USA Today reports Outlook good for tax cuts by states.
Soaring state tax collections have created momentum for tax cuts in 2006, when most governors and legislators will face voters.But where's New Jersey in this list? Isn't our state revenue growing as well? If even California can get out of its hole, why can't we? Roberto at Dynamobuzz notes that we are already facing a $5 billion "shortfall" in next year's budget.
State and local revenue rose 7.2% in the first nine months of this year, the biggest jump since 1990, according to the U.S. Bureau of Economic Analysis. Spending is up 6%, the most since 2001.
Three years of strong revenue growth have left many states with large surpluses. New Mexico is looking at a $1 billion surplus. Florida expects more than $3 billion.
Even financially troubled California took in $3.4 billion more than it spent in the budget year that ended June 30 — the state's first surplus since 2000. California's deficit was erased by a 13.2% revenue increase.
What the politicians don't tell us is that the shortfall is really the difference between the bureaucrats' featherbedding, goldplating, moneygrabbing wishlist and the projected revenue from current taxes. According to the Office of Legislative Services analysis of the Governor's Budget in March 2005, revenues have been growing significantly the last couple of years: They estimated fiscal year 2005 at $27,384 million and FY 2006 at $27,613 million. The largest portion of that, the income tax, has grown 43% since 2003, yet cannot satisfy the politicians lust for cash.
What gets really interesting is a comparison to another state with a budget "shortfall." Carroll Andrew Morse of Rhode Island group blog Anchor Rising wrote this week about the state's $60 million problem, which is about 2% of their total budget. It also works out to about $56 per person in the state. Here in Jersey, the so-called shortfall is over 18% of FY 2006 projected state spending, or $575 for every single one of us (based on 2004 US Census estimated population).
We cannot tolerate a state government that plans to spend us into oblivion. Send a message to Trenton that the government's top line can not be allowed to grow, especially at the rate demanded by the tax receivers. This so-called budget gap must be resolved by reducing spending, not by increasing revenue.
Update: Enlighten New Jersey had a great piece on the budget the other day. It looks like they have better (i.e., more recent) numbers than I used, but the differences are marginal.