New Jersey’s revenue outlook just keeps getting brighter, the state treasurer said Monday.
Collections of the sales tax and fees on home sales are booming, putting the state on track to pad its planned $6.3 billion surplus by hundreds of millions of dollars more by the June 30 end of the fiscal year.
Gov. Phil Murphy in February raised revenue forecasts for the current fiscal year by $3.2 billion, from about $41 billion to $44.2 billion, which represented a remarkable turnaround after early-pandemic fears of crippling economic meltdown. That extra cash will allow the state to sock billions of dollars away in reserves — much of which Murphy plans to spend next year.
The budget adopted in the fall assumed a $4.3 billion revenue shortfall, which Murphy and the Legislature agreed to plug with borrowing that ultimately proved unnecessary.
Treasurer Elizabeth Muoio told the Assembly Budget Committee on Monday to expect more good budget news when she presents a final revenue report in June.
“Treasury is confident that the overall revenue forecasts will increase by hundreds of millions of dollars due to the federally-induced surge in consumer spending,” she said. “Our sales tax forecast, for example, is likely to rise by at least several hundred million in FY 2021 alone. So, all in all, the revenue outlook for the remainder of the current fiscal year and going into FY 22 is positive and improving.”
Muoio and the nonpartisan Office of Legislative Services traditionally would provide final revenue forecasts this week. However, the delayed income tax deadline means the Treasury Department is still awaiting tax payments from last-minute filers and won’t have a full grasp on income tax payments until June.
Sales and realty transfer tax collections are driving a lot of the optimism this year. April sales tax collections were 23% higher than April 2019, while realty transfer fees — reflecting soaring home sales — were 75% higher in April than the same month in 2019, Muoio said.
The nonpartisan Office of Legislative Services predicted it will also raise its own revenue estimates in June, said David Drescher, OLS’s revenue, finance and appropriations section chief. Its estimates for the current and upcoming fiscal year are already $553 million higher than Murphy’s.
“We were above Treasury when we testified a month and a half ago. We have not formally updated, but I think we are looking at a higher forecast than our forecast from a few weeks ago,” Drescher said.
While the state often looks to California, Massachusetts, Connecticut, Pennsylvania and New York for context in forecasting tax collections, those states also delayed their tax filing deadline and there’s little insight to be gleaned there, revenue analyst Jordan DiGiovanni said. California’s windfall is making headlines, but OLS warned much of those gains stem from big Initial Public Offerings that won’t translate to New Jersey’s economy, he added.
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Samantha Marcus may be reached at smarcus@njadvancemedia.com.