FISCALYEAR 2021-2022 - New Jersey Legislature
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FISCAL YEAR 2021-2022
A N A LY S I S O F T H E N E W J E R S E Y B U D G E T
TAX AND REVENUE
OUTLOOK
Prepared by the
New Jersey Legislature
c e ooff L E G I S L AT I V E S E R V I C E S
O f f iice
April 2021NEW JERSEY STATE LEGISLATURE
S E N AT E B U D G E T A N D A P P R O P R I AT I O N S C O M M I T T E E
Paul A. Sarlo (D), 36th District (Parts of Bergen and Passaic), Chair
Sandra B. Cunningham (D), 31st District (Part of Hudson), Vice-Chair
Dawn Marie Addiego (D), 8th District (Parts of Atlantic, Burlington and Camden)
Nilsa Cruz-Perez (D), 5th District (Parts of Camden and Gloucester)
Patrick J. Diegnan, Jr. (D), 18th District (Part of Middlesex)
Linda R. Greenstein (D), 14th District (Parts of Mercer and Middlesex)
Declan J. O’Scanlon, Jr. (R), 13th District (Part of Monmouth)
Steven V. Oroho (R), 24th District (All of Sussex, and parts of Morris and Warren)
M. Teresa Ruiz (D), 29th District (Part of Essex)
Troy Singleton (D), 7th District (Part of Burlington)
Michael L. Testa, Jr. (R), 1st District (All of Cape May, parts of Atlantic and Cumberland)
Samuel D. Thompson (R), 12th District (Parts of Burlington, Middlesex, Monmouth and Ocean)
G E N E R A L A S S E M B LY B U D G E T C O M M I T T E E
Eliana Pintor Marin (D), 29th District (Part of Essex), Chair
John J. Burzichelli (D), 3rd District (All of Salem, parts of Cumberland and Gloucester), Vice-Chair
Daniel R. Benson (D), 14th District (Parts of Mercer and Middlesex)
Robert D. Clifton (R), 12th District (Parts of Burlington, Middlesex, Monmouth and Ocean)
Serena DiMaso (R), 13th District (Part of Monmouth)
Gordon M. Johnson (D), 37th District (Part of Bergen)
John F. McKeon (D), 27th District (Parts of Essex and Morris)
Nancy F. Muñoz (R), 21st District (Parts of Morris, Somerset and Union)
Carol A. Murphy (D), 7th District (Part of Burlington)
Verlina Reynolds-Jackson (D), 15th District (Parts of Hunterdon and Mercer)
William W. Spearman (D), 5th District (Parts of Camden and Gloucester)
Benjie E. Wimberly (D), 35th District (Parts of Bergen and Passaic)
Harold J. “Hal” Wirths (R), 24th District (All of Sussex, and parts of Morris and Warren)
O F F I C E O F L E G I S L AT I V E S E R V I C E S
Thomas Koenig, Legislative Budget and Finance Officer
Vacant, Assistant Legislative Budget and Finance Officer
Marvin W. Jiggetts, Director, Central Staff
David Drescher, Section Chief, Revenue, Finance and Appropriations Section
This report was prepared by the Revenue, Finance and Appropriations Section of the Office of Legislative Services under
the direction of the Legislative Budget and Finance Officer. The primary author was Jordan M. DiGiovanni.
Contributors include Scott A. Brodsky, Parag Shende, and Joseph A. Pezzulo.
Questions or comments may be directed to the OLS Revenue, Finance and Appropriations Section
(Tel: 609-847-3835) or the Legislative Budget and Finance Office (Tel: 609-847-3105).The Fiscal Year 2021 and Fiscal Year 2022
Office of Legislative Services
Tax and Revenue Outlook
Introduction
T
he Office of Legislative Services (OLS) has prepared this report to assist the members of the
Senate Budget and Appropriations Committee and the Assembly Budget Committee as they
develop the FY 2022 annual appropriations bill. The OLS revenue estimates rely on a review of
current State revenue collections, revisions to State and federal laws, historical revenue collection
patterns, and a variety of economic data and forecasts, as well as professional judgment.
The OLS projects that combined FY 2021 and FY 2022 revenues will be $553.2 million more than the
estimates in the FY 2022 Governor's Budget Recommendation:
• For FY 2021, the OLS revenue estimates are $428.3 million above the Executive budget estimates.
• For FY 2022, the OLS revenue estimates are $124.9 million above the Executive budget estimates.
Contents Page
Introduction ……………………………………………………………... 11
Executive’s Fiscal Year 2021 and Fiscal Year 2022 Revenue Estimates ... 12
OLS Fiscal Year 2021 and Fiscal Year 2022 Revenue Estimates ………... 13
Gross Income Tax .................................................................................... 14
Sales Tax ................................................................................................... 17
Corporation Business Tax ........................................................................ 19
Corporation Business Tax – Banking and Financial Corporations .…..... 11
Petroleum Products Gross Receipts Tax and Motor Fuels Tax ............. 12
Cigarette Tax ……………........................................................................ 13
Realty Transfer Fees ……………………………………………………. 14
Transfer Inheritance Tax ……………………………………………….. 15
Insurance Premiums Tax ……………………………………………….. 16
Casino Revenue Fund …………………………………………………... 17
Annual Undesignated Fund Balances – Year End ……………................ 18
Appendices:
Detailed Fiscal Year 2021 Revenue Estimates ..................................... A-2
Detailed Fiscal Year 2022 Revenue Estimates ..................................... A-3
Pass-Through Business Alternative Income Tax …………………..... A-4
Paycheck Protection Program Loans to New Jersey Businesses ….. A-5
1OLS Tax and Revenue Outlook FY 2021-2022
Executive's Fiscal Year 2021 and Fiscal Year 2022 Revenue Estimates
($ Millions)
Excutive's Executive's
Executive's
FY 2021 FY 2021 Dollar Percent Dollar Percent
FY 2022
Original Revised Change Change Change Change
Estimate
Certification Estimate
Gross Income Tax $15,015.6 $15,278.9 $263.3 1.8% $16,257.5 $978.6 6.4%
Sales Tax* 9,869.1 10,622.8 753.7 7.6% 10,909.9 287.1 2.7%
Corporation Business Tax* 3,246.6 3,438.5 191.9 5.9% 3,721.3 282.8 8.2%
CBT Banking & Financial Corporations 160.0 78.2 (81.8) -51.1% 60.0 (18.2) -23.3%
Petroleum Products Gross Receipts Tax 1,635.1 1,621.6 (13.5) -0.8% 1,789.2 167.6 10.3%
Less PPGR Capital Reserves (791.7) (805.6) (13.9) 1.8% (882.5) (76.9) 9.5%
Inheritance Taxes 368.7 527.7 159.0 43.1% 468.0 (59.7) -11.3%
Insurance Premiums Tax 555.0 502.3 (52.7) -9.5% 605.0 102.7 20.4%
Realty Transfer Fee 361.4 464.5 103.1 28.5% 408.0 (56.5) -12.2%
Alcoholic Beverage Excise 120.2 146.1 25.9 21.5% 130.0 (16.1) -11.0%
Other Revenues* 10,434.9 12,322.1 1,887.2 18.1% 7,394.7 (4,927.4) -40.0%
Grand Total, All Funds $40,974.9 $44,197.1 $3,222.2 7.9% $40,861.1 ($3,336.0) -7.5%
See appendices for additional detail. Numbers may not add due to rounding.
