New Jersey’s tax revenues lagged at pandemic’s one-year mark, but officials have since expressed optimism

(The Center Square) – When the anniversary of COVID-19 shutdowns hit this March, the economic news across much of the country was encouraging, according to a recent study. A total of 29 states reported positive tax revenues in year-over-year comparisons.

New Jersey, however, was not one of those states – at least at that snapshot in time.

In more recent months, however, state officials say New Jersey is rebounding, citing stimulus spending and strong vaccine statistics as reasons behind the positive trajectory.

In its latest report, Pew Charitable Trusts examined states’ tax recovery efforts, based on available data through February. New Jersey ended the one-year mark in the red, collecting 1.1 percent less in taxes from the year prior.

But State Treasurer Elizabeth Maher Muoio said data has been more encouraging this spring. In particular, Maher Muoio cited “a remarkable two-month revenue surge” in April and May in testimony she provided to the Assembly Budget Committee on June 9.

“Following the pandemic recession of 2020, the FY 2021 baseline revenues will hit almost $44 billion, well above the FY 2019 pre-pandemic peak of $38.3 billion,” Maher Muoio wrote.

The positive figures, Maher Muoio said, have resulted in adjustments to the state treasury department’s short- and long-range projections.

“We are raising our forecast for FY 2021 by $4 billion, and our forecast for FY 2022 by $1.1 billion compared to the levels presented in the governor’s (Phil Murphy) budget message back in February,” Maher Muoio said.

New Jersey’s upbeat prognosis comes on the heels of an unprecedented year of wild swings in tax revenue statistics.

In March 2020, just as pandemic-induced shutdowns were going into effect, New Jersey still reported positive comparables, netting 1.9 percent more in tax revenues, compared to the year prior.

Mirroring figures seen in many states across the country, the steep drops followed in the subsequent months. In April 2020, New Jersey’s tax revenues plunged 44.1 percent and remained in negative double-digit territory the following month, with a 36.5 percent decline.

Last summer, as some of Murphy’s most stringent emergency orders were lifted, the state’s tax revenues began to rebound, though they remained in negative territory through early this year.

Throughout most of the rest of 2020, New Jersey’s tax revenue declines stayed in the upper single digits before falling to a 2.2 percent decline in December and early 2021 declines of 1.7 percent and 1.1 percent in January and February, respectively.

While most of the country was heavily impacted by tax declines in the early months of the pandemic, the statistics have varied from one state to the next as different measures were taken to try containing COVID-19 while preserving as much of the economy as possible.

According to Pew Charitable Trusts’ analysis, Idaho was in the best financial shape in February, with an 11-percent increase in tax revenue, compared to the year prior, while Utah followed behind with a reported increase of 8.7 percent.

The two states off the mainland reported the sharpest losses early this year, with Alaska reporting a 49.2 percent decline in February and Hawaii grappling with a 17.4 percent drop, year-over-year, the same month.

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