Income and corporate tax revenues are below projections, which could mean changes to Gov. Chris Christie’s budget proposal. Former New Jersey State Treasurer David Rousseau spoke with NJ Today Managing Editor Mike Schneider about the newly released number and the possibility of tax cuts, which he is against at this time.
Rousseau said the number surprised him because he expected revenue to be on par with last year’s numbers or have slight growth. Instead, revenue was down. He said income tax revenue is a bit easier to predict than that of corporate taxes.
“The income tax and corporate tax collections we got in April were for economic activity that occurred back in 2011,” Rousseau explained. “When everybody filed their income taxes in April, it was for the revenue they made in 2011, same as corporations. So clearly the economic activity in 2011 wasn’t as great as the administration thought.”
A drop in revenue can have a snowball effect with the shortfall carrying over into the next year. “You really have to look at whether the 7+ percent growth rate that the governor had in his budget for 2013 is realistic at all any more,” Rousseau said.
He said that the treasurer is likely figuring out where the shortfall is in the revenues and trying to figure out how to offset the revenue loss. The solutions must also be amenable to the governor and the legislature, Rousseau explained.
The former treasurer said he disagrees with all three tax cut proposals currently being discussed. “I think that right now everyone needs to slow down,” he said. It’s not the time to move forward on the tax cuts.”
Rousseau explained that a tax cut that would cost roughly $200 million has to be weighed against with other considerations.
“Let’s see what the administration has to offset the revenue shortfall and then move from there,” he said. “Clearly it’s not time to rush to judgement on this and it probably should wait at least until next year when we see what the economy is like, and maybe even for longer than that until we really get some of the other needs that need to be addressed in this state taken care of.”
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