* Sales and corporate energy revenues are in Other Revenues.
Fiscal Year 2021 Highlights:
• Revised estimates by the Executive for total revenues are up $3.222 billion from the
level certified in the FY 2021 Appropriations Act (September 2020).
• The estimate for the gross income tax is up $263.3 million.
• The estimate for the sales tax is up $753.7 million.
• The estimate for the corporation business tax is up $191.9 million.
• Other revenues are up $1.887 billion and include an estimate for the Pass-Through
Business Alternative Income Tax of $1.919 billion.
Fiscal Year 2022 Highlights:
• The gross income tax is projected to grow by $978.6 million or 6.4 percent.
• The sales tax is projected to grow by $287.1 million or 2.7 percent.
• The corporation business tax is projected to grow by $282.8 million or 8.2 percent.
• Other revenues are projected to decrease by $4.927 billion, as $4.5 billion in COVID-19
bond proceeds booked in FY 2021 will not reoccur in FY 2022.
2OLS Tax and Revenue Outlook FY 2021-2022
OLS Fiscal Year 2021 and Fiscal Year 2022 Revenue Estimates
($ Millions)
Executive's
OLS FY 2021 OLS FY 2022
FY 2021 Dollar Percent Dollar Percent
Revised Revenue
Original Change Change Change Change
Estimate Estimate
Certification
Gross Income Tax $15,015.6 $15,700.0 $684.4 4.6% $16,287.6 $587.6 3.7%
Sales Tax* 9,869.1 10,746.4 877.3 8.9% 11,070.0 323.6 3.0%
Corporation Business Tax* 3,246.6 3,408.8 162.2 5.0% 3,696.4 287.6 8.4%
CBT Banking & Financial Corporations 160.0 78.8 (81.2) -50.8% 68.3 (10.5) -13.3%
Petroleum Products Gross Receipts Tax 1,635.1 1,588.1 (47.0) -2.9% 1,677.8 89.7 5.6%
Less PPGR Capital Reserves (791.7) (762.0) 29.7 -3.8% (754.2) 7.8 -1.0%
Inheritance Taxes 368.7 492.1 123.4 33.5% 456.3 (35.8) -7.3%
Insurance Premiums Tax 555.0 473.1 (81.9) -14.8% 584.4 111.3 23.5%
Realty Transfer Fee 361.4 460.5 99.1 27.4% 409.7 (50.8) -11.0%
Alcoholic Beverage Excise 120.2 141.7 21.5 17.9% 127.5 (14.2) -10.0%
Other Revenues* 10,434.9 12,298.0 1,863.1 17.9% 7,362.2 (4,935.8) -40.1%
Grand Total, All Funds $40,974.9 $44,625.5 $3,650.6 8.9% $40,986.0 ($3,639.5) -8.2%
See appendices for additional detail. Numbers may not add due to rounding.
* Sales and corporate energy revenues are in Other Revenues.
Fiscal Year 2021 Highlights:
• The OLS estimate is $3.651 billion above the level certified in the FY 2021 Appropriations
Act (September 2020), and $428.3 million above the Executive’s revised estimate for
FY 2021.
• The estimate for the gross income tax $684.4 million above the certified estimate, and
$421.1 million above the Executive’s revised estimate.
• The estimate for the sales tax is $877.3 million above the certified estimate, and $123.6
million above the Executive’s revised estimate.
• The estimate for the corporation business tax is $162.2 million higher than the certified
estimate, and $29.7 million below the Executive’s revised estimate.
Fiscal Year 2022 Highlights:
• The OLS estimate is $124.9 million above the Executive’s estimate for FY 2022.
• The estimate for the gross income tax is $30.1 million above the Executive’s.
• The estimate for the sales tax is $160.1 million above the Executive’s.
• The estimate for the corporation business tax is $24.9 million below the Executive’s.
• The OLS estimates assume lower overall growth in FY 2022 than the Executive;
however, the OLS is forecasting from a higher base in FY 2021.
3OLS Tax and Revenue Outlook FY 2021-2022
Note: Unless otherwise referenced, all graphs display actual or OLS estimated revenues.
Gross Income Tax
The gross income tax (GIT) is the State’s largest revenue, accounting for roughly 35.2 percent of the
projected revenues for FY 2021. A large part of the growth in recent years was attributable to non-
recurring, one-time effects from changes in the federal tax code. In addition to changes in federal law,
the State’s gross income tax statutes have been modified over the same time period, including, but
not limited to, two increases in the marginal tax rates imposed on income in excess of $5.0 million (CY
2018) and income between $1.0 million and $5.0 million (CY 2020), enhancements to the State’s Earned
Income Tax Credit program (CY 2018 and CY 2020), an increase in the deduction available to veterans
(CY 2019), the establishment of a Child and Dependent Care Tax Credit (CY 2018), an increase in the
State’s property tax deduction (CY 2018), and military combat pay exemptions (CY 2020).
The COVID-19 pandemic challenged the State’s economy from its onset, while also puzzling revenue
forecasters and economists. Despite unemployment in this State surging from an average of 3.4
percent in CY 2019 to an average of 9.8 percent in CY 2020, with the highest monthly unemployment
rates reaching 16.6 percent in April 2020 and 16.5 percent in May 2020, tax revenue from wage income
never buckled. As mentioned by the Executive in the FY 2022 Budget-in-Brief, job losses were
concentrated among low-wage workers, and those making under $50,000 per year only account for
about eight percent of withholding collections.
Fiscal policy at both the federal and State levels was enacted to reduce the economic impacts of the
COVID-19 pandemic. For example, the federal Paycheck Protection Program, a part of the federal
4OLS Tax and Revenue Outlook FY 2021-2022
Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), provided financial assistance in the
form of forgivable loans to businesses to retain workers, helping to mitigate the impact to
withholdings. Additionally, the State extended last year’s April 15th GIT tax filing deadline to July 15th,
which provided people and businesses with additional flexibility.
As is true in most years, GIT collections rely, at least in part, on how the minority of taxpayers who pay
the majority of the GIT fared during the prior year. Typically, high-income taxpayers derive a larger
share of their annual income from more volatile sources than salaries and wages, such as capital gains.
As a result, they pay the bulk of April final payments and quarterly estimated payments. On March 9,
2020, Wall Street suffered its worst day since the start of the Great Recession in 2008, as the Dow
Jones Industrial Average, NASDAQ Composite, and S&P 500 all posted historical losses. However, the
Dow Jones Industrial Average and S&P 500 recovered and closed at record highs at the end of the
year, with the NASDAQ Composite close behind.
The degree of uncertainty this fiscal year and next is unusually high, given ongoing impacts of the
pandemic-induced recession on New Jersey’s economy. Further complicating revenue forecasts is the
recent extension of the filing deadline for individual taxpayers. Specifically, those final returns and
payments that were due on April 15, 2021, are now due by May 17, 2021. Thus, the Executive and OLS
will have to wait an additional month to evaluate those important payments.
