,’’ he said, but that still means approximately $628 million.
In light of that, he questioned how the state can expect 7 percent growth next fiscal year when other states and credit agencies are anticipating 2 percent.
“We’re comfortable with where we are now,’’ Sidamon-Eristoff said, “and we don’t think it serves the process of putting together a budget to lurch from extreme to extreme.’’
He also said that it does not serve the state well to have economic outlooks that are overly pessimistic because it can affect decisions of credit rating agencies.
In addition, Sidamon-Eristoff told the committee the administration remains committed to an income tax cut despite the lowered projections of revenue.
The treasurer, on a related matter, would not allow himself to get pulled into the squabble over Christie’s derogatory remarks concerning OLS’ budget chief, David Rosen.
“Treasury will not fall into the trap … of being invited to comment on the governor’s statements,’’ he said in response to a question from Sarlo. “The governor, like many, has some frustrations with the way issues are managed, but speaking for myself, we are pleased to have a cordial professional relationship with our colleagues at OLS,’’ he said.
Sen. Joe Pennacchio commented to the treasurer that he does not thing it’s necessarily bad when OLS and Treasury disagree. “I like to see you and OLS challenged,” he told Sidamon-Eristoff. “It makes democracy win.”
After the hearing, Sarlo said that as budget chairman revenues are on his mind, and it seems clear that the governor will certify revenues that differ from OLS’ projections by $627 million.
Asked about the fate of the various tax cut proposals, he said, “Revenues are the driving issue. There are a lot of components” that must be dealt with in full caucus, he said.
On Wednesday, Assembly Democrats similarly pressed the treasurer over the administration’s projections and how they compared with the $1.3 billion shortfal OLS is projecting.