N.J. $2.4 Billion Short Without Murphy Taxes, Treasurer Says

(Bloomberg) -- New Jersey Treasurer Elizabeth Muoio said structural budget troubles are accelerating, and the state is on track for a $2.4 billion deficit if tax increases aren’t in place for the fiscal year that starts July 1.

The shortfall endangers Governor Phil Murphy’s $37.4 billion budget which relies on taxes yet to be enacted. New Jersey is forbidden under its constitution from passing an unbalanced budget.

Muoio told lawmakers in Trenton that revenues forecast by her office last month remain close to targets for the current and upcoming fiscal year. The gross income tax, the biggest revenue source, was up 9 percent through the end of April from a year prior. Other general fund revenue, though, “are growing much more slowly and in many cases actually declining,” Muoio said.

Murphy, a Democrat who took office in January, has proposed $1.5 billion in taxes on high earners, yet-to-be-legalized recreational marijuana and services such as Airbnb Inc. and Uber Technologies Inc. The Democrat-dominated legislature, though, hasn’t thrown support behind such initiatives in the U.S. state with the highest property taxes.

“Without our proposed changes, projections for fiscal year 2019 are on a trajectory for a general fund deficit of $2.4 billion,” Muoio said. “We must take action to correct our serious structural deficit and structural fund imbalance. General fund revenues are simply not keeping pace with our obligations.”

Among the governor’s priorities is a pension payment of $3.2 billion, a record, for the least-funded retirement system among U.S. state governments.

For this year and next, the administration already is planning to transfer $790 million in energy taxes to prop up the budget, Muoio said.

©2018 Bloomberg L.P.