- Associated Press - Thursday, May 8, 2014

TRENTON, N.J. (AP) - New Jersey’s treasurer told lawmakers Thursday that Gov. Chris Christie’s administration is looking for ways to cut its budget between now and the end of June to fill an $800 million budget gap, not just delay payments due before then.

Andrew Sidamon-Eristoff appeared before the Senate’s budget committee for a second straight day of grilling by lawmakers who are antsy about how the state will fill that gap, which was discovered only in late April.

The treasurer reiterated something that both he and the Republican governor have said repeatedly since the dire financial report: All options are on the table.

But he said that he prefers not to rely solely on moving payments- such as pension contributions or hospital or school aid - due between now and June 30 into the fiscal year that starts on July 1, saying that “would not in fact be a budgetary solution, it would be a cash-management solution.”

Instead, Sidamon-Eristoff said, the state needs to cut spending either this year or next. He also said that revenue increases - in other words, tax or fee increases - are being considered, too.

State Senate Budget Committee Chairman Palu Sarlo warned that while moving payments might not seem like a big deal, it could have repercussions for the state. “By pushing payments into next year, credit rating agencies would not look favorably upon it,” he said.

Sidamon-Eristoff attributes the surprise shortfall to very wealthy people paying more in taxes at the end of 2012 to avoid higher federal payments after that and reducing tax liabilities going forward.

He said his staff’s economists are still trying to determine whether the lower revenue was a one-time blip or an ongoing issue for the state.

“There are some who would argue that we could look forward to a bounce,” the treasurer told lawmakers. “Right now, based upon our mutual experience I’m on the more cautious end of things.”

He said that until he gives further guidance later in May, lawmakers should assume that projected revenue for fiscal 2015 would be about $1.1 billion less than previously stated.

He said he would present changes later to both this year’s spending plan and the proposed one for the coming year, which currently calls for $34.1 billion in state government spending.

During the hearing, Sen. Nellie Pou, a Democrat from Paterson, pointed out that the number of New Jersey residents earning more than $500,000 a year has been growing, raising the possibility of bringing back a higher income tax rate on those top earners. It’s a move that the Democrat-controlled Legislature adopted each year from 2010 to 2012 and which the Republican governor vetoed each time.

The treasurer warned against such a move again this year.

He noted that just 400 high-earning households are responsible for nearly 10 percent of the state’s income tax revenue because of their very high incomes and New Jersey’s highly progressive tax structure. That very wealthy group could easily leave the state if their rates went up further, Sidamon-Eristoff said.

After all, he said, those are the sorts of taxpayers who found ways to reduce their tax liabilities this year, creating the sudden shortfall.

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