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| C | New Jersey |
• Population (rank): 8,724,560 (11)
• Average per capita income (rank): $31,877 (3)
• Total state spending (rank): $54,073,301,000 (8)
• Spending per capita (rank): $6,198 (9)
• Governor: Jon Corzine (D)
• First elected: 11/2005
• Senate: 40 members: 23 D, 17 R
• Term limits: None
• House: 80 members: 48 D, 32 R
• Term limits: None
The problems in New Jersey's fiscal stewardship have never been clearer than they were on the Fourth of July, 2006, when the state's casinos and parks had to be closed — the result of lawmakers' inability to pass a budget on time. The budget fracas revolved around Governor Jon Corzine's plan to deal with structural money shortfalls by raising the sales tax from 6 to 7 percent. The impasse was resolved only when legislators agreed to approve the increase but send half of it back out in the form of property tax relief.
Last year the governor and legislature seemed genuinely dedicated to avoiding similar embarrassment. And they took a step toward accountability by publishing a comprehensive Citizens' Guide to the budget that included every change to the governor's original submission along with the name of the official who proposed that change. Transparency seemed to help; the budget passed nine days early.
But an on-time budget isn't necessarily a good one, and New Jersey hasn't yet found a way to deal with the long-term imbalance between its revenues and its spending. The state's citizens have begun to understand the problem. In November 2007, staring down a $3 billion hole in a $33 billion budget, voters rejected a plan to dedicate the remaining half-penny of the sales tax increase to property tax relief — and they did this despite the fact that New Jersey has the highest property tax in the nation. With a debt of $32 billion, such hard decisions are going to be necessary for some time.
The consequences of the fiscal problem hit home everywhere in state government. Deferred maintenance in the transportation system has swelled to $13 billion. As one Department of Transportation official puts it, "we are holding ground on the pavement and we are losing on the bridges." Although New Jersey has the nation's third-lowest gas tax, a tax increase to bolster maintenance doesn't seem politically possible. Corzine talks about creating a nonprofit public benefit corporation to manage the day-to-day operation of several major roadways, including the New Jersey Turnpike and Garden State Parkway.
Non-transportation infrastructure is no better off. The state dedicated $7 million this year toward a prioritized list of roof improvements on public buildings; even so, life-cycle roof replacement is three or four years behind schedule.
Similarly, the state's dwindling investment in human capital training has begun to leave a mark. With a hiring freeze on for many positions in the state, maximizing the productivity of each employee becomes critical. But New Jersey spends less than 0.2 percent of its corrections payroll on training, for example, while neighboring Pennsylvania and Connecticut spend 1 percent and 1.8 percent, respectively. That ranks among the lowest in the nation. Civil service rules dictate that employees with seniority have protected jobs during layoffs, potentially compounding the problems of the baby-boomer retirement wave by leaving a dearth of young, well-trained talent in its wake.
Worse still, New Jersey faces a newly revealed $58 billion long-term bill for post-employment retirement benefits owed to its workers. Many other states are up against big bills on this front, but New Jersey's is a whopper by anyone's standards. On the pension side, the state is similarly hobbled. Despite improved funding in the past two years, liabilities continue to grow.
Note: This online version has been modified from the version that appeared in print to remove an incorrect reference to the amount spent by New Jersey's Department of Children and Families on training of managers.
For additional data and analysis, go to pewcenteronthestates.org/gpp.