By John Reitmeyer, The Record (Hackensack, NJ)
TRENTON, NJ—The same federal tax policy that Gov. Chris Christie is now blaming for New Jersey’s $807 million budget shortfall helped save his budget last year when he was facing another sizable gap, according to a Record analysis of income tax data.
Last year, budget documents show Christie boosted his income tax projection by $406 million, even as he was lowering the forecast for other state revenues by $812 million.
New Jersey would eventually do even better than Christie had thought once all April and May income tax revenue was counted, taking in a combined $600 million more than was collected over those two months the previous year, according to The Record’s analysis.
At the time, officials from the state Department of Treasury acknowledged that federal tax changes — namely higher rates for the wealthy — played a role in producing the windfall.
But this year, Christie and his administration are saying something entirely different about the same higher tax rates, which were enacted in early 2013 when President Barack Obama and Congress decided to end Bush-era cuts for the nation’s highest income earners to avoid the so-called fiscal cliff.
Now, it’s those higher federal rates that have brought on New Jersey’s $807 million budget shortfall and thrown the state’s $33 billion budget into disarray with just two months left in the current fiscal year, Christie told reporters at a State House news conference on Tuesday.
“What we’re being told initially is this is the effect of the change in the law … by the Obama administration and the Congress to increase tax rates on upper-income individuals,” he said. “Remember, it’s the top 1 percent in the state that pays 40 percent of the income tax, so when you start to make changes, they’re going to change their behavior.”
But Rep. Bill Pascrell (D-NJ) said Christie is taking the easy way out in blaming federal tax policy changes for all his budget problems. He should have been able to predict this year’s drop-off in income tax collections after enjoying last year’s huge gains, the congressman said.
“The expiration of the Bush tax cuts for the wealthy was no secret,” said Pascrell, a member of the House Ways and Means Committee, which is responsible for federal tax bills. “Governor Christie was not complaining about state revenues seeing a windfall of $400 million last year due to people shifting income from one year to another.”
“Any responsible budget would have accounted for this in the first place,” he said.
Christie’s press secretary, Michael Drewniak, called Pascrell’s comments “partisan-based, not reality-based.”
GOP Assemblyman Declan O’Scanlon said other states are experiencing similar problems as a result of the federal tax changes, under both Democratic and Republican administrations.