It’s no surprise state revenues are taking a hit.
A press briefing today by Treasury Department head Elizabeth Muoio put the damage at about $10 billion.
In simple terms, that means that between now and the end of the next fiscal year, June 30, 2021, the state projects to reap $10 billion less than it normally would from its three major taxes.
For those interested in the details, projections are for revenue drops of almost $5 billion from the income tax, $2.7 billion from the sales tax and $1.7 billion from the corporate business tax.
Those figures add up to around $9.4 billion and reach $10 billion when assorted, smaller revenue streams are considered like the gas and realty taxes.
Keep in mind these are only projections; nobody truly knows, for instance, anything about income tax revenue in, say, January, 2021, because nobody truly knows how many people will have jobs at that
As Muoio said in what may have been an understatement, “We are in unprecedented territory.”
The governor occasionally has thrown around the figure of $30 billion to estimate the fiscal impact of COVID-19.
Phil Murphy explained at his own briefing today that the larger figure includes not only revenue loss, but spending needs related to the virus.
Most strikingly perhaps, Muoio said the fiscal update presented today does not include any of the new taxes the governor proposed in his budget address a few months ago.
That suggests that Murphy will not renew his push for the so-called millionaire’s tax, which is something the governor has wanted since his 2017 campaign.
Muoio and Murphy earlier in the day identified three ways to offset the revenue drop – borrowing, federal assistance and cuts, including furloughs.
Of the three, help from the feds continues to be questionable. The governor said in his briefing that members of both parties are coming around to the need for Washington to help state and local governments.
But there are some “closed minds,” Murphy said.
And in taking another swipe at Majority Leader Mitch McConnell, the governor said, “One of those with closed minds controls the Senate.”
Independent of help from the feds, Muoio spoke of almost $5.4 billion in various planned reductions. Technically, these include outright reductions, appropriations delayed and withdrawal of some of the
governor’s proposed spending priorities as identified in his budget proposal.
Additionally, Muoio said the state already has put about $1 billion of spending in reserve, applied the “rainy day fund” to general revenues and implemented a hiring freeze, excluding virus response needs
Both Murphy and Muoio boasted that state finances, if not rosy, were improving until the pandemic hit.
The governor mentioned such accomplishments as increased pension contributions, more money put into surplus and increased funding for such things as New Jersey Transit. All that is now at risk. But that’s not all.
Muoio admitted that without a sizable amount of federal help, things will get “significantly worse.”
And there’s even more bad news.
The treasurer acknowledged that the projections do not take into account the possibility of a second wave of the virus.
All this happened the same day the governor wished all a Happy Memorial Day weekend.