As Gov. Chris Christie took on a staggering $1 billion budget shortfall last year by delaying property tax relief and slashing funding for public-worker retirements, his administration also made a subtle shift in how the state discloses monthly tax-collection data.
Overlooked by many at the time, the disclosure change meant revenue reports that help show on a monthly basis whether the state is living up to its constitutional obligation to maintain a balanced budget were no longer as detailed as they had been under the reporting tradition prior governors from both parties had followed in Trenton for years.
Now, despite beginning a new fiscal year on more promising footing under a new state treasurer, Christie’s administration is sticking with its new format for disclosing monthly revenue data.
The first monthly update on tax collections issued by acting Treasurer Robert Romano for the fiscal year that started July 1 did not include the side-by-side comparisons in precise dollar amounts that used to be a hallmark of the state’s monthly tax reports.
A spokesman for the Department of Treasury told NJ Spotlight that Romano, who replaced former Treasurer Andrew Sidamon-Eristoff at the start of the new fiscal year, will carry on the revenue-reporting policy launched a year ago.
“There are currently no plans to issue revenue reports or releases differently under this treasurer than the last,” Treasury spokesman Christopher Santarelli said.
Though highly technical in nature, the precise dollar-to-dollar comparisons of tax collections to budget projections, broken down by each revenue source each month, demonstrated whether the state was running ahead of its projections or, as has been the case during several of Christie’s years in office, was operating with a revenue shortfall.
In its place, the Christie administration’s new reporting policy measures monthly tax collections against a percentage of growth that’s projected for each tax source during the fiscal year.
For Christie, a second-term Republican, the shift in policy came about a year before he officially joined the 2016 contest for the GOP’s presidential nomination, and as major Wall Street credit-rating agencies were all lowering New Jersey’s debt grade amid the budget shortfalls.
Those credit-rating downgrades – all three major rating agencies have lowered the state’s debt grade by three steps during Christie’s tenure — have left New Jersey with the second-worst credit rating among U.S. states, behind only Illinois.
And the downgrades have also proven to be a major weak spot for Christie in his presidential bid; he continues to trail the GOP primary contest’s frontrunners, including businessman Donald Trump, in the polls.
Yet it was Christie who promised “a new era of accountability and transparency” during his 2010 inaugural address. He also authored a 2010 executive order that called for enhanced monthly reporting of tax collections.
“New Jersey has for too long reported public revenues in a fashion that makes it difficult for taxpayers, investors and policymakers to assess whether budgets are in balance and cash flow is sufficient to meet state government
obligations,” the executive order said.
But last year, Sidamon-Eristoff defended the new revenue-reporting policy, saying the more precise monthly tax-collection data at times produced misleading information that didn’t always offer an accurate picture of the state’s budget health. The monthly reports also lacked detail about adjustments made on the spending side of the ledger, he argued.
Sidamon-Eristoff stuck with the new format even as the state’s budget outlook showed some signs of improvement before he stepped down, including a $200 million tax-revenue windfall that appeared at the end of the last fiscal year.
The first revenue report for the new fiscal year also showed cumulative state tax collections were ahead of where they were during the same period last year, by about $125 million.
Assembly Budget Committee Chair Gary Schaer (D-Passaic) was among the lawmakers who loudly criticized the state’s new reporting policy last year, predicting it would be harder for state legislators, especially those who serve on budget committees, to keep up with the monthly revenue stream amid a still volatile economy.
He said “it’s not a surprise” that Christie’s administration has decided to stick with the new reporting policy this year, but Schaer added he still thinks the change has not been for the best.
Having more detailed monthly revenue reports enables lawmakers to act proactively on the budget, not at the last minute when a shortfall has already grown too big to deal with.
“Without being provided the data, without being given an understanding of the numbers, the Legislature is undermined from the job it needs to do and it is sworn to do,” Schaer said.
Still, Assemblyman Declan O’Scanlon, the top Republican on the Assembly Budget Committee, said it’s the cumulative budget data that is still being published by Treasury that’s most meaningful for lawmakers when they are evaluating state tax collections.
“The real relevant data is the cumulative data,” said O’Scanlon (R-Monmouth). “The per-month numbers are quite frankly nowhere near as valuable.”
In addition, he said, lawmakers can reach out to the treasurer personally if they need more information.
“If I have more questions, all I have to do is call,” O’Scanlon said. “I haven’t had the treasurer, Treasurer Eristoff or the acting treasurer, ever fail to answer questions.”
“I find it hard to believe that legislators aren’t getting sufficient information to do our job,” he said.
But Schaer said the issue is bigger than the work of the budget committee members.
“People have a right to understand that information,” Schaer said. “We need to remember that this is a government of the people, not of political parties.”
And he said if the situation were reversed and it was a Democratic governor holding back the precise tax-collection data his position would be the same.
“This cannot be a political matter,” Schaer said.