Fiscal Year 2021
GIT revenue totaled $9.282 billion through the end of February, which was $246.7 million, or 2.6
percent below the prior fiscal year. This decline is primarily because of a shift in timing of taxpayer
refunds from FY 2020 to FY 2021, due to the extension of the tax year 2019 gross income tax return
filing and payment deadline. Year-to-date refunds remained up by a significant $433.6 million or 64.0
percent, withholdings were up $341.3 million or 4.6 percent, final payments were down $64.0 million
or 10.2 percent, and estimated payments were down $96.6 million or 4.8 percent. Withholding
collections benefited from the incorporation of a higher marginal rate imposed on income in excess
of $1 million and below $5 million.
For FY 2021, the Executive has revised its GIT estimate upward by $263.3 million from the amount
certified in September, to $15.279 billion, a 6.0 percent decline from FY 2020. The Executive’s estimate
for FY 2021 anticipates $514.0 million from the extension of the increased marginal income tax rate on
income between $1.0 million and $5.0 million. Two specific policy changes are expected to reduce GIT
revenue in FY 2021: 1) the Pass-Through Business Alternative Income Tax (PT-BAIT); and 2) the tax
benefits related to the federal Paycheck Protection Program. The Executive anticipates that PT-BAIT
tax credits will reduce FY 2021 revenues under the GIT by $853.0 million. The OLS agrees with the
Executive’s estimate. Likewise, recipients of Paycheck Protection Program loans are allowed to
deduct business expenses that were paid with the tax-exempt loan proceeds. This is expected to
reduce revenues by $150.0 million to $175.0 million in FY 2021.
The FY 2021 OLS estimate of $15.7 billion is $421.1 million above the Executive’s estimate, and a decline
of 3.4 percent from actual FY 2020 collections. As is the case with the Executive’s estimate, the OLS
estimates fall below the FY 2020 level because of anticipated refunds from PT-BAIT credits and
Paycheck Protection Program deductions. The OLS does not have the Executive’s exact component
assumptions for FY 2021, but the OLS believes the main difference lies with withholding projections
5OLS Tax and Revenue Outlook FY 2021-2022
for the remainder of the fiscal year. February withholding collections, as well as preliminary March
collections, have been exceptionally strong, so the OLS is likely projecting a higher growth rate.
Withholdings during these months may have benefited from the payout of Wall Street bonuses, with
the average bonus up 10.0 percent, according to the New York State Comptroller.
Fiscal Year 2022
The Executive’s FY 2022 GIT estimate includes the continuous impact of the PT-BAIT credits, as well as
two new policy initiatives. First, the Executive is proposing to increase and expand eligibility for the
Child and Dependent Care Credit, which would reduce FY 2022 GIT revenue by an additional $17.2
million. Second, the Executive is also proposing to expand the Earned Income Tax Credit to certain
senior taxpayers, which would reduce FY 2022 GIT revenue by $8.2 million. Overall, the Executive
projects 6.4 percent growth for the GIT in FY 2022, yielding $16.257 billion.
For purposes of this analysis, OLS accepts the Executive’s estimates for the Child and Dependent Care
Credit increase and extension and the Earned Income Tax Credit expansion, which has been the
historical precedent set by OLS when policy initiatives are included as part of the Executive’s original
budget proposal. The OLS estimate further adjusts FY 2022 collections downward by $100 million to
reflect expansions to the corresponding federal programs that flow through to the State through the
operation of our own laws. However, the OLS projects a lower growth rate of 3.7 percent off the OLS’
higher FY 2021 base, yielding $16.288 billion, or $30.1 million less than the Executive. The OLS factored
in an $80.0 million reduction to its FY 2022 estimate for the potential impact of Paycheck Protection
Program deductions next fiscal year.
The OLS’ GIT estimate for FY 2022 assumes modest growth in withholding receipts at a rate of 2.2
percent, as the labor market continues to recover after the pandemic. Withholding accounts for about
three-quarters of total GIT collections each year, so this assumption is the primary driver of the OLS’
overall forecast for FY 2022. Estimated payments and final payments are projected to grow between
2.5 to 3.0 percent, while refunds are expected to decline as some refund activity from FY 2020 slipped
into FY 2021, inflating refunds for the fiscal year, and the impact of the Paycheck Protection Program
deductions falls off.
6OLS Tax and Revenue Outlook FY 2021-2022
Sales and Use Tax
In Spring 2020, sales and use tax revenues plunged to all-time lows. Specifically, May 2020 revenue,
which reflected economic activity from April 2020, fell by 29.0 percent. This marked the largest
percentage decline in sales tax revenue since the Great Recession, when June 2009 sales tax revenue
fell by 18.4 percent. The impact of COVID-19 containment measures on retail sales was apparent.
Consumer spending also decreased due to a combination of factors, including fewer opportunities to
purchase taxable goods and services, decisions by consumers to save income instead of spending it,
and many consumers shifting spending towards essential goods and services due to the COVID-19
pandemic. Many of those goods and services, such as groceries, are not subject to the State’s sales
tax.
By the start of FY 2021, sales tax collections benefited from the gradual easing of restrictive health and
safety measures, increased expenditures by consumers of previous federal income support payments,
and a shift in consumer spending from often non-taxable services to frequently taxable goods.
Additionally, sales tax collections were likely buoyed by the State’s strong real estate market and the
necessity to furnish and improve real property, and payments collected from remote sellers as
consumers shifted to online shopping.
7OLS Tax and Revenue Outlook FY 2021-2022
FY 2021
Through February, the sales and use tax has generated $6.379 billion in revenue for the State, up $268.1
million or 4.4 percent compared to the prior fiscal year. Initial expectations for FY 2021 sales tax
revenue were grim after the record declines posted last Spring. The Executive’s original revenue
certification from the FY 2021 Appropriations Act anticipated sales tax revenue growth in FY 2021 of
only 1.0 percent.
The Executive revised its estimate for FY 2021 to $10.623 billion, an increase of 8.7 percent over FY
2020. The OLS FY 2021 estimate of $10.746 billion is $123.6 million higher than the Executive’s revised
estimate and 10.0 percent above actual FY 2020 collections. The OLS notes that the Executive’s
estimate was made prior to the enactment of the federal American Rescue Plan Act of 2021, which
extended unemployment benefits and provided additional stimulus checks. For the remainder of the
fiscal year, sales tax collections are projected to experience double-digit growth off a lower FY 2020
base.
FY 2022
The Executive’s FY 2022 forecast of $10.910 billion is 2.7 percent above its FY 2021 estimate. The OLS
estimate for FY 2022 of $11.070 billion assumes 3.0 percent growth off of its higher FY 2021 estimate.
As noted by the Executive, consumer spending is expected to expand in FY 2022, but at a more modest
pace. The absence of additional federal assistance will likely reduce consumer expenditures. Lastly,
pandemic-induced shifts in consumer expenditures to taxable goods could slowly revert to pre-
pandemic norms, further dampening potential growth in FY 2022. On the opposite side of the
spectrum, the revitalization of the State’s tourism industry could boost sales tax revenue during the
summer months.
8OLS Tax and Revenue Outlook FY 2021-2022
Corporation Business Tax
The corporation business tax (CBT) is among the most difficult revenues to project, in part because of
the lack of a clear correlation between corporate profits and CBT collections. Furthermore, annual
collections typically include both payments and refunds from multiple tax years. Business incentive
tax credits, which can be delayed, transferred to other taxpayers and applied to other taxes, or
adjusted for tax planning purposes, also confound revenue forecasts.
