Latest news with #LizMuoio
Yahoo
14-05-2025
- Business
- Yahoo
Budget experts tell lawmakers revenue projections are up, but there's no windfall
Treasurer Liz Muoio told lawmakers Wednesday that the state is entering the new fiscal year "with a solid foundation while keeping an eye on national and international economic developments." (OIT/NJ Governor's Office) The state's fiscal forecasters nudged up revenue projections for the current and coming fiscal year after receiving April tax filings, but the minor shifts reflect predictions of slow growth and broad uncertainty over the future of federal funding. Officials with the Treasury and the nonpartisan Office of Legislative Services both projected New Jersey would bring in $57.1 billion in the fiscal year that begins July 1, up from the $56.8 billion forecast by the Treasury in early April and roughly in line with the legislative office's prior estimates. Gov. Phil Murphy's proposed budget calls for about $58.4 billion in spending for the next fiscal year. Treasurer Liz Muoio told the Assembly's budget committee Wednesday that the positives of the spring filing season outweigh the negatives. 'We will enter the new fiscal year with a solid foundation while keeping an eye on national and international economic developments,' Muoio said. 'As you are all aware, we continue to face massive budgetary uncertainty at the federal level.' Revenue projections for the current fiscal year, which ends June 30, rose by similar levels. The Treasury estimates an increase from $54.9 billion to $55.3 billion, and the Office of Legislative Services' projections increased from $55.3 billion to $55.4 billion. The increases are too modest to significantly ease fiscal planning in a budget year officials have repeatedly called difficult, though absent later changes to state spending, they will nominally increase state reserves projected for the end of the next fiscal year from $6.3 billion to $6.7 billion. That level of surplus would again leave New Jersey's reserves below 12% of spending, which could spell trouble for the nascent tax relief program called Stay NJ, which promises to halve senior citizens' property tax bills and is set to begin issuing payments in the next fiscal year. Statutory language requires a pause to Stay NJ payments if the state's surplus dips below 12% of spending, though lawmakers can overwrite that requirement through budget language. The Treasury has updated costs for certain health care and other programs in Murphy's budget proposal, nudging them up by a combined $306.8 million. The state's deficit — the degree to which spending outpaces revenue — remains a projected $1.2 billion for the next fiscal year. The boost to Treasury's current-year revenue projections was attributed largely to strong personal income tax performance in April, particularly on capital gains. Officials cited a 9.9% growth rate for the gross income tax in the current fiscal year but said its growth would moderate to 2.7% in the next. Muoio said corporate business tax collections were down 18%, year-over-year, with 60% of that decline due to businesses writing off operating losses in line with a 2023 law changing how business income is calculated for tax purposes. Those declines should taper off in future years, but were expected to reduce collections under the state's corporate transit fee from $867.5 million to about $814 million in the next fiscal year. Save a 6% constitutional dedication for open space, revenue from the corporate transit fee in future fiscal years is required by law to flow to NJ Transit. Officials predicted slow growth for New Jersey's existing revenue sources. The Office of Legislative Services' projections say existing revenue would increase by only 1.1% in the coming fiscal year, though tax and fee increases proposed by Murphy would bring overall growth to roughly 3.4%. 'Achieving even this modest growth depends on the continued strength of the state's consumer spending and employment, which thus far have remained resilient. Nonetheless, it is important to recognize that downside risks remain,' said Oscar Mendez, revenue and economic policy analyst at the Office of Legislative Service. Legislators, including top members on budget committees, have expressed resistance to the proposed tax hikes, which include an expansion of the sales tax to include services at recreational businesses, higher taxes on casinos' gambling winnings, and larger surcharges on the sale of expensive homes, among other things. 'I want to make it clear to everybody who's listening to this. There's no desire from this Legislature to tax those services,' Sen. Paul Sarlo (D-Bergen), the Senate's budget chair, said at an April hearing. 'I think they were a talking point by the governor. I think the governor realizes those will be eliminated.' Persistent uncertainty about the future of New Jersey's federal funding amid broad, unpredictable shifts in federal policy left considerable flex in the state's revenue projections. New Jersey was set to receive $26.2 billion in federal funding for the next fiscal year, and it's unclear how congressional Republicans' proposal to cut more than $818 billion from Medicaid and other programs will affect New Jersey's federal funds. Thomas Koenig, the legislative budget and finance officer at the Office of Legislative Services, said things could turn out well, but he added, 'We are concerned there is a larger than usual downside risk to our forecast.' SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
