When it comes to raising revenue for the state, Internet gambling has been a bust.
Online gambling has failed to generate most of the tax revenue that it had been anticipated to this year, accounting for roughly half of a downward adjustment to the annual state budget.
New Jersey is now projected to end the fiscal year in June with less revenue than expected, the third straight year Gov. Chris Christie's administration overestimated revenue collections on which the state budget is based. The administration reduced its revenue forecast by $251 million; a legislative estimate represents a further reduction of $217 million.
The forecast for the Casino Revenue Fund, which collects taxes from online gambling and Atlantic City's brick-and-mortar casinos, has been cut by $126 million, accounting for roughly half the state's revised budget projection, said State Treasurer Andrew Sidamon-Eristoff.
He told the Senate Budget Committee on Tuesday he remains optimistic that taxes from Atlantic City gambling will rise over the mid- and long-term, while acknowledging that online gambling receipts come in far shy of projections during the first four months of availability.
"Clearly, the results so far have not met our expectations," he said.
Legislative budget officer David Rosen, who testified earlier before the Senate panel, said the tax has generated $4.2 million between the last week of November, when Internet gambling started, through the end of February. He said monthly amounts have been rising from $1.1 million in December to $1.4 million in January and $1.5 million in February. He said he expects that trend to continue and for the state to generate a total of $12 million this year, and $48 million next year.
The administration originally projected $180 million in Internet gambling taxes, then dropped the number to $160 million in June.
Sidamon-Eristoff refused to specify how much the administration is expecting from online gambling compared with casinos. However, he did say 248,000 Internet gambling accounts had been opened as of Feb. 28, a 25 percent increase from the prior month.
Sen. Paul Sarlo, a Democrat who chairs the budget panel, said he is frustrated to be ending another fiscal year having to make late budget adjustments.
Rosen's Office of Legislative Services projects that the state has overestimated revenues by a combined $509 million through the fiscal year that begins July 1.
Christie proposed a $34.4 billion budget for the fiscal year that begins July 1 based on revenue growth of 5.8 percent. Rosen forecasts revenues to grow at 5.5 percent.
Rosen also said New Jersey has been slower to recover from the recession than neighboring states.
The state's lagging economic recovery is one reason Wall Street rating agencies have been cool toward New Jersey's fiscal outlook.
Fitch Ratings last week lowered the state's credit outlook from "stable" to "negative," while maintaining the state's credit rating, following Moody's Investor Service, which took the same actions in December. A third agency, Standard & Poor's, has held a negative credit outlook for New Jersey since September 2012.
Sarlo also quizzed Sidamon-Eristoff on the state's transportation plan, suggesting that one way to solve infrastructure needs is by raising the gas tax. Sarlo said the administration's five-year pay-as-you-go plan has remained largely unrealized.
"All we've done is borrow, borrow, borrow," Sarlo said.
The treasurer said the administration would present a plan for funding the Transportation Trust Fund in about nine months.