In addition to the inherent difficulties with forecasting this tax, extensive policy changes at the State
and federal level in recent years have transformed the tax base and rate multiple times, contributing
to a dramatic increase in collections in FY 2019. Shortly following this spike, the economic fallout from
the COVID-19 pandemic and ensuing recession severely dampened expectations for revenue
collections. Shocks in global supply chains caused by shutdowns disrupted production and
manufacturing operations. Social distancing restrictions resulted in temporary closures as businesses
had to adapt. Mass layoffs resulted in a significant spike in unemployment, as businesses closed weeks
into the COVID-19 pandemic.
Fiscal policy at both the federal and State levels was enacted to mitigate the economic impacts of the
COVID-19 pandemic. For example, the federal Paycheck Protection Program, a part of the federal
Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), provided financial assistance in the
form of forgivable loans to businesses to retain workers. The State utilized grant and loan programs,
such as the Small Business Emergency Grant Program, to support New Jersey small businesses and
nonprofits impacted by the COVID-19 pandemic and subsequent State public health responses.
Additionally, the State extended last year’s April 15th CBT tax filing deadline to July 15th.
FY 2021
Year-to-date collections through February totaled $2.060 billion, a 0.5 percent increase over FY 2020.
Gross payments were down $65.9 million primarily due to a decrease in estimated payments and final
9OLS Tax and Revenue Outlook FY 2021-2022
payments. CBT refunds also declined by $76.2 million, helping to position collections into positive
territory. Because of the filing extension last year, payments and refunds that would have otherwise
been processed in April were spread throughout the tail end of FY 2020 and likely crossed into FY 2021.
FY 2021 CBT receipts also have benefited from changes to the CBT surtax. CBT taxpayers with New
Jersey allocated taxable net income in excess of one million dollars are required to pay a 1.5 percent
surtax on their income. The enactment of P.L.2020, c.95, in September 2020, retroactively increased
the surtax from 1.5 percent to 2.5 percent effective January 1, 2020. Since the surtax increase was
retroactive, payments that would have otherwise been made in FY 2020 are accounted for in FY 2021
instead. The Executive’s forecast anticipates an additional $261.0 million in CBT revenue from the
change to the surtax, and the OLS concurs.
Identical to the GIT, two specific policy changes are expected to reduce CBT revenue in FY 2021: 1) the
Pass-Through Business Alternative Income Tax (PT-BAIT); and 2) the tax benefits related to the
Paycheck Protection Program. The Executive anticipates that PT-BAIT tax credits will reduce FY 2021
revenues under the CBT by $460.0 million. The OLS agrees with the Executive’s estimate. Likewise,
recipients of Paycheck Protection Program loans are allowed to deduct business expenses that were
paid with the tax-exempt loan proceeds. This is expected to reduce revenues by $250.0 million to
$300.0 million in FY 2021.
The Executive’s revised estimate increases the certified FY 2021 projection of $3.247 billion to $3.439
billion, a 9.7 percent decrease from FY 2020. The OLS estimate of $3.416 billion is slightly below the
Executive’s estimate for FY 2021. Despite being ahead for the year, CBT revenue is expected to decline
once annual returns are filed and the PT-BAIT refunds are processed.
FY 2022
The economic outlook for businesses throughout CY 2021, which impacts FY 2022 collections, has
improved over the past few months. Vaccine development and distribution has been underway and
continues to increase in capacity. Industries impacted the hardest by the COVID-19 pandemic are
expected to recover, but the permanent economic damage is still unknown. Pent-up demand could
be a lifeline for some businesses most affected by pandemic restrictions. In February 2021, the
Congressional Budget Office forecasted real gross domestic product to return to a pre-pandemic level
by mid-2021.
For FY 2022, the Executive projects $3.721 billion, an increase of 8.2 percent from FY 2021. The OLS
estimate of $3.696 billion in FY 2022 anticipates near identical growth, but off a lower FY 2021 base.
The OLS notes that the temporary surtax will remain at 2.5 percent for the entirety of FY 2022. The
impact of PT-BAIT refunds on CBT revenues will be recurring, but may change in magnitude as more
data become available. The impact of Paycheck Protection Program exemptions is expected to affect
FY 2022; however, the OLS believes the impact will fall below FY 2021 amounts.
10OLS Tax and Revenue Outlook FY 2021-2022
CBT on Banking and Financial Corporations
The corporation business tax on banking and financial corporations raises a fraction of the revenue
of the “regular” CBT. This tax experienced tremendous growth in FY 2019 when collections reached
$292.4 million, the most revenue generated over the past decade. CBT B&F receipts at the time
benefited from the State surtax of 2.5 percent, the State’s shift to combined reporting, and federal tax
law changes that affected the State’s tax base.
Most of the revenue from this tax is received as quarterly estimated payments, which occur in April,
June, September, and December/January for most taxpayers. Given the timing of these payments,
estimated payments received during a calendar year often parallel total collections for the fiscal year.
As displayed in the table above, net revenue collections from estimated payment months in CY 2020
totaled $89.7 million, a severe decline compared to the past few years.
In FY 2020, revenues of $283.0 million remained near FY 2019 levels; however, FY 2020 benefited from
a non-recurring settlement payment of $130 million. If the non-recurring settlement payment is
factored out, FY 2020 collections drop to $153.0 million, the second lowest amount collected since FY
2012. Year-to-date revenues through February totaled $47.1 million, a drop of 79.8 percent compared
to FY 2020. The Executive revised its FY 2021 forecast from $160.0 million to $78.2 million, a decrease
of $81.8 million. For FY 2022, the Executive projects revenue to decline further to $60.0 million, a
decrease of 23.3 percent from FY 2021.
The OLS is slightly above the Executive for FY 2021 and FY 2022. The OLS estimates that FY 2021 receipts
will total approximately $78.8 million, a decrease of 72.2 percent below FY 2020. For FY 2022, the OLS
is projecting $68.3 million, $8.3 million more than the Executive’s projection. The OLS believes that
combined reporting may be shifting some taxpayers under the regular CBT, thereby reducing
collections from this tax.
11OLS Tax and Revenue Outlook FY 2021-2022
Petroleum Products Gross Receipts Tax
Millions of Dollars
FY 2020 FY 2021 FY 2021 FY 2022
% Change % Change % Change
Actual Certified Revised Estimate
PPGRT Total $1,338.4 $1,635.1 22.2% $1,588.1 18.7% $1,677.8 5.6%
Capital Reserves -$574.5 -$791.7 -$762.0 -$754.2
Adjusted PPGRT $763.9 $843.4 10.4% $826.1 8.1% $923.6 11.8%
Note: The FY 2021 revised and FY 2022 estimate are based on the OLS forecast.
Petroleum Products Gross Receipts Tax
Since the enactment of P.L.2016, c.57, the petroleum products gross receipts tax (PPGRT) rate has
been increased twice through Executive action. Under that law, a statutory formula determines how
much annual revenue the PPGRT is to generate from taxation of highway fuels, and provides for an
adjustment of the PPGRT rate in order to collect that amount, known as the highway fuels revenue
target. The first adjustment occurred on October 1, 2018, following two years of collections below
targets. A second adjustment was made on October 1, 2020, after the COVID-19 pandemic resulted in
a dramatic reduction in fuel consumption in CY 2020.
