NJ’s economy in danger — maybe for years to come (Analysis)
There were two troubling new reports out this week that show New Jersey is still moving in a dangerous direction when it comes to fiscal stability in both the short and long term.
The group Truth in Accounting found New Jersey’s long-term bills now total more than $208 billion. It amounts to more than $65,000 per taxpayer, according to the conservative think tank. That is the worst in the nation for the fifth year in a row. The state with the second-highest debt load, Illinois, has saddled taxpayers with more than $52,000 in debt, far less than New Jersey.
The biggest drain on New Jersey fiscal health continues to be the cost of pension and health benefits for public workers. So far, Gov. Phil Murphy has been reluctant to tackle those issues in an substantive way, lest he anger the public employee unions that have been a major funding source for promoting Murphy's progressive agenda.
At the same time, a business.org analysis shows New Jersey continues to be among the worst states in the nation when it comes to the power of a paycheck. The study finds New Jersey in the bottom 10 states for how far our money goes. At the median income, a NJ resident has to work two weeks just to afford the rent on a one-bedroom apartment.
The two studies show not only does New Jersey remain one of the most expensive states in which to live, we have to work harder and longer just to keep our heads above water
As one of the highest-taxed states in the nation, the constant worry about making ends meet takes a significant psychological toll on the people who live here. That further adds to an uninspired New Jersey consumer that worries businesses.
It’s a vicious cycle that makes recovery far more difficult in New Jersey compared to other states. A recent Pew Charitable Trust survey found New Jersey is one of only 10 states that still has not recovered the tax revenue lost during the Great Recession. At the same time, state budget costs have escalated. Murphy has increased spending over $3 billion since taking office and increased a variety of taxes to pay for the additional expenditures, with most of those tax hikes levied on businesses.
Following the approval of Murphy’s latest budget, State Chamber of Commerce President Tom Bracken warned New Jersey was not doing enough to make New Jersey more competitive and affordable and urged Murphy to incentivize businesses to come to New Jersey, to stay here, and grow here.
“This must be a priority, with a goal of creating a national model that enhances our competitiveness.” Bracken said.
After her group surveyed its members about the 2019 business climate, New Jersey Business and Industry Association President Michele Siekerka was more direct: “As our state continues to track among the worst in the nation for business tax climate, we hope our policymakers will understand the impact of these cumulative costs.”
Only 40% of members surveyed by the NJBIA believed New Jersey’s economy was “good” or “excellent.”
Taxpayers are equally skeptical of the Murphy administration policies. The latest Monmouth University poll found more than 26% believe Murphy has hurt business. More than 3 in 10 believe Murphy has hurt the middle class, the main drivers of the state’s economy.
A new survey of national economists worries the ongoing trade war with China could trigger a recession by the end of next year. That could be devastating to a state like New Jersey that has not yet fully recovered from the last recession.
The end result is a state economy that could be mired in stagnation, with consumers reluctant to spent their shrinking disposable income and businesses wary to expand as they face a higher burden from taxes and regulation.