TRENTON – News that the state could expect at least a $700 million revenue shortfall has cast a dark shadow over any prospects for the Legislature approving a cut in income taxes, according to a leading Senate Democrat.

The chairman of the Senate Budget and Appropriations Committee, Sen. Paul Sarlo, (D-36),  all but pushed a tax cut proposal off the table Thursday after the state’s Office of Legislative Services projected a $700 million shortfall that could reach as high as $2 billion if growth remains flat.

“Does the math work?” Sarlo responded after being asked by reporters about the prospect of an income tax cut plan moving through the Legislature.

“I don’t see where the math works,” he said.

David Rosen, OLS’ budget and finance officer, warned Senate lawmakers New Jersey would need “a spectacular revenue acceleration” to hit the governor’s target projections. 

Revenues have grown at 0.2 percent for the first five months of Fiscal Year 2013, he said, adding that New Jersey will need to witness a more than 8 percent monthly revenue boost just to keep from dipping into a larger shortfall.

Rosen also testified that if the future growth rate remains at 0.2 percent it would mean a shortfall of more than $2 billion.

“Clearly our economy in New Jersey is sputtering along,” Sarlo said.

“I’m concerned,” he said. “If the economy remains flat it will be at the $2 billion mark.”

A spokesman for the governor did not immediately respond for comment.

However, committee member Sen. Joe Pennacchio, R-26, Montville, said that the Democrats’ actions today amounted to campaign season rhetoric.

“Today’s ‘special budget hearing’ was really the Trenton Democrats’ attempt to kick off their 2013 gubernatorial campaign against Gov. Chris Christie,” he said in a release. “It was a blatant show of hypocrisy at the expense of New Jersey residents, whose money and resources should not be squandered on political games.”

Pennacchio said that Christie always has produced a balanced budget.

“In January 2009, when former Gov. Corzine turned a $600 million surplus into a multibillion dollar budget deficit, the Democratic majority did not call a ‘special’ hearing. In four consecutive months leading up to February 2009, then-Gov. Corzine projected positive revenues, while OLS snapshots showed state sales and income taxes were negative,” Pennacchio said.

“Rather than conducting any budget hearing in January 2009, the Senate Democrats passed in February 2009 a bill to shift hundreds of millions of dollars to try to cover Corzine’s looming budget shortfall. They didn’t try to humiliate that governor. They just tried to solve his problem.”

Earlier story:

OLS warns N.J. facing $700M revenue shortfall