The Executive’s FY 2021 certified amount anticipated the rate increase earlier in the fiscal year. The
Executive revised that amount to $1.622 billion, or 21.2 percent growth over the previous fiscal year. A
portion of total collections, $816.0 million in FY 2021, remains in the General Fund to support
transportation debt service payments. The remaining balance, $805.6 million, is earmarked to the
PPGRT Capital Reserves for dedicated transportation purposes. For FY 2022, the Executive estimates
PPGRT revenues will increase to $1.789 billion. The General Fund portion increases to $906.7 million,
while the Capital Reserve portion increases to $882.5 million.
Year-to-date PPGRT revenues through the end of February total $914.4 million, up 3.3 percent. This
growth stems primarily from the October 1, 2020 increase in the PPGRT per gallon tax. However, the
underlying trend in highway fuel consumption, the key driver of this tax, is negative. Nevertheless,
the Executive and OLS concur growth in collections will continue, with the higher tax rate
counteracting tax base decline.
The OLS PPGRT forecast of $1.588 billion for FY 2021 is $33.5 million below the Executive’s revised
estimate. The OLS FY 2022 estimate of $1.678 billion is 5.6 percent above its FY 2021 estimate. This
estimate reduces resources designated for the capital reserves, and has no impact on the net General
Fund retention compared to the Executive’s estimates.
Motor Fuels Tax
The Executive made a slight revision to its FY 2021 estimate for the motor fuels tax, reducing it to
$436.8 million, a change of $3.4 million. The Executive is projecting FY 2022 revenue at $458.5 million,
an increase of 5.0 percent from FY 2021. The OLS estimates of $426.7 million for FY 2021 and $441.6
million for FY 2022 are consistent with the Executive in terms of direction, but the OLS expects
revenues in FY 2022 to grow at a slower rate and off a lower base.
12OLS Tax and Revenue Outlook FY 2021-2022
Cigarette Tax Estimates and Distributions
Millions of Dollars
Actual Executive Estimates OLS Estimates OLS Difference
FY 2020 FY 2021 FY 2022 FY 2021 FY 2022 FY 2021 FY 2022
Total Collections, All Sources: $569.0 $575.4 $552.0 $569.2 $543.6 -$6.1 -$8.4
Less, Health Care Subsidy Fund -391.5 -391.5 -391.5 -391.5 -391.5 0.0 0.0
Less, Dedication for Debt Service -91.7 -86.0 -83.3 -86.0 -83.3 0.0 0.0
Less, Dedication for Anti-Smoking -5.7 -5.8 -5.5 -5.7 -5.4 0.0 0.1
Total Collections On-Budget $80.1 $92.1 $71.7 $86.0 $63.4 -$6.1 -$8.3
Cigarette Tax
In FY 2020, the cigarette tax, which is imposed at a rate of $2.70 per pack of 20 cigarettes, generated
roughly $569.0 million in revenue for the State. However, only a portion of this amount appears as
budgeted General Fund revenue. Of the amounts collected in FY 2020, $391.5 million supported the
off-budget Health Care Subsidy Fund, $91.7 million was used off-budget to pay debt service on
cigarette tax revenue securitization bonds, and $5.7 million was dedicated for anti-smoking initiatives.
The remaining $80.1 million was accounted for on-budget as General Fund revenue.
Cigarette tax collections have declined steadily since FY 2012, tracking closely with the industry’s
annual rate of decline of three percent to four percent. From FY 2018 to FY 2020, the average rate of
decline for this tax was close to six percent. In recent years, alternatives to cigarettes, such as vapor
products, have become increasingly popular, further diminishing cigarette sales volume. The legal age
to purchase cigarettes, and other tobacco products, was increased at the end of 2017 from 19 to 21,
which also likely contributed to declining revenues.
Despite the downward trend established over the last decade, total cigarette tax collections through
February were up roughly 1.1 percent. Notably, one of the largest tobacco companies noted that U.S.
cigarette volumes were flat industry wide. Economic recessions normally depress consumer spending.
However, certain “sin” taxes, such as the cigarette tax, are resistant to significant swings because of
the taxed products’ addictive qualities, and may even grow during periods when other forms of
consumption decline. Revenue collections may also have benefitted from the ban on flavored vaping
products pursuant to P.L.2019, c.425, which may have led some users of those products to switch to
cigarettes after the law took effect in April 2020.
The Executive projects $92.1 million in FY 2021 and $71.7 million in FY 2022 on-budget cigarette tax
revenue. The FY 2021 estimate assumes a 1.1 percent growth in total cigarette revenues from FY 2020.
The FY 2022 estimate assumes a 4.1 percent rate of decline in total cigarette revenues from FY 2021.
The OLS projects $86.0 million in FY 2021 and $63.4 million in FY 2022 on-budget cigarette tax revenue.
The FY 2021 estimate assumes total cigarette revenues will remain flat. The FY 2022 estimate assumes
that total cigarette revenues will decline by 4.5 percent, returning to the rate of decline typically
expected with this tax.
13OLS Tax and Revenue Outlook FY 2021-2022
Realty Transfer Fees
In recent years, realty transfer fee collections plateaued after consistent growth since FY 2012. In prior
versions of the Tax and Revenue Outlook, the OLS has noted that several factors could impact future
growth in realty transfer fee collections, such as increasing mortgage rates and the tightening supply
of homes available for purchase. Following a significant jump in the average 30-year fixed mortgage
rate in CY 2018, that rate fell in CY 2019 and hit a historical low in CY 2020. The supply of homes
tightened further, which had a positive impact on housing prices.
Nationally, organizations such as the National Association of Home Builders and the National
Association of Realtors have noted strong growth in new and existing homes sales as well as single-
family home prices through the end of calendar year 2020. Concerns remain with affordability and
inventory going forward.
Regionally, data from the New Jersey Realtors indicated that closed sales for single-family homes were
up 7.4 percent and pending sales were up 12.4 percent through the end of CY 2020. Particularly
noteworthy were the increases in median sales price from $330,000 in CY 2019 to $380,000 in CY 2020
and average sales price from $407,911 in CY 2019 to $474,256 in CY 2020. Through February 2021, those
same key metrics remained strong; however, new listings were down 30.4 percent.
The Executive revised its FY 2021 realty transfer fee estimate to $464.5 million, a 27.4 percent increase
above FY 2020, and is projecting $408.0 million for FY 2022, a decrease of 12.2 percent from its FY 2021
forecast. In comparison, the OLS is projecting $460.5 million for FY 2021 and $409.7 million for FY 2022.
The OLS forecast assumes that realty transfer fee collections through the remaining months of FY 2021
will experience significant growth. Revenue growth is expected to flatten at the start of FY 2022 and
decline slightly thereafter as the realty market settles.
The Executive projects the separate one-percent assessment on property sales valued over $1 million
at $175.7 million, or 33.8 percent growth, and reduces their estimate to $168.0 million for FY 2022, a
decrease of 4.4 percent. Through February, preliminary collections of $106.2 million were up 22.5
percent, or $19.5 million, above FY 2020. Given year-to-date performance, the OLS agrees with the
Executive for both FY 2021 and FY 2022.
