With the downturn of the economy since the beginning of the Great Recession in 2007, many have questioned the effects it will have on their state and their hometown. But in all sincerity, the recession has taxed — pun intended — many an American in all facets of society.
In the race to regain financial stability, some successful states have managed to gain ground with a shadow of their former health, but others have undoubtedly fallen far behind. According to a report issued this month, New Jersey has fallen the farthest.
In the midst of the media storm concerning Chris Christie’s Bridgegate scandal, a new study was released regarding the state’s fiscal solvency in comparison to our other 49 states. Using 2012 fiscal data, the report measures the fiscal conditions — financial health — of each state based on measures such as on-hand cash and unfunded liabilities.
The study by Sarah Arnett, published by the Mercatus Center at George Mason University, is quite timely in consideration of the political scrutiny Christie and his administration are facing. The data, collected two years prior to Christie’s ascension into the governorship, asserts that his state is ranked No. 50 — dead last — in terms of budget solvency, long-run solvency, and the state’s overall fiscal condition.
According to Arnett, “each state’s position in the rankings reflects the interaction and feedback of a state’s political environment, rules and laws, and external conditions.” Regarding New Jersey, Arnett found that the state’s ranking in budget solvency was primarily reflective of “a decrease in net assets of $64 billion,” and despite tax revenue improvements, it has not kept up with expenditures.
Arnett wrote, “New Jersey has still not returned to the revenue levels it achieved before the recession.” This has ultimately led to underfunded pension systems and subsequently “billions in unfunded liabilities.”
But when considering New Jersey’s losses, let us not forget the tragic effects Hurricane Sandy wrought on the state in 2012, with $36.8 billion in economic losses and the destruction of 346,000 homes. In addition to this massive hit, Arnett asserts that the reason behind New Jersey’s long-run solvency issues is the state’s unfunded state and local pensions dating back 15 years. The author also found that New Jersey has “an estimated unfunded pension liability of around $25.6 billion” as well as $53.9 billion in unfunded liabilities for health benefits. But this is only part of the problem.
At Investors.com, John Merline argued that states’ partisanship could be correlated to their solvency, writing, “red states with lower taxes and fewer regulations tend to do better than blue states that have bigger governments.” From Arnett’s findings, Merline discovered that nine of the top ten fiscally stable states are run by Republican governors — all but Montana, which he claims “is generally a conservative state, having voted for the GOP candidate in each of the past five presidential elections.”
As New Jersey is considered a blue state, Republican Gov. Christie will now be facing scrutiny from all sides in the events leading to the 2016 election, provided he remains a contender for the GOP candidate.
It’s clear that as students in our inherited era, the fiscal effects of our nation’s plight are ongoing and widespread outside the cloak of Texas. As for New Jersey, sworn in for his second gubernatorial term on Jan. 21, Chris Christie is set to carry on the fate of the small state for better or worse. And one thing is certain: social networking hives are sure to follow him.
Opinion columnist Alex Meyer is a creative writing freshman and may be reached at [email protected]
