TRENTON -- The state will hold off making $308 million in Homestead property tax rebate reimbursements to municipalities for two months to reckon with a $527 million hole in the state budget, Treasurer Ford Scudder said Tuesday.

The delay will be felt by municipalities, but not homeowners who've already received the credit against their property tax bills, Scudder told lawmakers. He said he doesn't expect it will affect their cash flows.

"While this is a step that we would prefer not to take, we view this two-month delay as a vastly superior option than reducing the pension payment or reducing other programmatic spending in the last two months of the year," Scudder said in announcing his office's plans to make up for the $527 million shortfall in tax collections.

The treasurer's view of two-month shortfall from now until the fiscal year ends on June 30 was less optimistic than a $274 million gap projected by the non-partisan Office of Legislative Services.

However, the Christie administration has a rosier view of how it will all shake out from now until the next fiscal year ends on June 30, 2018.

OLS says the budget will come $687 million short over the next 14 months. The treasurer says revenues will grow faster than projected next fiscal year and pegs the shortfall at $336 million.

Gov. Chris Christie has great latitude to adjust the budget mid-year to address shortfalls, which have hounded New Jersey's budget for years, even as his administration has adopted more modest projections.

In addition to delaying payments to municipalities, the state will close the projected budget gap with about $39 million in reserves, savings in program operations, and diverting $50 million from the Clean Energy Fund.

One reason the administration is forecasting a $527 million deficit for the next two months is that it is projecting more conservative revenues from personal income and corporation business taxes and because it doesn't expect an Exxon legal settlement to be finalized before the fiscal year ends on June 30.

OLS will present more up-to-date projections on Wednesday based on information from the treasurer's Tuesday testimony.

Both the treasurer and OLS derive estimates from past performance of different taxes and things like regional and national economic indicators.

With a heavy reliance on high-income earners through its progressive tax structure, budget experts warn, the state's gross income tax can be unpredictable. And the corporation business taxes are considered even more difficult to nail down.

The treasurer's office expects income taxes will clock in $102 million below revenue estimates in this year's budget and $53 million below in the next. OLS's estimates show a $95 million shortfall this year and $115 million next year.

Both say corporation income taxes will dip at least $200 million below budget in each year.

OLS and the treasurer's office continued to disagree on the effect of federal tax reform talk on income tax collections in their remarks to the Senate Budget and Appropriations Committee.

The treasurer's office said in April, before the all-important spring tax collections, that last year's strong stock market performance would be reflected in a boom of reported unearned income this year.

But OLS warned that higher income taxpayers may defer taking their capital gains by a year to take advantage of possible tax changes.

"The OLS continues to hold to its working hypothesis that taxpayer behavior at the end of calendar year 16 may have been influenced by the anticipation of federal tax rate cuts, causing taxpayers to both delay taking gains and perhaps accelerate deductions at the end of last year," said Catherine Brennan, revenue chief for OLS.

Scudder, meanwhile, said New Jersey was spared that tough blow dealt to some other states. "We have not seen such an effect in (gross income tax) collections," he said.

The administration's more optimistic projections for the fiscal year that begins July 1 are based in part on shifting money from the Exxon settlement that it won't be able to spend this year into the upcoming fiscal year, and its belief that the state will generate $200 million from an overhaul of taxation and billing services.

Michael Darcy, executive director of the League of Municipalities, said the organization is still "trying to get our arms around" the plan to delay Homestead Rebate payments to towns. He said it may be more immediate concern for municipalities operating on a July 1 fiscal year.

Samantha Marcus may be reached at smarcus@njadvancemedia.com. Follow her on Twitter @samanthamarcus. Find NJ.com Politics on Facebook.