New Jersey’s tax revenue plummeted nearly 60 percent – or by $3.5 billion – between April 2019 and last month, Gov. Phil Murphy announced Wednesday, as the COVID-19 pandemic and recession ravage state budgets and economies.
Data released Wednesday afternoon from the state Treasury show steep drops in the level of tax revenues on which the state relies, such as the sales, income and corporate business taxes.
But Murphy pointed out a particularly large caveat: That the April 15 tax filing deadline was pushed back to July 15, as were federal tax deadlines.
Some of the revenue might be made up by then, the Treasury said.
Between April 2019 and this past month, the state’s gross income tax fell 72 percent, or $2.6 billion. Corporate business tax fell 59.5 percent – or $552 million – during that same time period. Sales tax, which makes up the largest chunk of the state’s revenue, was down 13.7 percent, or $124 million.
Taxes on casinos, which have remained closed since March 16, dropped 66 percent. The gas tax dropped 27 percent, or $35 million, as millions of residents choose to stay at home and avoid non-essential travel.
State law requires that if gas tax collections go down, then the gas tax must increase and vice versa.
Sales tax revenue fared better according to the report. The Treasury said that was because April data included numbers from March—before economic restrictions truly hit the state.
“Moreover, April numbers generally reflected a lot of economic activity from March, including the weeks before the systematic shuttering” of the state’s economy, Murphy said Wednesday at his daily COVID-19 daily press briefing in Trenton.
May’s numbers will show just how hard the sales tax revenue was hit in April.
“What would usually be a bellwether report for how we would finish the fiscal year would now be delayed,” the governor added. The numbers released in May will show the entire month of April, and Murphy said he expects “worse news.”
The state’s budget deadline was pushed back from June 30 to Sept. 30, and Murphy has already frozen $920 million out of concern that the money might not be there to support spending originally proposed for that final stretch of the year.
Murphy warned that the state is teetering on the edge of “financial disaster” in a matter of weeks, as the COVID-19 pandemic and virtual shutdown in New Jersey meant to stop the spread of the virus decimate between $20 billion and $30 billion of state revenue.
He wants much of that money to be made up for with federal aid, and by borrowing at least $5 billion through a Federal Reserve program.
Senate President Stephen Sweeney, D-3rd District, has shown wariness of that plan, and has instead floated furloughing up to 100,000 state and local workers, which he argued could save the state roughly $750 million.