TRENTON — Lawmakers heard a rare piece of good news about New Jersey's finances this morning: State revenues through fiscal 2012 will be $913 million higher than Gov. Christie's budget originally anticipated.
That was the forecast for the remainder of this year and next by David Rosen, legislative budget and finance officer for the nonpartisan Office of Legislative Services.
In testimony before the Assembly Budget Committee, he said that the lack of an anticipated turnaround in corporate business tax collections "is more than offset by a remarkable development for the gross income tax."
Revised estimates by OLS, following April tax collections, concluded that income taxes will grow by $1.4 billion more than expected.
Rosen attributed the change to growth in income for wealthy residents, who had seen their income plummet in the earlier years of the recession. More recently, he said, top earners saw their wealth increase as the stock market improved.
"While the recession has had terrible consequences for many middle and lower-income New Jersey residents, it was the loss of income for wealthier New Jerseyans that sunk our income tax collections," Rosen said.
Meanwhile, corporate business taxes are estimated to fall $443 million lower than expected; sales taxes are projected at $10.1 million less than expected; and all other revenues are estimated at $79.5 million lower than expected.
Assembly Budget Officer Declan O'Scanlon (R., Monmouth) cautioned that New Jersey should continue to exercise fiscal restraint despite the good news, suggesting that the additional revenue be used to bolster the surplus or make pension and debt payments.
Assembly Budget Chairman Louis Greenwald (D., Camden), for his part, suggested much of the revenue go toward property tax relief.
But how the money is spent is largely contingent on a looming state Supreme Court decision on whether the state will have to come up with another $1.6 billion in education funding.