NJ Treasury: State Could Face Up to $10 Billion Shortfall as Result of COVID-19

The New Jersey Statehouse and Capitol Building In Trenton

New Jersey may be facing more than a $10 billion shortfall through the end of next fiscal year

 

(TRENTON) – The New Jersey Department of the Treasury today issued its first projections on the potential shortfall the State of New Jersey will be facing through the end of the next fiscal year as a result of the economic impact of the COVID-19 pandemic.

“Based on a wide variety of economic assumptions, the State of New Jersey may be looking at a combined $10.104 billion revenue shortfall over the remaining months of Fiscal Year 2020 through the end of Fiscal Year 2021,” said State Treasurer Elizabeth Maher Muoio.  “While there are many moving parts, what is clear is that this decline would be worse than the Great Recession. As we’ve said before, in order to address this unprecedented fiscal crisis, it will require extremely difficult decisions in the weeks and months ahead, which will necessitate a combination of critically needed borrowing, budget and appropriation adjustments, and more robust federal assistance.”

Preliminary revenue projections were also provided to legislative leaders and staff today in advance of a meeting with administration officials. Treasury also included preliminary projections in a new voluntary disclosure statement to bondholders this evening.

As noted in the voluntary disclosure statement, Treasury’s Office of Revenue and Economic Analysis (OREA) is estimating that FY 2020 budget revenues of $36.708 billion are projected to be $2.757 billion, or 7.0 percent, lower than what was projected at the time of the Governor’s Budget Message in February.  FY 2021 budget revenues of $33.815 are projected to be $7.346 billion, or 17.8 percent, lower than the Governor’s Budget Message.  These revenue projections are based upon a wide variety of economic assumptions, including the assumption that there will not be a resurgence of COVID-19 cases later this year. Additionally, the projections do not include any of the new tax policy proposals for Fiscal Year 2021 that were recommended in the Governor’s Budget Message.

Additional details can be found in the disclosure statement. Treasury also noted that further details will be provided when the administration issues a detailed budget report to the Legislature by May 22, as required under the recently enacted law (A-3918) that extended both the tax filing deadlines and the fiscal year.

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