New Jersey Governor, Chris Christie’s math has failed him for the sixth straight year. Right on schedule, his revenue projections have fallen short, this time to the tune of $600 million.
The state government is now forced to revise its budget in light of the tax collection shortfall, impacting the coming fiscal year. This amounts to a total of $1 billion, and an impact spread over two annual budgets.
Perhaps wisely, Christie has stated publicly that the budget shortfall won’t affect public-employee pensions, this go around. But the perennial solution of dipping into the state’s surplus is on the table, as well as raiding the Clean Energy Fund.
2016’s deficit performance runs a close second to that seen in 2014, with that year’s budget being slightly larger. Jersey lawmakers have now raised concerns about the state’s credit-rating. Consecutive deficit budgets could amount to yet another downgrade. Also impacted by the two-year shortfall is the Transportation Trust Fund. The victim of making up successive shortfalls, New Jersey’s legislators having been looking for ways to resurrect it. It’s anyone’s guess how the Transportation Trust will fare in light of an unstable fiscal outlook.
Ford Scudder, acting State Treasurer pointed to diminished tax revenue growth as the culprit. Income tax revenues had been projected to grow modestly for the coming fiscal year. Scudder has a point, as while New Jersey saw considerable job growth over the past year, it’s apparent that these low wage jobs didn’t deliver the same revenue punch as their higher-paid counterparts. Jersey’s Office of Legislative Services threw Wall Street into the mix, pointing out that the weakened status of this financial engine is at least partially to blame for Jersey’s woes.
Because of language in New Jersey’s state constitution which mandates balanced budgets, Christie’s administration is bound to find ways and means to avoid deficits. Newly drafted budget sheets reveal that spending cuts will hit more than twenty state programs. This action will amount to a saving for the state of $364 million. To pick up the rest of the tab, the surplus account will be called upon, providing the state with $239 million to throw in the pot.
Director of Sierra Club New Jersey, Jeff Tittel, points out that the Fund is supported by a line item added to state utility bills for the purpose, referring to the Fund as the Christie administration’s “ATM”. He points out that the serial raiding of the Fund means it’s not able to do its electricity-saving job and that Jersey’s rate payers are footing the bill.
New Jersey’s business community is also paying the price for Christie’s faulty math. Tax credits ostensibly available to promote job growth through the Business Employment Incentive Program will now be deferred. In addition, the government will adjust the program’s mandate, reducint the amount of credits the business community can claim in 2017. This would save the beleaguered administration another $135 million.
With New Jersey’s credit-rating downgraded by three rating agencies three times previously, the state is now lumbered with one of the lowest ratings in the USA. The effect is that obtaining credit for capital works is rendered more difficult and costs more, compelling such projects to be spread out over more than one fiscal year. It’s hoped that acting State Treasurer Scudder is correct in insisting that there won’t be further punitive action by the rating agencies.