PJ BLOGGER

N.J. tax shortfall swells to $5B

In Uncategorized on November 13, 2008 at 12:43 pm

By GREGORY J. VOLPE
Gannett State Bureau

http://www.courierpostonline.com/article/20081113/NEWS01/811130373&referrer=FRONTPAGECAROUSEL

The struggling economy has left a projected $1.2 billion shortfall in the state’s budget this year, and the gap could grow to a $5 billion deficit next year, Gov. Jon S. Corzine’s administration announced Wednesday.

Tax collections for October were $211 million off target, the second straight sobering month for New Jersey. The news prompted state officials to triple the $400 million shortfall estimated a month ago to $1.2 billion.

Corzine said his administration had already prepared for the original $400 million shortfall and will ask his cabinet to make $600 million more in cuts and renegotiate large contracts to keep the state afloat.

“We have to get the end result of revenues and expenditures being balanced,” Corzine said. “And we will.”

Corzine said the state is in good shape to handle the current deficit but didn’t say how he would address the $5 billion hole he estimates will loom for the fiscal year 2010 budget, which will have to be introduced early next year and adopted in June.

“The budget, we’ll take in due course as we put it together for February,” Corzine said.

New Jersey, like nearly every other state in the country, faces a budget shortfall aggravated by the national economic problems. Through the first four months of the fiscal year, total revenues are off by $258 million, paced by deficits in income taxes ($153 million), sales taxes ($85 million) and real estate transfer taxes ($26 million).

Corzine said it’s “not unsurprising given the continuing sharp decline in the economy and ongoing recession.”

Corzine hinted at ways he will address the shortfall — budget cuts, renegotiated contracts with outside vendors and consultants and delaying equipment purchases — but wouldn’t discuss specifics.

Public employee contracts won’t be included in the negotiations, but Corzine said there have been preliminary discussions about a potential work force reduction.

“We’re not anticipating that, but we’re not taking it off the table,” Corzine said.

The Legislature is scheduled to consider at hearings today some of the economic stimulus proposals Corzine pitched last month such as business and job-creation tax breaks and grants and food, heating and legal assistance for low-income families.

Reach Gregory J. Volpe at gvolpe@gannett.com

http://www.courierpostonline.com/article/20081113/NEWS01/811130373&referrer=FRONTPAGECAROUSEL

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