On Monday, May 16, The Office of Legislative Services (OLS) and the New Jersey State Department of Treasury provided testimony to the Senate Budget and Appropriations Committee on updated revenue projections for the FY 2023 State Budget. There is an estimated multi-billion-dollar surge in revenue with a $3.6 billion increases over the previous year’s projections. If the OLS projections are correct, there will be an estimated $6.9 billion in increased tax revenue than estimated by the Murphy Administration. New Jersey Treasury’s projections are $7.8 billion higher than initial forecasts with projected revenue for FY 2023 of $51.4 billion.
Office of Legislative Services (OLS) Updated Revenue Projections
David Drescher, OLS Section Chief, Revenue, Finance and Appropriations provided an update on revenues for FY 2022 and 2023 following the April collection period, which includes quarterly and annual corporate and personal income tax filing deadlines. While the forecast for taxes was in line with expectations the Gross Income Tax was much higher than anticipated was $1.2 billion than last year and totaled $4.4 billion. Mr. Drescher cautioned that it should not be anticipated that the Gross Income Tax revenue gains will continue as it is related to the boom in the financial markets and the overheated economy. Mr. Drescher further cautioned that “Based on the mismatch of estimated and final payments, the enormity of this surge, and its likely connection to markets that have since turned downward, we think this is mostly a one-time effect. Our forecast for FY 2023 is higher than our previous forecast, but it is flat compared to the updated FY 2022.”
Department of Treasury Updated Revenue Projections
Deputy Treasurer Aaron Binder, testifying on behalf of State Treasurer Muoio, provided an update on the State’s revenue outlook for FY22 and FY23. Noting that the state’s fiscal picture is remarkably strong and reviewing the April numbers Deputy Treasurer Binder stated that the State’s revenue are now an estimated $51.4 billion in FY22. The State’s combined forecast is $919 million above OLS’s revised forecast, $452 million higher in FY22 and $467 million higher in FY23. Deputy Treasurer Binder also acknowledge that the current growth rates are not sustainable and that some revenues have peaked and should be adjusted back to more sustainable levels. As a result the State Treasurer’s total FY23 forecast of $50.6 billion, 1.6% lower than FY22.
Lynn Azarchi, Acting Director of OMB, highlighted the State’s dedication of funding to debt reduction to improve the State’s long-term fiscal conditions; commitment to fixing the underfunded State pension system; increasing property tax relief through ANCHOR, and committing to school aid on the way to fully funding the new school funding formula. Acting OMB Director Azarchi also highlighted the increase in requests for assistance from the General Assistance and Temporary Assistance for Needy Families (TANF) programs. The caseloads are now above pre-pandemic levels.
Department of Treasury’s Departmental Budget
The Department noted their pivot “from crisis response to integrating lessons learned and modernizing our day-to-day work to better serve the people of New Jersey and fellow State agencies.” The Department of Treasury highlighted the Division of Pensions and Benefits hiring of full complement of call center counselors leading to an 89% answer rate and wait time on average of three minutes as well as the launch of live web chat services; the Division of Purchase and Property extending their online procurement to create a virtual marketplace to leverage the State’s purchasing power through NJSTART; partnership with the Department of Transportation and Department of Environmental Protection to identify locations of the installation of electric vehicle charging stations.
Contact: Andrew LaFevre, Legislative Analyst, firstname.lastname@example.org , 609-695-3481 ext: 116