New Jersey’s April Income-Tax Record High Surprises Even Treasurer
(Bloomberg) -- New Jersey saw record tax collections in April, allowing it to boost revenue forecasts for the year by $377 million and leaving the chronically cash-strapped state anticipating surpluses through the end of the next budget year.
The $3.6 billion taken in last month as tax returns came due increased New Jersey’s major revenues so far in the current fiscal year ending in June by 11% from a year earlier, according to figures released by Treasurer Elizabeth Muoio as she testified at a Senate budget committee hearing in Trenton. It helped propel the revised total-revenue projection for the current fiscal year to $38.1 billion, or $377 million higher than Governor Phil Murphy had expected.
New Jersey is among a group of states, including California, Illinois and Connecticut, where April tax revenue has been stronger than projected. It’s making up for shortfalls earlier in the budget year when collections lagged official forecasts because of the difficulty in predicting how U.S. tax changes, including the $10,000 cap on state and local deductions, would ripple through state capitals.
Muoio had predicted a strong April “but we encountered somewhat of a surprise” with that record, she said.
The influx is providing extra cash for governments already benefiting from the nearly decade-long economic expansion and is coming just as many set their budgets for the coming fiscal year. While it’s a boost for New Jersey’s current fiscal year and the one that starts July 1, it also sets up Murphy for a political tug of war with fellow Democrats who dominate the legislature. The governor has said he will set aside $250 million for tax relief, but only if he wins approval of a millionaire’s tax that lawmakers oppose.
The state will use some of the money to replenish its rainy-day account -- which can be used only in an emergency -- with at least $250 million, a first since that fund was drained in 2008, Muoio said on May 13. That’s in addition to back-to-back projected annual budget surpluses in excess $1 billion for the current year and next, leaving New Jersey with a cushion not seen since fiscal 2009 as Murphy hedges against a potential recession.
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