A new report gives New Jersey a grade of “F” for having the worst finances of any state in the nation.
According to Sheila Weinberg, the CEO of Truth in Accounting, a think tank that analyzes government financial reporting, New Jersey’s finances have been in a free-fall for the past three years.
“If you divide the amount of money needed to pay all of New Jersey’s outstanding bills by the number of state residents, each taxpayer’s burden is $67,200,” she said.
“This represents the amount that each taxpayer would have to send to the state capital just to bring the state’s finances back into a balance.”
She pointed out another way to look at it is this is the amount of money New Jerseyans will have to pay in the future in taxes, but they won’t receive any benefits or services.
A series that details the fundamentals of New Jersey’s budget, as well as its current budget woes
Richard F. Keevey
This is the first in a multipart series outlining New Jersey’s fiscal fundamentals, written by Richard F. Keevey, the former budget director and comptroller for New Jersey and currently a senior policy fellow at the School of Planning and Policy at Rutgers University. The idea behind this series is to demystify some of the state’s financial challenges, and put them in context of the broader issues New Jersey faces. It’s also intended as a way to underscore the importance of state government in a year that will see a new governor and a new Legislature chosen by voters.
New Jersey has a strong central government. The governor has potent appointment and financial powers. New Jersey’s local governments like to tout their home-rule powers — and they’re correct in certain circumstances — but when it comes to municipal, county, and school finance the state’s powers and oversight are quite significant.
The office of the governor is viewed as the strongest in the country. Unlike many states, New Jersey’s governor (and lieutenant governor) are the only officers elected statewide, and all cabinet officers and principal state officials are appointed by the governor — unlike Pennsylvania, Delaware, and New York, for example, where several cabinet officials are elected.
More taxes, no new taxes, higher taxes, marijuana taxes, corporate taxes, tax relief, and even a new tax structure — it’s definitely an election year in the Garden State
Tax reform is becoming a hot topic in Washington, D.C., as President Donald Trump is looking for Congress to cut both corporate and personal income-tax rates. Similarly, the future of New Jersey tax policy is also expected to become a key issue in Trenton once the state welcomes its next governor early next year.
Democrats who control New Jersey’s Legislature signaled several months ago as they were hashing out a new state budget with Gov. Chris Christie that they would be pushing once again for a millionaires tax to bring in more funding for local school districts once the term-limited Republican governor leaves office in January 2018.
And if Democratic gubernatorial candidate Phil Murphy ends up winning the gubernatorial election in November — something that the latest public-opinion polls suggest is likely — legislative leaders should find a willing partner. Murphy’s own fiscal platform includes a call for enacting a higher levy on the state’s wealthiest residents, among other tax-policy changes.
But even if Murphy’s opponent, Republican Kim Guadagno, ends up pulling off an upset, she’s also talking about tax reform. The centerpiece of her economic agenda is a more than $1 billion “circuit breaker” property-tax relief initiative.
TRENTON — Gov. Chris Christie’s administration is digging in on a labor dispute in which it refuses to pay public employees’ step increases after their contracts expired, despite state court rulings that have largely upheld the practice.
The administration has asked the Public Employment Relations Commission to block the union’s request to go to arbitration to argue that the state should pay their step increases.
Tens of thousands of state employees have missed one or more of these longevity pay bumps as the state froze salaries for workers whose contracts expired June 30, 2015. The state relied on a decision from PERC that upended a four-decades-old custom of step increases outliving the term of a contract.
Hetty Rosenstein, state director of the Communications Workers of America, New Jersey’s largest state employee union, said that despite a state Supreme Court ruling in August rebuking PERC, Christie’s administration is still seeking to freeze employees on the salary guide.
The only way to stem our tide of outmigration is to bring our economic policies in line with our direct regional competitors — Pennsylvania and New York
September 4,2017
written by OpportunityNJ June 26, 2017
Ridgewood NJ, New Jersey has many positive attributes. We added almost 60,000 jobs in 2016, the state’s largest gain since 2000, according to the New Jersey Department of Labor and Workforce Development. We have among the best K-12 public education systems in the nation and a highly skilled workforce including the highest concentration of scientists and engineers in the world — more than 225,000 statewide.
New Jersey also has a strong transportation network. We are home to the Port of New York and New Jersey, the third largest seaport in North America and the largest and busiest maritime cargo center on the East Coast. And we are among the national leaders in logistics and distribution. New Jersey is also a great recreation state with more than 130 miles of shoreline, beautiful parks, and mountains.
Despite these great assets, New Jersey remains a significant outlier, both nationally and regionally when comparing competitiveness and affordability including our state’s high cost of living and its heavy tax burden. New Jersey’s border states, Pennsylvania and New York, continue to be the No. 1 and No. 2 outmigration states for New Jersey residents and are challenging our competitiveness.