14OLS Tax and Revenue Outlook FY 2021-2022
Transfer Inheritance Tax
As with any wealth tax, transfer inheritance tax revenue has fluctuated widely over the years from
double-digit rates of growth in some years to double-digit rates of decline shortly thereafter. The
transfer inheritance tax is dependent on myriad factors, including the number of wealthy decedents
during a particular year and the magnitude of their wealth. The transfer inheritance tax filing process
typically takes eight months to complete, so the amounts realized during a fiscal year are, at least in
part, based on factors from the past.
For example, transfer inheritance tax collections in December 2020 and January 2021 were up 126.8
percent and 56.8 percent year-over-year, respectively. Based on data published by the New Jersey
Department of Health, New Jersey resident deaths tripled in April 2020 and were up 57.6 percent in
May 2020 compared to the same months in the prior year, as the COVID-19 pandemic reached its initial
peak. The transfer inheritance tax returns and related payments for the transfer of those resident
decedents’ real and personal properties were due by December 2020 and January 2021, which
accounts for the spike during those months.
Through February, receipts from the estate tax and the transfer inheritance tax totaled $343.0 million,
up 27.2 percent in the aggregate. Of the amounts collected, $340.1 million was from the transfer
inheritance tax, up 36.1 percent, and $2.9 million was attributable to the estate tax, down 84.9 percent.
The Executive increased its estimate for these combined taxes in FY 2021 from the $368.7 million
certified last September to $527.7 million, assuming growth of 43.1 percent above FY 2020. The OLS is
also anticipating FY 2021 collections to come in above the certified amount, but lower than the
Executive at $492.1 million.
For FY 2022, the Executive is projecting a decline in transfer inheritance tax revenue to $468.0 million,
down 11.3 percent from its FY 2021 estimate. The Executive is not anticipating revenue from the estate
tax. The OLS estimate of $456.3 million, down 7.3 percent from its FY 2021 estimate, is $11.7 million less
than the Executive. The OLS estimate assumes that asset values will remain strong, but the rate of
death will return to pre-pandemic levels.
Assets considered in the calculation of a resident decedent’s transfer inheritance tax liability
may include, but are not limited to:
• Real property (i.e., real estate);
• Businesses, bank accounts, stocks, and investment bonds; and
• All other property, such as automobiles, personal property, furniture, cash and uncashed
checks, or interest in a prior estate.
15OLS Tax and Revenue Outlook FY 2021-2022
Insurance Premiums Tax
The insurance premiums tax is imposed on the premiums collected on insurance risks in this State.
Insurance premiums tax returns are filed on March 1 of each year and finalize the tax liability a taxpayer
incurred during the prior calendar year. When the annual return is filed on March 1, a taxpayer is also
required to make a prepayment equal to 50 percent of the preceding calendar year’s tax liability. A
second prepayment is due on June 1 of each year and is equal to 50 percent of the preceding calendar
year’s tax liability. Consequently, the third and fourth quarters of each fiscal year account for almost
all of insurance premiums tax collections.
In the past, the insurance premiums tax has experienced heightened volatility in collections
attributable to tax credits. The State’s economic development incentive programs allow for
taxpayers, typically those with corporation business tax liabilities, to convert their incentive awards to
tax credit transfer certificates. Those tax credit transfer certificates may then be sold to another
taxpayer. In most cases, this happens to be a taxpayer with an insurance premiums tax liability.
Through the end of January, the insurance premiums tax carried a negative balance of $90.2 million.
This has become typical, since refunds are processed earlier in the fiscal year prior to payments being
received. However, in addition to refund activity that likely resulted from tax credits, the State was
also required to refund Johnson & Johnson at least $56 million stemming from a New Jersey Supreme
Court ruling in December 2020.
Unlike the Executive, the OLS has the opportunity to evaluate preliminary collection data for March
prior to forecasting revenues. Thus, the OLS can assess aggregate insurance premiums tax collections
across February and March, which comprise the first prepayment required by law. These data indicate
a decline in the March 1 prepayment, with year-to-date collections down roughly 37.6 percent.
The Executive projects $502.3 million in FY 2021, a 19.3 percent decline from FY 2020, and $605.0 million
in FY 2022, an increase of 20.4 percent from the revised FY 2021 estimate. In contrast, the OLS is
projecting $473.1 million for FY 2021, a 14.8 percent decline from FY 2020, and $584.4 million for FY
2022, 23.5 percent growth above its FY 2021 estimate. The difference between the Executive’s
estimate and the OLS’ estimate is presumably due to the availability of data.
The OLS anticipates the fourth quarter of FY 2021 to be more in line with historical collections, since
tax credits are included in the calculation of the March 1 payment. Any overpayments that remain
from March 1 will likely impact the June 1 prepayment. The uncertainty and volatility surrounding tax
credits always lingers, but FY 2022 will benefit from non-recurring refund activity.
Lastly, the enactment of P.L.2020, c.145, which allows for the reorganization of a health service
corporation, may have an impact on future insurance premiums tax revenues. However, a
reorganization has not occurred yet as of this writing, so the impact of this law may not materialize
during the fiscal years covered, and the estimates do not assume any impact.
16OLS Tax and Revenue Outlook FY 2021-2022
Casino Revenue Fund
During the last quarter of FY 2020 (April 2020 – June 2020), Casino Revenue Fund collections fell by
approximately 47.4 percent, as the COVID-19 pandemic, and policy responses thereto, shut down brick-
and-mortar casino operations for more than three months. Collections started to recover during the
early part of FY 2021 and have grown in six out of the eight months this fiscal year. This rapid recovery
is largely due to increased activity in internet gaming, which is taxed at a rate of 15 percent, compared
to brick-and-mortar casino gaming taxed at a rate of eight percent. The table above demonstrates the
shift from casino gaming to internet gaming over the course of CY 2020.
Through February, FY 2021 Casino Revenue Fund collections totaled $209.4 million, an increase of 10.1
percent from FY 2020. Of the amounts collected, roughly 41.0 percent was from the gross revenue tax
(i.e., the tax on brick-and-mortar casino operations), 49.0 percent was from the tax on internet
gaming, and 10.0 percent was from the tax on sports betting. This fiscal year is the first during which
revenue collected from internet gaming has exceeded the gross revenue tax.
The Executive projects growth in both FY 2021 and FY 2021 for the three major components of casino
taxes. Specifically, the Executive is forecasting that collections will total $326.3 million in FY 2021, up
approximately 24.3 percent over FY 2020, and $338.5 million in FY 2022, up 3.7 percent over FY 2021.
The OLS agrees with the Executive that Casino Revenue Fund collections will grow in both FY 2021 and
FY 2022, but is projecting slightly lower amounts of $320.0 million for FY 2021 and $330.1 million for FY
2022.
The OLS notes that the shift from brick-and-mortar gaming to internet gaming leaves some uncertainty
for the future. The shift occurred out of necessity as a response to the COVID-19 pandemic, since the
alternative (i.e., brick-and-mortar casinos) remained closed. It is unclear how much of that shift is
permanent, but it could impact tax collections going forward. As noted earlier, internet gaming is
taxed at a higher rate. So, if consumers revert begin to frequent casinos instead of gambling online,
collections could slowly decline. Alternatively, if consumers continue to participate in online gambling,
either in addition to or in lieu of casino gambling, collections may gradually increase.
