Treasury: Overall Revenue Collections Continue Downward Trend in October

TRENTON — The Department of the Treasury reported that October revenue collections for the major taxes totaled $2.501 billion, down $137.4 million, or 5.2 percent below last October. Fiscal year-to-date, total collections of $8.108 billion are down $673.1 million, or 7.7 percent below the same four months last year.

October collections for the Gross Income Tax (GIT), which is dedicated to the Property Tax Relief Fund, totaled $971.4 million, down $177.1 million, or 15.4 percent below last October. However, Treasury noted that collections were artificially held down due to the fact that this October had only four weekly employer withholding payments whereas last October had five. After adjusting for this extra payment, the GIT actually declined by an estimated 1.2 percent rather than appearing to fall by 15.4 percent. This is a reversal of the same phenomenon noted last month for September collections. Year-to-date, GIT collections of $3.356 billion are down $474.4 million, or 12.4 percent.

The Sales and Use Tax, the largest General Fund revenue source, reported collections of $1.045 billion in October, an increase of $67.8 million, or 6.9 percent, which is the strongest growth the state has seen since February. Due to the one-month lag in Sales Tax collections, October revenue reflects September consumer activity. As noted in prior months, the various federal stimulus programs, including the Paycheck Protection Program loans, Individual Economic Impact Payments (stimulus checks), and expanded unemployment insurance benefits, pumped nearly $34 billion into the state’s economy through the end of July. As the federal stimulus effects fade and as concerns rise about increasing COVID-19 infections, Sales Tax growth may weaken.

The Corporation Business Tax (CBT), which is the second largest General Fund revenue source, reported $194.7 million in October, down 7.5 percent from the same month last year. Year-to-date through October, CBT collections of $978.9 million are down $164.2 million, or 14.4 percent below the same period last year.

Finally, Realty Transfer Fee collections grew for the first time since March, reporting $42.6 million, which is a 36.4 percent increase over last October. While this revenue typically lags economic activity by at least two months, an improving housing market is also consistent with the positive Sales Tax collections.

In early November, Governor Murphy issued a revised revenue certification, as required by the New Jersey Supreme Court before any general obligation bonds can be issued under the COVID-19 Emergency Bond Act. The overall revenue outlook is now $398 million above the amount certified in the Fiscal Year 2021 (FY21) Appropriations Act at the end of September 2020.

While revenues are tracking slightly ahead of September’s projections, Treasury still expects overall FY 2021 collections to remain weak into the winter months followed by a return to collections growth next spring and summer.

Please see the attached chart for monthly and yearly comparisons.