N.J.'s $31.7B budget again considered overly optimistic

Budget analysts and credit rating agencies continue to cast doubt on a "Jersey Comeback."

On Tuesday, Standard & Poor's became the third credit agency within days to warn that New Jersey's $31.7 billion budget, which went into effect July 1, is based on overly optimistic revenue projections. It depends on expected revenue growth of nearly 8 percent, more than twice the rate of the previous year.

The Christie administration itself is presenting a muted economic forecast to investors, a far cry from the governor's months of touting the state's economic "comeback," a slogan he recently abandoned.

While two other rating agencies, Moody's and Fitch, last week deemed the state's economic outlook "stable," S&P downgraded it to "negative." It cited the revenue assumptions; reliance on one-shot measures, such as the clean energy fund, to plug budget holes; and longer-term economic pressures.

Both Moody's and Fitch expressed concern that despite the state's relatively wealthy population and diverse economy, New Jersey has lagged behind the nation in recovery and its budget remains structurally unbalanced.

Christie is relying on big revenue gains to persuade the Democratic-led Legislature to approve a tax cut.

Although S&P did not downgrade the state's bond rating, it warned that it might.

The budget that closed on June 30 came up $253 million short, according to the legislature's top budget analyst, David Rosen. That could cut into the $648 million surplus projected for this year, especially if revenues continue to miss the mark.

The Assembly Budget Committee is to hear testimony Wednesday in Trenton. Treasurer Andrew P. Sidamon-Eristoff has not confirmed if he will testify.

With unemployment at 9.8 percent (higher than the national average of 8.1 percent), Democrats seized on another opportunity to lambaste the governor.

"Christie is the only one who believes his own tale of an economic comeback for New Jersey," said Assembly Budget Committee Chairman Vincent Prieto (D., Hudson).

"We all want a successful New Jersey, but if we're to achieve it, we need to work with reality, not the administration's fairy-tale budgeting."