New Jersey’s current economic and tax revenue outlook is “looking positive and continues to improve,” even amid the backdrop of a pandemic that has lasted more than a year, State Treasurer Elizabeth Maher Muoio told state lawmakers.
Muoio said May 17 that “federal stimulus dollars have been a game-changer thanks to historically unprecedented levels of support for individuals and businesses.” In her testimony before the State Assembly’s Budget and Appropriations Committee, Muoio said her department tackled numerous challenges over the past 14 months as the coronavirus pandemic prompted Treasury to grapple with a two-fold question: “how do we keep State government fiscally sound and how do we maintain our Treasury operations?”
She credited numerous people and a lot of behind the scenes work for success on both fronts.
Positive Numbers Include Strong Housing Market
On the fiscal front, Muoio pointed to a variety of positive numbers. She said personal income rose by 6.1%—the highest national growth rate in a decade. This growth occurred despite flat wage growth as government benefits rose by what she described as “a remarkable 37%.”
American Rescue Plan stimulus payments that were delivered this spring prompted strong growth in retail sales in the U.S.—9.8% month-over-month this past March. Muoio said New Jersey data is expected to continue tracking national trends very closely.
The housing market in the Garden State is faring well, Muoio told committee members. Single-family home sales in March were 20.9% higher year-over-year. New listings in March 2021 were 8.5% higher and pending sales were 37.9% higher, year-over-year.
Labor Market Rebounding, Sales Tax Revenues Up
Muoio offered a variety of additional encouraging numbers:
- The labor market added 20,800 jobs in March and has recovered 53.7% of the jobs that were lost in March 2020 and April 2020.
- Sales tax revenues and revenues from realty transfer fees are “soaring.” Year-to-date sales tax collections are up 9% and realty transfer fee collections are up 26.3% over the same 10 months last year. April sales tax collections increase by 23% from pre-pandemic levels of April 2019.
- Final April income tax payments were about $2 billion below the normal, pre-COVID-19 level ($752 million in 2021 versus $1.772 billion in 2019), but Muoio attributed this drop to this year’s extension of the tax filing deadline to May 17. “We expect most of that difference to be made up by early June once the final returns are processed,” stated the treasury.
Light at the End of the Tunnel
Muoio said Treasury is confident that the overall revenue forecasts will increase by hundreds of millions of dollars due to the federally induced surge in consumer spending. “Our sales tax forecast, for example, is likely to rise by at least several hundred million in FY2021 alone,” she told lawmakers.
“We should all take encouragement in how far we’ve come in the past 12 months,” Muoio told the panel. “Thanks to the (Murphy) administration’s continued commitment to ensuring more and more New Jerseyans receive the vaccine, and the ongoing rollback of COVID-related restrictions, that light at the end of the tunnel continues to grow brighter.”
Treasury will release its full 2021 and 2022 revenue forecasts in early June after having time to process the gross income tax payments from the extended May 17 tax filing deadline.
Treasurer Touts Savings From Bond Refinancing
Muoio praised Treasury’s Department of Public Finance, which she said saved New Jersey taxpayers $384 million by refinancing Transportation Trust Fund Authority (TTFA) bonds, bringing the total net present value savings secured through strategic debt refinancing since January of 2018 to $1.06 billion.
“This transaction was an impressive win for the State and its taxpayers and a strong market affirmation of New Jersey’s credit,” Muoio said in an April 29 press statement.
Muoio said three tranches of previously issued TTFA bonds, totaling $1.47 billion were refinanced last month at a true interest cost of 2.59%, yielding the $384 million in savings. The bonds, which were issued in 2011 and 2012, are set to mature in June 2042.
Additionally, Treasury was able to successfully remarket approximately $147.5 million in TTFA floating rate bonds into a fixed-rate bond of just over 2%. The notes, which were originally issued by the authority in 2014, will still mature by 2034. Citigroup Global Markets served as Senior Managing Underwriter on both transactions.