NJ state finances still suspect: report
Income taxes are up, but spending is up more, under Christie, says Matt Fabian
The Nelson A. Rockefeller Institute of Government’s tax collection data last week reported a "very strong" 4.3% 2q2012 growth (vs a year ago) in personal income taxes, and 2.7% growth in sales taxes, which has a lot of bond- and budget-watchers relieved, writes Matt Fabian in his Municipal Market Advisers newsletter.
But Fabian's "a lot more cautious." Don't compare this year's income to last year's income. Compare this year's income to this year's spending, he says.
See New Jersey, for example. The Rockefeller people "showed a solid 7% increase for the income tax, 1% for sales taxes." Meanwhile NJ state treasurer's office said summer tax collections "surged" -- see this brief report.
"But these numbers do not tell the proper story... Compared to the Governor’s budget, revenues are actually lagging by $100 million...
"Sales taxes are decidedly weaker as are income taxes, versus budget...
"This is because the Governor was highly optimistic in his FY13 revenue projections (in part to build support for a proposed tax cut), where total revenues were expected to be $2.2 billion, or 7.3% above the revised projected fiscal year 2012 level...
"Governor Chris Christie conditionally vetoed a bill Friday that would have required faster monthly reporting of state finances and establish penalties for anyone who leaks unauthorized state financial details. Specifically, the Governor proposed the Legislature include a $10,000 penalty for unauthorized dissemination of data... Democrats say the governor’s projections are too rosy, and Christie says the Democrats are overly pessimistic.
"In our opinion, this is not a sign of strength. Political tussles over disclosure rarely occur where fundamentals are improving. Analysts thus have even more reason to take the state’s 'good news' with a few grains of salt."