17OLS Tax and Revenue Outlook FY 2021-2022
Annual Undesignated Fund Balances – Year End
Annual Undesignated Fund Balances - Ending Balances (June 30th)
$ in Millions
Surplus Revenue Property Tax Casino Control Casino Revenue Gubernatorial
Fiscal Year General Fund Total
Fund Relief Fund Fund Fund Elections Fund
2010 $794.3 $0.0 $10.0 $0.0 $0.0 $0.0 $804.3
2011 $864.1 $0.0 $5.8 $2.8 $0.0 $0.5 $873.2
2012 $441.4 $0.0 $2.4 $1.8 $0.0 $1.0 $446.6
2013 $301.4 $0.0 $8.6 $3.2 $0.0 $0.0 $313.2
2014 $295.1 $0.0 $1.1 $3.8 $0.0 $0.0 $300.0
2015 $806.4 $0.0 $10.2 $6.0 $0.0 $0.6 $823.2
2016 $469.8 $0.0 $3.3 $0.7 $7.5 $1.1 $482.4
2017 $783.8 $0.0 $2.7 $0.0 $0.0 $0.0 $786.5
2018 $990.6 $0.0 $0.0 $0.0 $0.0 $0.0 $990.6
2019 $1,287.7 $420.6 $3.0 $0.0 $0.0 $0.8 $1,712.1
2020 $2,154.5 $6.7 $1.8 $0.0 $0.0 $1.1 $2,164.1
2021 (est) $4,920.0 $1,421.9 $0.0 $0.0 $0.0 $0.0 $6,341.9
2022 (est) $2,192.8 $0.0 $0.0 $0.0 $0.0 $0.0 $2,192.8
Source: FY 2022 Governor's Budget Message and Prior Comprehensive Annual Financial Reports.
Revenue shortfalls and unplanned expenditures can destabilize the budgets of governments with
balanced budget requirements. Contingency reserves, such as “rainy day funds,” are intended to
mitigate potentially disruptive short-term fiscal stress by providing emergency budget resources using
previously saved surplus balances. The COVID-19 pandemic and the economic disruption that followed
provided a clear example as to the necessity of these reserves.
Until FY 2019, undesignated fund balances have served this purpose, albeit on a smaller scale. The
State’s rainy day fund, the Surplus Revenue Fund, had not received a deposit since FY 2008, but that
changed in FY 2019, when a $420.6 million deposit was made. The fund balance fell shortly thereafter
in FY 2020 to $6.7 million in the wake of the COVID-19 pandemic.
The Executive’s FY 2021 projected year-end undesignated fund balances total $6.342 billion, with $1.422
allocated to the Surplus Revenue Fund. The Governor proposes to spend down those fund balances
by $4.149 billion in FY 2022, leaving $2.193 billion by year’s-end. Three years after the first deposit into
the Surplus Revenue Fund in over a decade was made, all resources in the Surplus Revenue Fund are
expected to be exhausted.
Ultimately, the actual year-end balance will be determined by numerous spending decisions as well as
revenue collections. For example, the anticipated year-end balances for both FY 2021 and FY 2022
would be increased if the OLS revenue forecasts were adopted. Decisions on these and other matters
will be made by the Executive, both budget committees in the Legislature, and the full Legislature
during the next three months and throughout the next fiscal year.
18Appendices to OLS Tax and Revenue Outlook FY 2021-2022
Appendices Contents Page
Detailed Fiscal Year 2021 Revenue Estimates ................................. A-2
Detailed Fiscal Year 2022 Revenue Estimates ................................. A-3
Pass-Through Business Alternative Income Tax ..……...………… A-4
Paycheck Protection Program Loans to New Jersey Businesses ... A-5
A-1Appendices to OLS Tax and Revenue Outlook FY 2021-2022
Detailed Fiscal Year 2021 Revenue Estimates
Millions of $
Executive
Appropriations Revised OLS (March Diff: OLS -
Revenue Source Act (Sept. 2020) (Feb. 2021) 2021) Executive
Major Taxes:
Sales Tax, Total $9,888.1 $10,649.4 $10,773.0 $123.6
Sales Tax, Base 9,869.1 10,622.8 10,746.4 123.6
Dedicated Transfer to PTRF -781.1 -842.4 -842.4 0.0
Sales Tax, Energy 11.6 80.5 80.5 0.0
Sales Tax, Energy Tax Receipts 788.5 788.5 788.5 0.0
Corporation Business Tax, Total $3,250.4 $3,445.6 $3,415.9 -$29.7
Corporation Business Tax, Base 3,246.6 3,438.5 3,408.8 -29.7
Corporation Business Tax, Energy 3.8 7.1 7.1 0.0
Pass-through Business Alternative Income Tax 0.0 1,919.3 1,919.3 0.0
Inheritance Taxes* 368.7 527.7 492.1 -35.6
Motor Fuels Tax 440.2 436.8 426.7 -10.1
Insurance Premiums Tax 555.0 502.3 473.1 -29.2
Realty Transfer Fee 361.4 464.5 460.5 -4.0
Motor Vehicle Fees 515.6 515.6 515.6 0.0
Cigarette Tax 50.0 92.1 86.0 -6.1
Petroleum Products Gross Receipts Tax 1,635.1 1,621.6 1,588.1 -33.5
Less: Petroleum Products GR Capital Reserves -791.7 -805.6 -762.0 43.6
Corp. Business Tax - Banking and Financial 160.0 78.2 78.8 0.6
Alcoholic Beverage Excise Tax 120.2 146.1 141.7 -4.4
Tobacco Products Wholesale Tax 25.2 35.7 34.0 -1.7
Public Utilities Excise Tax 18.7 22.0 22.0 0.0
Subtotal, Major Taxes $16,596.9 $19,651.3 $19,664.8 $13.5
Misc. Taxes, Fees and Revenues
NJ COVID-19 State Emergency Fund - Premium 0.0 616.3 616.3 0.0
NJ COVID-19 State Emergency Fund - Borrowing 4,500.0 3,672.4 3,672.4 0.0
Medicaid Uncomp. Care Reimbursement 460.6 476.7 476.7 0.0
Public Utility Taxes (State Retention) 140.0 140.1 140.1 0.0
Assessment on Property Sold Over $1 Million 131.3 175.7 175.7 0.0
Hotel Occupancy Tax 80.2 83.3 83.3 0.0
Fringe Benefit Recoveries (Interdepartmental) 848.7 831.4 831.4 0.0
Other 1,552.1 1,495.7 1,495.7 0.0
Subtotal, Misc. Revenues $7,712.9 $7,491.6 $7,491.6 $0.0
Interfund Transfers
Subtotal, Interfund Transfers $526.7 $528.3 $528.3 $0.0
TOTAL GENERAL FUND $24,836.5 $27,671.2 $27,684.8 $13.5
Property Tax Relief Fund (Income Tax) $15,015.6 $15,278.9 $15,700.0 $421.1
PTRF Transfer from GF (Sales Tax) $801.6 $860.6 $860.6 $0.0
Casino Revenue Fund (CRF) $259.6 $326.3 $320.0 -$6.3
Casino Control Fund $60.9 $59.4 $59.4 $0.0
Gubernatorial Elections Fund $0.7 $0.7 $0.7 $0.0
GRAND TOTAL, ALL FUNDS $40,974.9 $44,197.1 $44,625.5 $428.3
* The Office of Legislative Services (OLS) includes both the inheritance tax and the estate tax in this line.
