Treasury updates revenue forecast, cites strong income collections and flags one-time effects; lawmakers press on Anchor checks and naloxone contract

Treasury officials told the Senate Budget and Appropriations Committee on May 15 that updated collections leave the state with larger-than-expected revenues for FY2025 and FY2026 but also raise questions about durability and program integrity. The Department of Treasury said FY2025 revenue projections increased by $388.5 million to about $55.3 billion and FY2026 projections rose by $323.2 million to about $57.1 billion.

The revenue boost came largely from higher-than-expected gross income tax (GIT) and strong payments to the pass-through business alternative income tax (PT BATE). "The PT BATE accounted for 90% of the forecasting difference between Treasury and OLS," Treasury testimony said, and Treasury raised the PT BATE forecast by $461.3 million for FY25 and by $306.6 million for FY26. Treasury also increased its GIT forecast and noted unusually strong final and estimated payments in April, driven in part by large net capital gains.

At the same time, corporate business tax (CBT) collections lagged. Treasury officials attributed much of the CBT decline to accelerated use of prior net operating losses after the 2023 CBT reform (PL 2023, c.96). "Total net operating losses between '22 and '23 jumped from about 5½ billion dollars to 9½ billion dollars," Martin Perska of OREA told the committee, saying the surge largely explains April's CBT weakness and is expected to taper in subsequent years.

Lawmakers pressed Treasury on several program-integrity and budget-sourcing issues. Senators asked whether trend supplemental spending included in the May packet — roughly $307 million in items such as children's care, Medicaid rate changes, and prescription programs — would reduce the additional surplus available to the legislature; Treasury staff explained that the packet raises the ending fund balance but also increases appropriations in the midyear update.

Several senators raised complaints about the Anchor property-tax-relief distributions after being shown checks that appeared to have gone to ineligible recipients. A senator described a case in which a high-school student living at home received a check they had not applied for. "No Anchor check goes out without an application being submitted," Marita Scurrada of the Division of Taxation said, adding that early years of the program experienced fraud and that the division has since implemented additional verification steps, including issuing paper checks to verified recipients and moving to ID.me verification for future filings. Scurrada also said exact counts of improper payments and cashed checks were not available at the hearing and would be provided to the committee.

Public-health procurement drew scrutiny as well. A senator asked why a Department of Human Services naloxone contract used a branded nasal spray rather than a lower-cost generic product and whether the procurement considered price per unit, supply capacity, and state manufacturing. Treasury said it did not have the DHS evaluation record in hand and would provide procurement documents and criteria through the chair.

Committee members repeatedly thanked the Treasurer and Treasury staff for administration of the accounts and for reforms they said improved state fiscal health, including increased pension contributions and modernization efforts like a new tax portal (STAR/New Jersey Tax Portal) and NJ FinLit. Treasury cautioned, however, that federal budget uncertainty and possible cuts to Medicaid, SNAP, broadband and other federal programs could materially affect the state's outlook.

The committee did not take votes on any bills. Members requested additional documentation on Anchor program verification, special line-item sourcing (PTRF questions), naloxone procurement records, and tax-credit liabilities; Treasury agreed to provide follow-up information through the chair as the Appropriations Act is finalized in June.