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New Jersey Ranked 43rd in, Best and Worst Run States in America Survey

Sweeney & Prieto

43. New Jersey

Debt per capita: $7,378 (5th highest)
> 2015 Unemployment rate: 5.6% (tied-19th highest)
> Credit rating: A2/A-
> Poverty: 10.8% (8th lowest)

December 16,2016

the staff of the Ridgewood blog

Ridgewood NJ, New Jersey has among the smallest reserve funds of any state. According to analysis by the Pew Charitable Trusts, New Jersey would be able to operate just eight full days with its budget reserves alone, less than a third of the average across all states. New Jersey also has just 42.5% of the assets it needs to meet its future pension obligations, nearly the smallest share of any state. Credit ratings agency S&P recently downgraded New Jersey’s bonds from A to A-, nearly the worst rating in the country. The agency cited the underfunded pension as one of the main reasons for the downgrade as well as the recently announced tax cut.

The “tax cuts”, which will amount to an estimated $1.4 billion in lost revenue a year by 2021, have been criticized as politically expedient and financially irresponsible as New Jersey struggles to balance its budget. New Jersey’s credit rating has been downgraded 10 times under Gov. Chris Christie, more than any other governor in U.S. history.

While most residents will not see a deal to raise New Jersey’s gas tax by 23 cents a gallon, to 37.5 cents as a “tax cut”  or in reality , despite Governor Christies war with the media most people realize that the nails have long been driven into New Jersey’s economic coffin. The Massive flight of personal assets as well as businesses, running from the state’s high tax anti-business climate has significantly eroded the tax base over years making a major financial shake-up in the state a foregone conclusion.

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Analysis: Wall Street skeptical of N.J.’s pension reforms


Analysis: Wall Street skeptical of N.J.’s pension reforms

APRIL 10, 2014, 10:15 PM    LAST UPDATED: THURSDAY, APRIL 10, 2014, 10:20 PM

Governor Christie is calling for pension reforms, but analysts from the Wall Street ratings agency Standard & Poor’s said on Thursday that it’s unclear if that will put the state on a better financial footing.

Their concerns came a day after the agency lowered New Jersey’s bond rating, making it third worst among U.S. states.

In major speeches this year, and at many public events lately, Christie has said he wants to work with lawmakers to come up with new reforms, changes like those he negotiated with Democrats in 2011.

During a town-hall-style event in Fairfield on Wednesday, Christie said he would “force this discussion” again with lawmakers.

“I’m going to put a plan out there, and they’re going to have to deal with it,” Christie said.

But on Thursday, spokesman Kevin Roberts would not say exactly what Christie is considering at this stage.

“The governor has been clear that he is engaging the Legislature, and absent an indication from them that they are willing to recognize reality and negotiate next-step reforms in a bipartisan way, he will put forward a proposal of his own,” Roberts said.

Roberts also disputed the notion from the ratings agency analysts that recent changes to the pension formula and debt restructurings have pushed costs on to future budgets.

And it’s that uncertainty from Christie, along with his recent budget practices, like over-eager estimates for tax revenues that fall short, that have analysts concerned.

After years of skipped or only partial contributions from the state, the public employee pension system remains grossly underfunded and continues to weigh down New Jersey finances.

The burdensome pension payment — Christie’s latest spending plan calls for a record, $2.25 billion contribution that is still only a fraction of what actuaries say the state should be spending on an annual basis to bring the fund closer to solvency — was among the factors cited by Standard & Poor’s in announcing its move on Wednesday.

The downgrade was bad news for Christie, a Republican who has tried to portray his administration as having improved New Jersey’s finances after years of Democratic mismanagement. But the analysts said New Jersey is still dealing with some economic struggles while most other states have enjoyed fuller recoveries that have put their budgets back on solid ground.

The lower rating for New Jersey’s debt also comes just as state lawmakers are reviewing Christie’s latest spending plan, a $34.45 billion budget that is the largest in state history. The credit rating is an important factor in the budget talks because it helps determine how costly any future borrowing or refinancing will be.

Christie used the downgrade’s announcement to apply more pressure on Democratic lawmakers to enact new pension system changes, something they are reluctant to do yet again.

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