To reverse this trend we must examine our policies on taxation, revenue generation, and spending, and we must do so through the filter of competitiveness and affordability.
Outmigration by the numbers
In February 2016, the NJBIA issued Outmigration by the Numbers: How do we Stop the Exodus? This report found that New Jersey lost $18 billion in net-adjusted gross income over a decade. We have now updated this data to include 2015 data and have learned the loss has since grown to nearly $21 billion over 11 years (2004-2005 through 2014-2015). Further, we found the largest outmigration group continues to be millennials followed second by those nearing retirement and retirees.
Last November, New Jersey took the first step in the long road toward comprehensive tax reform by phasing out the estate tax and sharply increasing the income tax exclusion for pension and retirement income. The estate tax elimination and the pension tax reduction should help stem the outmigration of seniors and small businesses. While this is a good start, there is much more that must be done.
New Jersey ranks in the bottom six of every single tax category — income, property, sales, corporate, and inheritance. And we are in the bottom 10 of all states in combined state and local debt. Further, New Jersey residents pay the fifth-highest percentage of their household income on rent of any state and pay the fourth-highest median monthly rent of any state.
New Jersey’s top income tax rate is 8.97 percent and ranks as the sixth highest in the country. Our neighbors to the north and the west offer a better income tax rate than we do, with New York’s top income tax rate at 8.82 percent and Pennsylvania’s income tax rate flat at 3.07 percent.
Out-of-control property taxes
New Jersey has an average property tax bill of $8,549 and collects $2,924 per capita in property taxes, both of which are the highest in the nation. New York at $2,435 and Pennsylvania at $1,338 per capita are considerably lower than New Jersey, as is the national per capita of $1,300.
New Jersey has the fifth-highest corporate income tax (9 percent) in the nation. New York ranks 24th, offering a lower corporate tax rate of 6.5 percent. While Pennsylvania has a higher corporate income tax rate at 9.9 percent, it has a much more favorable personal income, property, and inheritance tax climate that offsets this tax impact.
While New Jersey is in the process of eliminating the estate tax by 2018, we still have an inheritance tax. Only five other states — Nebraska, Kentucky, Iowa, Pennsylvania, and Maryland — even have an inheritance tax. Further, while Pennsylvania has an inheritance tax, the state mitigates the impact of this tax on small businesses.
New Jersey’s debt picture is no different than its tax climate. We are near the bottom of the national rankings in every debt category. Overall, as of June 30, 2015 the state had more than $153 billion in bonded and nonbonded indebtedness according to the fiscal year 2015 state debt report.
The state’s high level of debt and the need to generate revenue to pay off the debt is a major factor that affects the ability to lower the state’s tax burden to improve the level of affordability for individuals, families, and businesses. However, we can no longer increase our tax burden in order to raise revenue to pay down this enormous debt. This would only make New Jersey even less competitive and would surely feed into an exit strategy for New Jersey businesses and residents.
The time is now to revisit and completely review our economic policies on taxation, revenue generation, and spending and we must do so with a sense of urgency. We must look at how we spend our tax dollars and be honest about the fact that our current economic paradigm is just not sustainable. Failing to do so now will compound the problem for the generations to come.
The only way to stem our tide of outmigration is to bring our economic policies in line with our direct regional competitors — Pennsylvania and New York. Becoming more competitive means becoming more affordable so that businesses will want to locate here and taxpayers will want to live here.
Ridgewood NJ, while we have never been a strong supporter of Kim Guadagno , Phil Murphy (Corzine 2.0) is clearly a threat to many New Jerseyans livelihood . His big government tax and spend philosophy will chase any business out of New Jersey, leaving fewer people to carry the massive tax burden. Murphy’s “Connecticut Scheme ” will have the same results as in Connecticut driving away the states largest employers and most productive individuals .
Worse yet in recent statements Murphy is appearing a bit desperate which seems odd for someone “up 29 points” in the polls.
Kim Guadagno slapped back at Murphy, “It’s a shame that Phil Murphy would stoop so low to hide his support for raising taxes by over $1.3 billion by getting involved in divisive and horrendous identity politics. Carlos and I have condemned racism and bigotry in all forms, and Phil Murphy knows it. His desperate race-baiting attacks to stir up fake outrage are beneath all of us as New Jerseyans, who value diversity, equality and love for each other.”
