On Wednesday State Treasurer Andrew Sidamon-Eristoff will present a Budget Revenue update to the Assembly Budget Committee. As we receive further economic news for May, it just gets worse. Governor Christie’s “Jersey Comeback” looks increasingly like “Christie’s Blowback.”
The Star Ledger Editorial Board, NJ Public Policy President Gordon MacInnes and others agree this is not the time to saddle the State with the cost of an income tax reduction or property tax relief program. Neither of these competing plans are “free.” Their costs are added into a budget based on a tax revenue forecast which is collapsing amid problems in unemployment, foreclosures, higher cost of borrowing, and slow economic growth. Both Governor Christie and Senate President Sweeney this week appeared resolute in pursuing such a program. Their reasons seem to be for personal political gain as current forecasts do not justify their approach. Instead, we should spend what funds we can realistically anticipate on the basics, such as health, education, social safety net, and pensions.
Some updated/additional facts:
1 in every 1,842 NJ housing units received a foreclosure filing in April 2012, (RealtyTrak) and NJ’s percentage of home mortgage loans in foreclosure continues to rise, as rates nationally have fallen. NJ now has the second-highest percentage of mortgage loans in foreclosure – at 8.4% – behind only Florida at 14.3%. (NJ Real Estate Report)
Unemployment in April rose to 9.1%, as opposed to the national average of 8.1%, and NJ was only one of five states to have an increase in unemployment in April. (U. S. Bureau of Labor Statistics)
The state’s seasonally adjusted job count fell by 8,600 in March. In the private sector, the loss totaled 11,600. (Treasury Department Chief Economist Charles Steindel) However, the number of new jobs added in April was insufficient to reverse the March loss. (NJ Department of Labor)
Our Indexes of Economic Indicators for March show economic activity grew at a robust pace in New York State, a healthy clip in New York City but a diminished pace in New Jersey. (N.Y. Federal Reserve Bank)
Our May general economic index, falling to a minus 5.8%, signals contraction in the area covering southern New Jersey. (Philadelphia Federal Reserve Bank)
Fitch in August lowered NJ’s credit rating on general obligation bonds to AA-, its fourth step. The downgrade duplicated actions by Standard & Poor’s in February and Moody’s Investors Service in April. (New Jersey Newsroom)
Tax revenues through April are $230 million below the forecast for the first ten months of the current fiscal year. (State Department of Treasury)
Christie administration is now facing at least a $121 million shortfall in energy tax collections atop the $230 million shortfall revealed on Tuesday. (Assembly Budget Chair Vincent Prieto)
Christie administration and the nonpartisan Office of Legislative Services are now about $850 million apart on revenue projections through fiscal 2013. (estimate of Senate Budget Chair Paul Sarlo)
My guess is that on Wednesday the Treasurer will lower the tax revenue forecast somewhat, but leave open the possibility for a tax program to be negotiated.