This week, the legislature will begin to consider Governor Christie’s proposed FY 2012 budget. This is traditionally the time when the State Treasurer and the Legislative Budget and Finance Officer (LBFO) present their assessment of the state’s economy and what that means in terms of revenue collections for this year and the next. Today, State Treasurer Andrew Sidamon-Eristoff and LBFO David Rosen addressed the Senate Budget and Appropriations Committee; tomorrow, they will address the Assembly Budget Committee. Both of these full-day budget sessions traditionally are broadcast online.
The seven taxes in the table below account for eighty percent or more of the revenue collected by the state. It compares actual revenues collected in FY 2008 and FY 2010 to the amounts Governor Christie is using as a basis for his FY 2012 proposed budget. In an earlier blog, Taking the Long View, we outlined why it is appropriate to consider state collections and spending over a longer period of time than the year-to-year manner of the Governor’s annual budget. Suffice it to say, these are unprecedented times and we need a clear understanding of the situation.
In FY 2008, the state collected and spent more money than in any other year. Then the recession hit and revenues dropped precipitously. The FY 2008 and FY 2010 tax rates and structures are roughly comparable in those two years, i.e. no major increases or decreases were enacted in FY 2008 or FY 2010. Governor Christie is proposing a budget that also includes no significant rate changes.
The one rate change impact would be from the calendar year 2009 income rate increases on taxpayers earning more than $400,000. This likely had a residual effect on income tax collections in FY 2010. This is because higher income taxpayers tend to settle their tax bills in April and in 2009 their tax bills would have been higher (so additional calendar year 2009 taxes that are due would have been paid in FY 2010).