Murphy Race Baiting , “We are now seeing a disturbing trend emerge with Kim Guadagno and her campaign. Yesterday, she refused to criticize a sitting Assemblyman for posing with the Confederate flag, a symbol of bigotry and divisiveness. Today, we’ve learned that her choice for Lieutenant Governor, Woodcliff Lake Mayor Carlos Rendo, has been accused of systematic harassment and discrimination by the Chabad community in Woodcliff Lake. Yet, both times Lieutenant Governor Guadagno refused to criticize racist and anti-semitic speech despite the clear evidence.”
“Clear evidence.” really this guy is starting to sound like Al Sharpton quoting fake news , race baiting and obfuscating his positions trying to hide the huge tax increases that will finally sink New Jersey economy once and for all .
Kim Guadagno sums it up ,”Murphy is taking the coward’s way out, ducking for cover behind the task force to avoid saying what he’s likely thinking, that he plans to reward those unions for their support by dumping the cap. New Jerseyans deserve to know where Murphy stands before November, and they have every reason to expect our would-be governor to have the courage explain his position.”
A sea change in New Jersey politics is coming next year, not only because Gov. Chris Christie will be leaving office, but because many prominent voices in the Legislature will be gone or are shuffling into other positions.
A string of departures announced this year in the Assembly and Senate and the death of state Sen. Jim Whelan (D-Atlantic) will take a toll on the body’s institutional knowledge. And, depending on the outcome of the November elections, even more legislative leaders and longtime hands could be headed for the exit.
Assembly Speaker Vincent Prieto (D-Hudson) likely will be ousted from the top job in the lower house by his fellow Democrats and replaced with Assemblyman Craig Coughlin (D-Middlesex), and there’s a chance Senate President Steve Sweeney (D-Gloucester) could lose re-election in his district to a Republican challenger backed by the powerful New Jersey Education Association.
New Jersey has the highest property taxes in the nation, a crushing burden to middle-class families and indisputably the top concern of voters.
It’s a problem that can’t be solved until we contain the salaries and benefits of public workers. That is not a liberal view, or a conservative view. It is about the math. And it’s up to the next governor to face it.
The first test is coming soon, when a law setting a 2 percent cap on salary increases for police and firefighters in arbitration settlements is set to expire in December. The Republican candidate, Lt. Gov. Kim Guadagno, wants to renew the cap. But the front-runner, Democrat Phil Murphy, is keeping his options open.
Sheila McPherson is listed as a homemaker on an Internal Revenue Service report from the Democratic Governors Association. This year, Ms. McPherson donated $80,000 to the association, the first time, records show, that she gave to the national group. She also sent $10,000 to the New Jersey Democratic Committee.
Mrs. McPherson, who lists her residence in Rutherford, N.J., is married to Kenneth McPherson, a lawyer at a powerful firm, Waters, McPherson, McNeill.
Had her donations gone directly to Philip D. Murphy, the Democratic candidate for governor in New Jersey, it would have prevented her husband’s firm from getting any state contracts under a potential Murphy administration, the result of New Jersey’s strict pay-to-play laws. She also would have been able to give only $4,300 to Mr. Murphy directly.
Had she donated to any of the officials in counties where her husband’s firm has contracts, which total about $630,000, according to the New Jersey Election Law Enforcement Commission, they too would have come under scrutiny for potential pay-to-play violations.
Trenton NJ, New Jersey law will no longer require sleigh bells attached to horse-drawn sleighs on highways under legislation introduced by Assemblyman Ron Dancer. The legislator sponsors two bills removing antiquated sections of state law, “It’s like cleaning out your basement. You find some things that have outlived their usefulness and it’s time to let them go,” said Dancer (R-Ocean). “We don’t need a sleigh bell law. There was a place for it a long time ago, but now we’re discussing laws to regulate driverless cars.”
Dancer’s bill repealing the sleigh bell law (A5169) also abolishes a World War II-era statute legally defining the words “present war” as the military conflicts with Japan, German and Italy.
Another bill (A5170) rescinds two provisions from 1931 prohibiting the transportation of “any poor person” between counties. The Legislature created the State Pension Survey Commission in 1930. In its February 1931 report, the commission recommended that the county welfare boards assume responsibility for the administration of welfare programs, replacing municipal almshouses and poor houses. The purpose of the recommendation was to provide uniformity and efficiency in the administration of welfare programs.
“The archaic statutes are irrelevant and useless, and they should be retired,” said Dancer. “It’s time to bring our laws into the 21st century.”
NJ Spotlight is continuing its annual summer reading series. Every day the news website features an excerpt from a recent book — from nonfiction to novels to poetry – with a New Jersey connection.
Soft corruption is the type of influence peddling that’s perfectly legal – but unethical. And New Jersey politicians are masters of it. Former state Sen. Bill Schluter, well-known as an ethics crusader, explains what every New Jersey politician knows but you probably don’t: how to have money change hands for political benefit without breaking laws. Schluter even offers a solution for it, for those that want to take up the crusade. In this excerpt, Schluter gets into the details of the many ways New Jerseyans have bought influence while skirting the law.
