New Jersey is off to a disappointing start to the new fiscal year, with tax collections falling below expectations for July and unemployment hitting its highest rate in 35 years.
Unless the jobless rate improves -- New Jersey shed 12,000 jobs in July, more than any other state -- it will bode poorly for the state budget, which relies on income taxes for a third of its revenue.
Democrats used Thursday's twin economic announcements to pounce on Gov. Chris Christie's summer-long “Jersey Comeback” proclamation, and to ask aloud whether the governor will hold up New Jersey's economy as an example when he delivers the keynote speech at the Republican National Convention.
“There is nothing good to say about it at this point,” said Sen. Barbara Buono, a Middlesex County Democrat and frequent Christie critic. “It will be interesting to see how the governor defends this as a New Jersey comeback in his speech on Aug 28”
Buono, who has been talked about as a possible gubernatorial challenger to Christie next year, accused the administration of violating its own rules by not releasing revenue figures by the 10th of the month, which Christie pledged to do in an executive order signed his first week in office.
The administration released July figures after the close of business Thursday and after Buono called them out for not doing so sooner. June figures, which are more complicated to calculate because of end-of-year accounting adjustments and money transfers between fiscal years, have not been released.
The Legislature's budget expert, David Rosen, reported the shortfall could be as high as $542 million to end the 2012 fiscal year, though he cautioned in a memo that the numbers are preliminary and subject to adjustments of $200 million to $300 million.
More reliable figures should be available within a few weeks, he said.
Tax collections for July show a 5.5 percent lag over revised budget projections, a drop fueled by underperforming casino revenues, which were off by 30 percent for the month. Overall, the state collected $18 million less than the $322 million it had budgeted for the month. July is by far the lightest tax collection month of the year, and administration spokesman Michael Drewniak cautioned against reading too much into a single month's returns.
Meanwhile, unemployment hit 9.8 percent in July, its highest rate since April 1977. The uptick of 0.2 percent followed two months of strong jobs growth, but an increase in the overall number of unemployed.
The economic news for New Jersey wasn't all bad, however.
Sales of existing homes and personal income both rose in the first quarter of the year, and housing permits were up 25 percent through the first six months over the same period last year.
Tax revenues for July were 2.5 percent higher than in July 2011, but that's far shy of the 7 percent revenue growth on which the FY13 budget was based.
The governor is also calling for the first phase of a 10 percent tax cut to begin in January, but the Legislature has taken a wait-and-see approach and has said it would release the money to fund the first phase of the cut only if the administration is hitting its revenue targets in January.