Treasury: March Revenues Up 3.6%; COVID-19 Impact Likely to Start Materializing Next Month

(TRENTON) – The Department of the Treasury today reported that March revenue collections for the major taxes totaled $1.888 billion, up $66.3 million, or 3.6 percent above last March. Fiscal year-to-date, total collections of $22.398 billion are up $1.3 billion, or 6.2 percent above the same period last year.

Treasury has been warning for weeks that the economic impact of the COVID-19 pandemic would not be immediately apparent on the State’s finances because many of the major revenues report with a one-month lag. As a result, March revenue collections largely reflect February economic behavior, which was prior to the onset of many social and commercial restrictions designed to help mitigate the spread of coronavirus. Treasury is closely monitoring factors such as the closure of businesses across New Jersey, the sharp increase in unemployment insurance claims, and the decline in the stock markets, which are expected to have a significant impact on tax revenue collections in the coming months.

In the meantime, Gross Income Tax (GIT) receipts for March totaled $590.7 million, a 15.7 percent increase above last March. Year-to-date GIT collections of $10.119 billion are up 7.1 percent. The GIT, which is constitutionally dedicated to the Property Tax Relief Fund, is the State’s largest tax revenue source, and April is typically the largest month of GIT collections each year.

However, due to the current crisis, the Governor and Legislature agreed to extend the traditional April 15 deadline for Gross Income Tax, Partnership, and Corporation Business Tax filings and payments to July 15 in order to mirror the federal extension. As a result, billions of dollars in tax collections will likely be postponed for several months. This delay, in combination with the likely weakness in future withholdings from employee wages, suggests a challenging period for State tax revenue collections lies ahead.

The Corporation Business Tax (CBT), the second largest General Fund revenue, generated $300.4 million, 2.9 percent below last March. Year-to-date, the CBT has collected $2.350 billion, or 7.7 percent above last year. March was the fourth consecutive month of declining CBT revenues. As with the GIT, corporate taxpayers will be allowed to delay April tax payments to July 15, postponing significant State revenues in the months ahead.

The Sales and Use Tax, the largest General Fund revenue source, reported $636.4 million in March, down 0.3 percent. Year-to-date, Sales Tax collections of $6.748 billion are up 5.0 percent over the same period last year. Tax revenues from March consumer activity, when the significant COVID-19 restrictions began, will not be reported until April because Sales Tax collections are reported with a one-month lag.