David Drescher, chief of OLS’s revenue, finance, and appropriations section, told lawmakers that the state saw an “unprecedented April surge” in revenues over levels that are already historically elevated.
“Accordingly, we’ve increased our [gross income tax] forecast by $3.6 billion over the two years. This will leave the state considerably better positioned than we originally envisioned, some $6.9 billion or 7.7% over the executive’s forecast of just a few months ago,” Drescher said, according to NJBIZ.
He attributed the boon to financial markets and the state’s red-hot economy, although Drescher predicted the upward trend would not last as the Federal Reserve continues to raise interest rates in an effort to cool down inflation.
Democrat Craig Coughlin, the speaker of the New Jersey General Assembly, said his state needs tax relief, and he would push for the largest tax relief program in New Jersey’s history as part of this year’s budget.
“The revenue update shared with the Legislature today demonstrates a surplus of billions of dollars beyond what was anticipated in the Governor’s proposed budget,” Coughlin said. “This welcome news is made possible because we have made the difficult choices over the last five years to place New Jersey back on the road to fiscal health, and we will continue to make responsible decisions in this year’s budget.”
Murphy, a Democrat, has proposed handing out $900 million in property tax relief, but Republicans in the state legislature are pushing to hand back a figure of more than $4 billion to taxpayers in the Garden State.
“When New Jersey families are struggling with soaring prices and inflation, we believe Gov. Murphy must commit to giving back these overcollections immediately to families that are suffering today,” said New Jersey Senate Minority Leader Steven Oroho, a Republican.
During the height of the pandemic, the New Jersey economy and the economy of the United States contracted quickly as restaurants and businesses were forced to close their doors.
President Joe Biden passed a massive spending bill last year that includes stimulus checks after former President Donald Trump had already infused the economy with two other stimulus payouts before the Democratic legislation.
As people emerged from the pandemic flush with cash and eager to venture from their homes, they began spending their money, causing the country’s gross domestic product growth to explode.
An unwelcome result of the hot economy was that inflation has gone through the roof, with consumer prices increasing 8.3% in the 12 months ending in April — near the fastest pace in four decades.
Now, the Fed is hoping to curb inflation by slowing down spending by hiking its interest rate targets and undoing its unprecedentedly loose monetary policy.