Moody’s Investor Service today cast doubt on revenue predictions for the upcoming fiscal year, forecasting that they will remain “muted” and in line with the recent two-year trend.
On its Weekly Credit Outlook, Moody’s said it expects the state’s economic recovery to lag the nation, putting income growth at risk unless the economy sees a marked upswing.
“However, Moody’s Analytics projects the state’s high unemployment rate (9% in March compared to 8.2% for the U.S.) will exceed the country’s rate through 2014 and the state’s economic recovery will lag that of the nation. Accordingly, we expect revenue growth to remain in line with recent trends through fiscal 2013, challenging the state’s ability to structurally balance its growing.”
The report is further bad news for Gov. Chris Christie who has based the upcoming Fiscal 2013 budget on revenue growth of 7.4 percent. Moody’s points out that in Fiscal Year 2011, Christie’s first in office, Revenue grew by 2.8 percent. So far in Fiscal Year 2012, revenue has grown by just 2.7 percent.
The agency further cited surrounding states New York, Pennsylvania and Connecticut, which all saw lower than expected revenues in the first part of the year but experienced an uptick in April.
By contrast, New Jersey’s revenues were 5.3 percent below projections in April, the most crucial month for collections.
“April income tax receipts typically reflect final payments and refund activity related to economic activity in the prior calendar year,” Moody’s said. “New Jersey’s disappointing April results are partially related to the state’s more optimistic projections compared to its neighbors, as well as relatively slow economic performance in late 2011. Relative to income tax receipts in the prior year, New Jersey had a moderate 1.8% increase through April.”
Administration spokesman Kevin Roberts responded to the report, saying it’s too early to present a full picture of state revenues.
“The state’s revenues remain $500 million above the same point last year, with two months of revenue and three months of sales left to report in the current fiscal year,” Roberts said. “As he did last year, the Treasurer will testify this week to provide a full and complete revenue picture for New Jersey as we move through the end of the fiscal year – not a shotgun analysis that relies on a single figure that does not accurately represent the health of the state’s economy in full.”