TRENTON, N.J. (CBS/AP) — The head of the Senate Budget Committee says New Jersey is facing significant late-year budget cuts because Gov. Chris Christie’s administration overestimated how much tax revenue the state would receive.
Sen. Paul Sarlo says up to $800 million in fixes will be needed in the next two months to close out the fiscal year with a balanced budget, which the state constitution requires.
The Senate Budget Committee has given the NJ Treasurer’s Office 10 days to come up with proposals for how to balance the shortfall in the current budget and make changes to the FY 2015 budget, which was already submitted.
Sarlo says since Christie has come into office his budget projections have repeatedly been higher than actual revenues and next year’s budget now looks to be unbalanced by about $1B.
Christie says much of the shortfall is a result of the 2012 fiscal cliff when income tax rates were raised on the country’s highest earners.
In New Jersey the top 400 taxpayers make up 10 percent of the total income tax revenues.
Christie says, “When you keep rates on the top taxpayers, and all the taxpayers, as high as you’re keeping them and then you try to raise them again – people will change their behavior to avoid it.”
Sen. Sarlo says lawmakers were notified Monday that the budget would have to be rebalanced again. Downward adjustments were made in February.
“I just think they were a lot more optimistic that we were rebounding from the recession. New Jersey is lagging the rest of the nation in rebounding from the recession.”
“The economic policies put forth by this administration have not worked, we need to create jobs, we need to put people back to work. When you put people back to work greater revenues will come rolling into the state coffers.”
There is little money left in the budget so late in the fiscal year.
The state still has $500 million in school aid and the $1.7 billion earmarked for the pension system.
The administration is working on a plan to deal with the shortfall.
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