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N.J. at risk of economic calamity, study says

By Adrienne Lu

Inquirer Trenton Bureau

New Jersey made it onto an undesirable top-10 list yesterday, ranking high among the states most at risk of economic calamity, according to a national research group.

California is in a league of its own, but New Jersey also faces a steep climb out of the recession, according to a new study by the Pew Center on the States. Others in fiscal peril are Arizona, Nevada, Oregon, Florida, Illinois, Michigan, Wisconsin, and Rhode Island, the study authors warned.

The states' "fiscal situations are widely expected to worsen even when the national economy starts to recover," the report said.

New Jersey's "math does not add up," according to the report.

Though its property taxes are the highest in the nation and it has increased sales and personal income taxes to generate more revenue in recent years, the Garden State still faces one of the biggest budget shortfalls, the study said.

The report blamed "years of fiscal mismanagement" for "soaring debt and a persistent imbalance between what the state collects and what it spends."

The collapse of Wall Street last year further decimated New Jersey's economy. The state's long-term debt of more than $44 billion is characterized in the study as "eye-popping," and is among the highest per-capita debt loads in the country. The state's pension funds also are severely underfunded.

The report credited Gov. Corzine with taking unpopular positions in an attempt to address fiscal problems but said those efforts "have barely made a dent."

Gov.-elect Christopher J. Christie will have to make difficult decisions when he takes office in January.

At a Veterans Day event yesterday, Christie said he would seek new concessions from the state workforce of about 75,000 to reduce a projected budget gap of $8 billion.

Among the options he would consider in the next fiscal year are trimming the state's contribution to the workers' pension fund and asking for more givebacks from labor, he said.

Last week, Corzine ordered his cabinet to find $400 million in additional savings to try to balance the budget and he commanded departments to maintain a hiring freeze and restrictions on travel.

He also urged state lawmakers to refrain from spending additional money during the coming lame-duck session.

Because the 10 states cited in the study account for more than a third of the U.S. population and economic output, actions by their governments - such as tax increases or drastic spending cuts - could slow the nation's efforts to beat back the recession, the study authors said.

The group evaluated the 50 states on six criteria: change in revenue, the budget gap as a percentage of general funds, change in unemployment, the foreclosure rate, whether a supermajority is required to raise revenue or ratify budgets, and money management.

On a scale of 1 to 30, with California the worst at 30 and Wyoming the best at 6, New Jersey scored 23 and Pennsylvania 11. The national average was 17.

The Pew center studies state policy and is a division of the Pew Charitable Trusts.

Contact staff writer Adrienne Lu at 609-989-8990 or alu@phillynews.com.

This article contains information from the Associated Press.

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Comments

Posted 06:05 AM, 11/12/2009

langx

No problem. NJ just elected a guy who is going to follow the Bush model. Take two tax cuts and everything will be fine. We all know how that worked out. By the time Christie finishes with NJ we will be lucky if we have our trash picked up. How people thought Corzine could lower taxes when all our federal dollars NJ sends to DC went to Iraq is beyond me. The entire country is in a hole and you hire a Bush lackey to fix the problem they helped create. NJ deserves everything they get.

Posted 06:09 AM, 11/12/2009

FrankMar

Christie has his work cut out for himself. There are so many groups in NJ used to getting their outstretched hands filled when ever they want it's going to be very difficult to change the status quo. Not to mention the NJEA, the Teacher's Mafia, er, I mean Union. Good luck CHris, you're gonna need it.

Posted 06:10 AM, 11/12/2009

tr88

New Jersey's "math does not add up," according to the report. Though its property taxes are the highest in the nation and it has increased sales and personal income taxes to generate more revenue in recent years, the Garden State still faces one of the biggest budget shortfalls, the study said. The report blamed "years of fiscal mismanagement" for "soaring debt and a persistent imbalance between what the state collects and what it spends." It;s George Bush's fault.

Posted 06:36 AM, 11/12/2009

willy25

Could George Bush really be responsible for everything gone wrong in NJ? Maybe Corzine should have had a viable plan. Sleeping with the Unin leader did not work for anyone but Corzine.

Posted 08:19 AM, 11/12/2009

Melyssa

If you think the economy in NJ is bad now, wait until Christie Canyon steals from the treasury to pay his food bills -- unless he outright takes things from the stores "because he can." And I predict that property taxes will not be lower than they are now by the end of his term.

Posted 08:56 AM, 11/12/2009

MikeP

No Bush isn't responsible for all of NJ's problem and nobody is saying that he is. Bush and the Republicans are responsible for the state of the national economy and it will take many years to recover from their policies. 70% of the economy is based on the middle class consumer. The middle class has declined by 35% during the Bush administration while the wealthy has not grown much but their wealth has increased significantly. There is no chance the economy can rebound without middle class spending. What's Christie's proposal? Cut the wage and benefits of the middle class. Brilliant. This is what you get when you elect someone who knows nothing about economics at a time when you need someone to fix the economy. No wonder NJ is in such bad shape. But, luckily, people can move to another state.

Posted 11:50 AM, 11/12/2009

riverhealer

Unfortunately Jerseyites will continue moving to Bucks, Northampton and Monroe Counties. We don't need anymore stinkin' suburban sprawl.

Posted 01:09 PM, 11/12/2009

BFlint

The JFK/Reagan model works. Reduced taxes equal INCREASED TAX REVENUES. Bush did not implement the other half of the Reagan model which is to strengthen the dollar. The Obama/Corzine model is a failure. Increased govt spending and increased taxes equal DECREASED TAX REVENUE. Add govt corruption and inept financial management like Corzine did and you get even larger deficits. NJ needs to cut its' state workforce by 30% minimum.

Posted 01:21 PM, 11/12/2009

Melyssa

And NJ needs to cut its Flints by at least one.

Posted 02:00 PM, 11/12/2009

MercerCty

What they need to do first is merge away some of the ridicluous number of small towns and school districts in order to cut down on overhead. Also, the biggest portion of property taxes are for the schools - but who gets on the school boards? Typically people with kids in the schools or backed by teachers unions - all of whom will spend spend spend. The administrators also make a fortune - the superintendent in West Windsor-Plainsboro just got a 3.5% raise and now makes $192,676 while the assistant now makes $165,854.

Posted 02:07 PM, 11/12/2009

MercerCty

And in addition, because the Board of West Windsor-Plainsboro CONSIDERED looking into outsourcing custodial work, the unions cranked up the fear machine and we now have lawn signs all over railing agains "strangers in our schools"

Posted 02:59 AM, 11/13/2009

jowillia1

Remember when NJ was a low tax state? Really kids, it once was so....

Posted 11:42 AM, 11/13/2009

dvguy

For those with short memories... it was during the other Christie's administration that the state really started piling up the debt. Her treasurer, Brian Clymer, a darling with the Reagan administration, enabled her administration to avoid tax increases while expanding government spending by coming up with creative means of deep borrowing and raids on the pension system, another form of borrowing.