As the Assembly met for a voting session this afternoon, some members were worrying about the state’s declining revenue picture. Earlier this week, in a bond filing on Wall Street, the Treasury Department, warned that federal support for unemployment insurance and Medicaid in New Jersey would be less than projected.
Republican budget officer Declan O’Scanlon (R-13) said that is not necessarily an ominous sign. “All communication with Wall Street is supposed to envision any downside potential. You have to be open to investors about any downside potential,” he said.
But the Democrats’ top fiscal watchdog, Budget Committee Chairman Vincent Prieto (D-32), said it looks like mid-year budget cuts in the budget may be necessary.
“It’s tough because there will be clearly people that are not gonna be happy and we’re gonna have to try and be as mindful as possible,” he cautioned. “Just like everybody else throughout the state whether it’s municipalities or counties, we’re gonna have to do more with less and we’re gonna have to tighten our belts.”
The governor’s initial budget proposal projected revenue would grow this fiscal year by 7.4 percent. Now with revenue running $175 million below projection for July, August and September on top of a $240 million projected hole in the budget that closed in June, revenues will have to grow more than 10 percent in the remaining 9 months if the budget is to stay in balance.
O’Scanlon said “some friends of mine on the other side of the aisle are screaming bloody murder that we have to hit the panic button, which nobody in a neutral position in OLS or the administration is saying.” He adds that Gov Christie will offer spending cuts if he needs to. “With this governor, I’m confident. He’ll do whatever he has to do.”
And he isn’t giving up on revenues meeting projections because New Jersey income tax revenue, he says, is very much tied to Wall Street. “Wall Street performed really well these past 12 months,” said O’Scanlon. “So we could see a positive upside surprise as we go forward and people start to report income in the next few months.”
Hanging in the balance is the Republicans’ call for a tax cut. To that, Prieto says not so fast. “We need to take the wait-and-see approach,” he said. “If the numbers do start coming at an astronomical level … then maybe we can look at it.”
It’s a typical Trenton battle for perception. Republicans say things are under control. Democrats say there are dark clouds on the horizon.
Chief Political Correspondent Michael Aron reports from the Statehouse.