NJ Budget ‘Positive and Improving’ as Sales Tax, Home Sales Surge
TRENTON – State officials anticipate adding hundreds of millions of dollars to the state’s revenue forecast, but the good news for the budget will have to wait a few weeks because the tax filing deadline had been delayed to Monday, a month later than usual.
Monday was to have been the conclusion of the Legislature’s yearly budget review, which wraps up with the state treasurer and budget analysts in Office of Legislative Services finetuning the outlooks put forth between February and April. That final update is now scheduled for June 9.
But OLS and Treasurer Elizabeth Maher Muoio were in general agreement in an interim update to the Assembly Budget Committee: Better-than-expected gains in sales tax and realty transfer tax revenue are going to mean an increase in the revenue forecast, further padding a projected $6.34 billion surplus.
“Treasury is confident that the overall revenue forecast will increase by hundreds of millions of dollars due to the federally induced surge in consumer spending,” Muoio said. “Our sales tax forecast, for example, is likely to rise by at least several hundred million in FY2021 alone. So, all in all, the revenue outlook for the remainder of the current fiscal year and going into FY22 is positive and improving.”
Muoio said federal stimulus dollars have been “a gamechanger.” Government benefits nationally increased 37% in 2020, meaning income rose 6.1% nationally despite flat wages. National retail sales were up 9.8% from February to March, nearly 28% above March 2020.
“New Jersey data is expected to continue tracking very closely with the national trends,” Muoio said.
Sales tax revenues in the first 10 months of the state fiscal year were 9% higher than the same period a year earlier. They were 23% higher in April than in April 2019, which Muoio said amounts to a two-year growth rate that’s three to four times greater than normal.
Single-family home sales in March up were up 21% from the same time a year earlier, with new listings up by 8.5% and pending sales up 38%. As a result, revenues from the realty transfer fee are up 26% year-to-date, with its collections in April up 75% from the same month in 2019.
“While comparisons to the pandemic recession levels of last spring will be misleading, these consumer-driven revenues are also well above pre-pandemic levels from two years ago,” Muoio said.
David Drescher, the chief of OLS’ revenue, finance and appropriations section, said the sales tax has been a consistent bright spot and that realty transfer fees are far above expectations. He said it’s too soon to draw conclusions about income taxes or corporate business taxes.
“Most of the revenues that we track other than those are performing roughly in line with expectations. But our initial outlook is that our revised forecast in a few weeks will increase notably,” Drescher said.
Assemblywoman Eliana Pintor Marin, D-Essex, the budget committee chairwoman, said she is hopeful the June revenue update will mean “hopefully having a nice cash flow into our state to help us really revive ourselves from this pandemic.”
Assemblyman John McKeon, D-Essex, said the state is in a far different position from expected. “We should be celebrating today because Moody’s going back about a year ago talked about a $13 billion deficit that they were projecting for this state,” he said.
Sen. Steve Oroho, R-Sussex, said the revenue update “is more proof that the administration severely misled the public, legislators, and the courts about New Jersey’s finances.”
And Assemblyman Hal Wirths, R-Sussex, said the budget is rebounding despite policies holding it back.
“From a revenue standpoint, there’s nothing we could do to grow revenue faster than to follow the CDC guidelines and allow people who are vaccinated to be unmasked and get back to work,” Wirths said.
The Tastiest Jersey Shore Food Trucks You Should Try This Summer
(NJ cracks down on polluters at 9 sites)