How the Great Recession is still burdening New Jersey
A new report finds 29 states have recovered from tax revenue losses sustained during the Great Recession, after accounting for inflation.
New Jersey isn’t one of them.
As of the end of last fiscal year, New Jersey’s tax revenue was still 6 percent below where it had been back in 2007, according to Barb Rosewicz a project director at the Pew Charitable Trusts. That compares to national growth of 6.3 percent..
"This is looking at inflation-adjusted dollars, so I’m really talking here about purchasing power," she said.
Rosewicz pointed out 8 other states have even lower tax revenue growth than New Jersey. The state with the worst growth is Alaska (-88.2 percent), followed by Wyoming, Oklahoma, Florida and New Mexico.
The state with the best revenue tax rebound is North Dakota (+26.1 percent), followed by Minnesota, Colorado, Maryland and Nevada.
So why is Jersey lagging behind most other states?
She said states that have recovered their tax revenue losses have done so through a combination of economic growth and tax policy changes, but in New Jersey’s case “economic growth as measured at least by state personal income is still 12th slowest since the recession.”
And at the same time, she noted, Jersey has “continuing long-term obligations that it must continue to pay down, unfunded pension liabilities, unfunded retiree healthcare and debt, which are taking pieces of the budget each year, so these obligations make this a really difficult time for the state.”
“The most striking thing about state tax revenue is how slowly it’s bounced back from the recession, and it grew really sluggishly over the past couple of years,” she said.
She noted usually during economic recoveries, states will use the time to rebuild revenues and pay down debt, but that hasn’t happened in the Garden State.
“New Jersey on top of slow growing tax revenue also has these continuing problems with long term obligations for unfunded pensions, unfunded retiree healthcare.”
You can contact reporter David Matthau at David.Matthau@townsquaremedia.com.
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