$59,400 Per Taxpayer: NJ Government Debt Burden Highest in the Nation
New Jersey is getting better about divulging its tops-in-the-nation debt burden but still isn’t entirely up front about the depth of that hole, says a Chicago-based think tank that advocates for transparency in government financial disclosures.
The big-picture debt amounts to $59,400 per taxpayer, highest among the states.
That's almost as bad as Puerto Rico's $65,100 per-taxpayer debt burden. The United States island territory defaulted on its debt last month.
That number comes from this summer’s installment of Truth in Accounting’s annual survey, which finds that New Jersey officials hide $51.5 billion of the state's long-term obligations from financial statements, which is about a quarter of the actual obligation.
“This is a per taxpayer amount, not per person. We consider taxpayers to be an individual filer or a joint filer,” said Sheila Weinberg, founder and chief executive officer of Truth in Accounting. “But per taxpayer it is $59,400. So that amount represents the amount that each taxpayer needs to send to the state right now in order to get the books back to zero. Or another way to look at it is $59,400 is the amount of future taxes that taxpayers are going to have to pay, but they’re not going to receive any goods or services or benefits for those taxes because all those benefits were used by prior taxpayers.”
“One definition of bankruptcy, a Webster’s dictionary definition, is that you don’t have enough money to pay all the bills that you have accumulated. And in that aspect, New Jersey is bankrupt,” Weinberg said. “They have bills of more than $200 billion, but they only have $25 billion in assets to pay those bills. So in that sense, New Jersey is bankrupt.”
The biggest gap in what the state discloses stems from how it calculates its unfunded tab for health benefits for retired public workers. Weinberg said it would be $38.5 billion higher if the state followed the accounting practices required by private companies.
New Jersey does disclose the higher "other post-employment benefits" total in a supplement to its 2015 Comprehensive Annual Financial Report, said Department of the Treasury spokesman Joseph Perone. That liability will be recorded in the CAFR itself, similar to new pension liability, beginning as required in fiscal 2018, he said.
New Jersey’s financial disclosure was more accurate in 2015 than 2014 because a new rule went into effect for how governments must account for their pension liabilities. That increased the total five-fold to around $80 billion, but Weinberg says it’s still not a complete picture because year-old data is allowed to be used under the new accounting standard.
“They’re only – I say ‘only,’ I hate to say ‘only’ when I’m talking billions – but they’re still hiding only $13 billion of their pension liability,” Weinberg said.
Perone said the net pension liability is properly reported at $79 billion, not the $95 billion cited by TIA.
Perone noted that New Jersey has received the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association every year since 1993 and that the state has received an unqualified audit opinion every year since then, as well.
Connecticut had the second highest per-taxpayer debt total, $48,600, according to the TIA report. .
“So New Jersey is closing in on Puerto Rico’s bad numbers,” Weinberg said said.