Crunch Time for Tax-Revenue Numbers That Shape Budget for This Year, Next Year
If tax revenue comes in significantly over projections -- estimated at $200M -- administration could bump up public-worker pension payment
Earlier this month Gov. Chris Christie’s state treasurer told lawmakers preliminary numbers showed state tax collections ahead of the latest budget projections by about $200 million. Today he is scheduled to share more precise figures that should play a big role in shaping both the final weeks of the current fiscal year and the debate over the budget for the one that begins July 1.
Treasurer Andrew Sidamon-Eristoff will appear before the Senate Budget and Appropriations Committee at 1 p.m. to go over the administration’s latest revenue forecast. David Rosen, the budget and finance officer for the nonpartisan Office of Legislative Services, is also scheduled to provide his own updated projections at 10 a.m.
Their appearances come as lawmakers are still reviewing the $33.8 billion spending plan Christie has. But they also await a ruling from the state Supreme Court on funding for the public-employee pension system that’s included in the current fiscal year budget.
The state constitution requires a balanced budget to be in place each year on July 1.
An improving tax-collection forecast could get the state closer to making the $2.25 billion pension contribution Christie said his administration would pay this fiscal year after signing ain 2011. It was Christie’s pledge to increase the state contributions over a seven-year term to reverse years of underfunding by prior governors from both political parties that won concessions from employees, including increased contributions toward their pensions and health benefits.
But the governor, a second-term Republican, went back on that promise when the state experienced budget problems last year, saying it could only afford to make a $681 million pension contribution this June.
That drew an immediate lawsuit from public-worker unions who asked the courts to enforce the seven-year payment scheduled. After the unionsearlier this year Christie appealed, and the case is now in the hands of the state Supreme Court. The court on May 6 and a ruling could come at any time.
Earlier this month Sidamon-Eristoff told the Assembly Budget Committee that preliminary figures for the current fiscal year indicated tax collections could be running $200 million ahead of the administration’s most recent official projections.
Any additional revenue would be used to boost the $681 million pension payment, he said. Today it should become clear exactly how much more revenue the administration is now expecting to collect by June 30, and how much bigger the $681 million pension payment will get.
A boost in revenue could also influence how much gets deposited into the pension system during the next fiscal year. Right now, Christie’sincludes a $1.3 billion pension contribution, but Democrats who control the Legislature say they want to make the full $3.1 billion payment that the seven-year payment schedule calls for.
To help make the bigger contribution, Senate President Stephen Sweeney (D-Gloucester)Rosen and Sidamon-Eristoff last appeared before lawmakers that would increase the state’s top-end income tax rate on earnings over $1 million from 8.97 percent to 10.75 percent. Legislative analysts expect the increase to bring in as much as $675 million during the first year, an amount disputed by Christie, who has rejected similar attempts to increase the top-end income-tax rate on four separate occasions. . At the time, Rosen was forecasting slightly less than the administration’s $32.8 billion for the current fiscal year, and slightly more than the administration’s $33.8 billion forecast for the next fiscal year.
But their appearances came before April income tax returns were collected and counted, which is always a key point in the state-budget cycle because the state takes in roughly 40 percent of its total revenues each year from just the income tax. And since revenue forecasting is not an exact science, there is always an
Last year’s was not a good surprise, with both Sidamon-Eristoff and Rosen reporting in May that the tax-collection forecast was being downgraded by $1 billion. They chalked the adjustment up to the impact that federal tax policy changes enacted for the 2013 tax year -- primarily higher rates for the wealthy -- had on state tax collections during the 2014 tax year.
If this year’s April surprise is a good one, it would mark only the second time since Christie took office in early 2010 that tax collections came in better than his administration has forecast. The other time was during the 2011 fiscal year, when the Christie administration announced a projected $242 million windfall. Christie proposed boosting-property tax relief and public-employee pension funding in response.