Yahoo
01-04-2025
- Business
- Yahoo
Budget experts warn lawmakers of upcoming fiscal uncertainty
New Jersey Treasurer Liz Muoio told lawmakers Tuesday that federal funding changes could have "a drastic" impact on the state budget. (OIT/NJ Governor's Office) State budget experts warned lawmakers on Tuesday of widespread uncertainty as the state moves to enact a budget for the coming fiscal year. Though officials from the Treasury and the nonpartisan Office of Legislative Services expressed optimism about revenue collections in the current fiscal year, which have exceeded expectations, they warned a tightening economy and residents' response to it could lead to a revenue slowdown in the fiscal year that begins July 1. 'While the broader state economy remains on stable footing, volatility in capital markets, shifting consumer behavior, and potential policy shifts could adversely impact revenue collections,' Oscar Mendez, a revenue and economic policy analyst with the Office of Legislative Services, told the Senate Budget Committee. The office estimated $55.33 billion in revenue for the current fiscal year, about $456.5 million higher than Treasury's own projections, with the differences mostly attributed to strong collections from the state's pass-through business alternative income tax in the weeks after Treasury issued its estimates. Stronger collections could ease the impact of the $1.2 billion structural deficit Gov. Phil Murphy has proposed for the upcoming fiscal year by expanding the state's reserves, which are spent down when state expenditures outpace state revenue. Legislators will receive another update on state revenue reflecting April tax filings in May. That update is expected to have positive news for lawmakers because markets were strong in the 2024 tax year despite the recent tumble fueled by President Trump's tariff policies. 'We're going to need those revenues. Any April surprises, we're going to need them for next year,' said Sen. Paul Sarlo (D-Bergen), the Senate budget chairman. Though the previous stock market hum may be a comfort to the state budget in the coming fiscal year, staggering drops across U.S. markets — including the S&P 500's worst quarter since Russia's full-scale invasion of Ukraine in February 2022 — could signal a potentially steep decline in income tax collections in the near future. 'Whenever the financial markets suffer, you can assume that there will be an echo in our revenue collections,' said Thomas Koenig, the legislative budget and finance officer. Uncertainty around federal funding — particularly on the $14 billion in federal dollars New Jersey receives for Medicaid — could also upend the state's budget. The future of Medicaid is particularly troubling not only because it sees an outsized share of federal spending but also because those federal funds are often paid to reimburse expenditures already made using state funds. The fact that many federal cuts have been issued on short notice or even retroactively compounds uncertainty at the state level, said Treasurer Liz Muoio. 'It is very difficult, A, to predict what's coming through because it's coming piecemeal, but then it's coming in and it's immediate,' she said. 'So when you are dealing with this on a reimbursement level, you've already spent that money, so the potential hit to our budget and our programs, I should say, could be drastic.' Legislators continued to express skepticism about some of the revenue raisers Murphy has proposed for the coming fiscal year, with particular resistance to a sales tax expansion that would tax services at laser tag arenas, swimming pools, and speedways, among a host of other recreational businesses. 'I want to make it clear to everybody who's listening to this. There's no desire from this Legislature to tax those services,' Sarlo said. 'I think they were a talking point by the governor. I think the governor realizes those will be eliminated.' Sarlo added he hopes revenue foregone by eliminating the expansion could be made up through governmental efficiencies or spending cuts. Public pans spending cuts, tax hikes in governor's budget plan Health benefits for public workers are also set to be a major cost driver in the coming fiscal year. The local part of the State Health Benefits Program is projected to see total cost increases of more than 20% for 2026, before even considering increases in the cost of health benefits. Municipalities have increasingly moved off the state plan amid steep cost increases in recent years, feeding a cycle where a smaller and increasingly less healthy pool of subscribers leads to cost increases that spur more departures. 'There is no doubt that the rate increases our plans have experienced in the past four years outpace what other, similar state and public employers are experiencing, especially in the SHBP local government section,' Muoio said. SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