Excerpt from Soft Corruption: How Unethical Conduct Undermines Good Government and What To Do About It, published February 24, 2017 by Rutgers University Press.
A wealthy sculptor with family problems makes generous campaign contributions in the hope of influencing legislators to enact a law that will help him stop his daughter from receiving a share of the family inheritance. He nearly succeeds. A state legislator dips into his publicly funded office budget to pay the assistant editor of his district’s largest newspaper $2,000 for unspecified general services. The speaker of the state assembly invites lobbyists to contribute $1,500 to her reelection campaign in exchange for the opportunity to talk with her about “your concerns and those of your clients.” Employing an unwritten but tradition-honored practice, a senator single-handedly blocks the governor’s highly qualified nominee for commissioner of education from even coming up for a confirmation vote. A longtime legislator, defeated on Election Day, is handed a position at the state’s parole board, at more than double his legislative salary. He leaves the job a year later, as soon as the resulting 78 percent bump to his state pension takes effect. His response to critics: “If anybody don’t like it, that’s too bad. Let them go spend thirty-three years in office.”
With the Rev. Al Sharpton at his side, Democratic gubernatorial candidate Phil Murphy made a campaign stop today at a hi-tech education center in Newark’s South Ward, saying the state needed to support urban youth to succeed in a globalized and digitized economy.
“We’ve got to be here, backing up these kids, to make sure that they can achieve all that they can achieve,” said Murphy, flanked by Newark Mayor Ras Baraka and Newark native Sheila Oliver, the Democratic lieutenant gubernatorial candidate. “Centers like this are at the very center of our economy. This is the future of our economy.”
Murphy appeared at NAN Newark Tech World, a center dedicated to improving Internet-based technological skills critical for many careers in the increasingly digital economy. A key part of the center’s mission is to provide access to opportunities available through the Internet by offering classes in computer training skills and other technology programs.
Even if one were to wave a magic wand and make these business-friendly changes, it’s way too late. NJ is operating in a state of virtual bankruptcy and servicing its debt is beyond anything changes like these could address. The world is changing, and location is no longer an issue. Businesses can be anywhere now and will always seek the lowest possible cost in terms of employees and real estate. It’s hard keeping anything in the USA, even in its lowest cost areas, when these businesses (or really competing businesses) can operate in places in China, the Philippines, India, etc. If NJ didn’t have such a massive debt load, it could probably ride this transition for many years, but we do have it, and the can is only kickable for so long until financial reality kicks in.
Starting this month, New Jersey’s chronically underfunded public pensions are going to benefit from Lottery funds as well as from more regular payments by the state
The New Jersey public-employee pension system traditionally has received cash contributions from the state in one lump sum — and only if the annual budget has been healthy enough at the close of each fiscal year to provide the full amount set aside by lawmakers.
But thanks to two recent policy changes that took effect earlier this month with the start of a new fiscal year, the pension system is going to receive more regular cash infusions from the state, and from two different revenue sources.
Monthly contributions will come in from the state Lottery under a complicated new law that was enacted earlier this month by Gov. Chris Christie and lawmakers that effectively transferred the Lottery enterprise into the pension system for a period of 30 years.
In fact, official figures that were outlined during a public meeting of the New Jersey State Investment Council yesterday indicate pension-fund managers expect to receive just over $1 billion throughout the 2018 fiscal year from the Lottery, with monthly infusions averaging $83.4 million.
Ridgewood NJ, The fiscal health of America’s states affects all its citizens. Indicators of fiscal health come in a variety of forms—from a state’s ability to attract businesses and how much it taxes to what services it provides and how well it keeps its promises to public-sector employees.
The Mercatus Center at George Mason University’s “Ranking the States by Fiscal Condition,”is now in its fourth year, Eileen Norcross and Olivia Gonzalez calculate indicators of fiscal health for all 50 states. Based on states’ 2015 financial statements, Florida ranks first as the most fiscally healthy state, while New Jersey ranks the lowest.
The study ranks each US state’s financial health based on short- and long-term debt and other key fiscal obligations, such as unfunded pensions and healthcare benefits. With refinements in its methodology, the 2017 edition updates the version that the Mercatus Center published in 2016. It presents information from each state’s audited financial report in an easily accessible format and is the most comprehensive snapshot of state financial health to date.
As usual New Jersey ranked 50th or dead last ,even behind bankrupt Illinois which ranked 49th. Even Connecticut with its aggressive taxation policies that drove out huge employers General Electric and Aetna still ranked 37th.