A-2Appendices to OLS Tax and Revenue Outlook FY 2021-2022
Detailed Fiscal Year 2022 Revenue Estimates
Millions of $
February 2021 GBM % March 2021 OLS % Diff: OLS -
Revenue Source Gov's Budget Change OLS Change Executive
Major Taxes:
Sales Tax, Total $10,915.8 2.5% $11,075.9 2.8% $160.1
Sales Tax, Base 10,909.9 2.7% 11,070.0 3.0% 160.1
Dedicated Transfer to PTRF -864.1 2.6% -864.1 2.6% 0.0
Sales Tax, Energy 81.5 1.2% 81.5 1.2% 0.0
Sales Tax, Energy Tax Receipts 788.5 0.0% 788.5 0.0% 0.0
Corporation Business Tax, Total $3,731.1 8.3% $3,706.2 8.5% -$24.9
Corporation Business Tax, Base 3,721.3 8.2% 3,696.4 8.4% -24.9
Corporation Business Tax, Energy 9.8 38.0% 9.8 38.0% 0.0
Pass-through Business Alternative Income Tax 1,300.0 -32.3% 1,300.0 -32.3% 0.0
Inheritance Taxes 468.0 -11.3% 456.3 -7.3% -11.7
Motor Fuels Tax 458.5 5.0% 441.6 3.5% -16.9
Insurance Premiums Tax 605.0 20.4% 584.4 23.5% -20.6
Realty Transfer Fee 408.0 -12.2% 409.7 -11.0% 1.7
Motor Vehicle Fees 447.1 -13.3% 447.1 -13.3% 0.0
Cigarette Tax 71.7 -22.2% 63.4 -26.3% -8.3
Petroleum Products Gross Receipts Tax 1,789.2 10.3% 1,677.8 5.6% -111.4
Less: Petroleum Products GR Capital Reserves -882.5 9.5% -754.2 -1.0% 128.3
Corp. Business Tax - Banking and Financial 60.0 -23.3% 68.3 -13.3% 8.3
Alcoholic Beverage Excise Tax 130.0 -11.0% 127.5 -10.0% -2.5
Tobacco Products Wholesale Tax 33.0 -7.5% 34.0 0.0% 1.0
Public Utilities Excise Tax 22.0 0.0% 22.0 0.0% 0.0
Subtotal, Major Taxes $19,556.9 -0.5% $19,660.0 0.0% $103.1
Misc. Taxes, Fees and Revenues
NJ COVID-19 State Emergency Fund - Premium 0.0 -100.0% 0.0 -100.0% 0.0
NJ COVID-19 State Emergency Fund - Borrowing 0.0 -100.0% 0.0 -100.0% 0.0
Medicaid Uncomp. Care Reimbursement 409.6 -14.1% 409.6 -14.1% 0.0
Public Utility Taxes (State Retention) 147.0 4.9% 147.0 4.9% 0.0
Assessment on Property Sold Over $1 Million 168.0 -4.4% 168.0 -4.4% 0.0
Hotel Occupancy Tax 107.0 28.5% 107.0 28.5% 0.0
Fringe Benefit Recoveries (Interdepartmental) 972.4 17.0% 972.4 17.0% 0.0
Other 1,483.3 -0.8% 1,483.3 -0.8% 0.0
Subtotal, Misc. Revenues $3,287.3 -56.1% $3,287.3 -56.1% $0.0
Interfund Transfers
Subtotal, Interfund Transfers $475.6 -10.0% $475.6 -10.0% $0.0
TOTAL GENERAL FUND $23,319.8 -15.7% $23,422.9 -15.4% $103.1
Property Tax Relief Fund (Income Tax)* $16,257.5 6.4% $16,287.6 3.7% $30.1
PTRF Transfer from GF (Sales Tax) $882.3 2.5% $882.3 2.5% $0.0
Casino Revenue Fund (CRF) $338.5 3.7% $330.1 3.2% -$8.4
Casino Control Fund $62.4 5.1% $62.4 5.1% $0.0
Gubernatorial Elections Fund $0.7 0.0% $0.7 0.0% $0.0
GRAND TOTAL, ALL FUNDS $40,861.1 -7.5% $40,986.0 -8.2% $124.9
* The Gross Income Tax estimates include the Executive's policy initiatives for the Child and Dependent Care Credit
and the Earned Income Tax Credit.
A-3Appendices to OLS Tax and Revenue Outlook FY 2021-2022
Pass-Through Business Alternative Income Tax
Introduction
Fiscal Year 2021 is the first year that includes revenue from the Pass-Through Business
Alternative Income Tax (PT-BAIT), which was established pursuant to P.L.2019, c.320 (C.54A:12-1
et al.) and went into effect on January 13, 2020. Traditionally, taxable income from a pass-through
business is reported on a member’s personal tax return, and taxes are paid by the individual member
based on the individual member’s allocated share. The ability for these members to deduct personal
state income tax payments on their individual federal tax returns was restricted by the federal Tax
Cuts and Jobs Act (TCJA) of 2017, as federal personal itemized deductions were limited to no more
than $10,000 per year. However, the TCJA cap did not apply to corporate income tax returns, so
businesses are still allowed to deduct state income taxes if they are imposed at the entity level.
PT-BAIT was established as a workaround to the federal tax code changes, so members could
still deduct their State income taxes for federal income tax purposes. The tax is elective, but members
of a pass-through entity who elect to pay this alternative income tax pay the tax at the entity level.
For a business that opts to pay the pass-through business alternative income tax, the bill provides a
refundable gross income tax credit that is available to taxpayers who are members of the pass-through
business. In the case of a corporation that owns a pass-through business opting to pay the pass-
through business alternative income tax, the bill provides a corporation business tax credit which, if
unused, may be carried forward for up to 20 years.
FY 2021 PT-BAIT Collections by Month
($ Million)
October November December January February Total
$15.8 $12.2 $972.1 $169.2 $14.8 $1,184.1
Fiscal Impact
PT-BAIT revenue is expected to be offset by an equal amount in tax credits, so the impact on
State tax collections should be revenue-neutral over time. To the extent that pass-through entities
elect to pay the tax, revenue will shift from the Property Tax Relief Fund to the General Fund. Gross
income tax collections are constitutionally dedicated to the Property Tax Relief Fund, but the law
requires collections from PT-BAIT be deposited into the State’s General Fund.
The timing of PT-BAIT and subsequent payments has caused a one-time revenue increase in
FY 2021, since most Tax Year 2020 PT-BAIT payments, including those that would have been made
during quarterly payment months in the prior fiscal year, were received between October 2020 and
December 2020. Additionally, CBT taxpayers may have to carry-forward their unused tax credits,
since those credit are not refundable. This could result in a slight uptick in initial revenue.
The Executive’s projection for PT-BAIT revenue in FY 2021 is $1.9 billion because of the one-
time revenue gain. The amount of PT-BAIT revenue is expected to decrease to $1.3 billion in FY
2022. The Executive anticipates that PT-BAIT credits will total $853.0 million against the gross
income tax and $460 million against the corporation business tax in both FY 2021 and FY 2022.
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