NJ Finances Were Nation’s Most Out-of-balance Over Last 15 Years
TRENTON – Reports on the 50 states from The Pew Charitable Trusts show New Jersey state finances at the bottom of the pack nationally since 2005 and its job market among the nation’s most battered by the pandemic.
The look back over the past 15 years finds New Jersey’s finances were the most out-of-balance in the nation in that period, according to the state’s audited Comprehensive Annual Financial Reports.
In all, there were eight states where revenues exceeded expenses over that 15-year range – New Jersey, Illinois, Massachusetts, Hawaii, Kentucky, Maryland, New York, and Delaware.
Long-term revenue in New Jersey totaled 91.5% of expenses, with deficits every year. The only other state to run a deficit every year was Illinois, where revenues totaled 94.1% of expenses. Pew says the chronic shortfalls in the state date to least fiscal 2002.
“New Jersey was one of the two states that struggled the most in this respect, the other one being Illinois,” said Joanna Biernacka-Lievestro, an associate manager at Pew. “Not only did they score the worst over the long term but they also recorded annual deficits in every single of the 15 years that we looked at.”
However, New Jersey’s shortfall in fiscal 2019, the most recent CAFR available, was its smallest in 12 years at $1 billion. Revenue totaled 98.5% of expenses, up from 90.5% in 2018 and 84.1% in 2017 – the latter of which was the biggest single-year shortfall in the 15-year period studied, almost $12 billion.
“Expenses in New Jersey have been coming down since basically 2017, and revenues have been going up since 2016,” Biernacka-Lievestro said. “There are some ups and downs before then, but recently the gap in narrowing. So, you know, it’s almost there.”
A separate dataset shows just under 77% of New Jerseyans in their prime working years – defined as people between ages 25 and 54 – were employed in the 12 months ending in June. That’s still slightly above the national rate – but down 6 percentage points compared to 2019, before the pandemic.
“Back in 2019, nearly 83% of those in the prime working years were employed. Only three states incurred larger losses over the period,” said Mike Maciag, a research officer for Pew.
The drop in New Jersey was exceeded only in Nevada, Hawaii, and Connecticut.
Personal income in New Jersey, as of the quarter ending in June, was 3.4% above its pre-pandemic level, adjusted for inflation. That’s below the national growth rate of 4.1% and ranks 32nd nationally.
“That’s just below the national rate, but it is slightly above New York, Pennsylvania and other states in the region,” Maciag said.
However, much of the growth was from extra financial help from the government, such as unemployment benefits and stimulus checks that have been phased out or pared back.
“In fact, if government assistance is excluded, total personal income for New Jersey would have essentially been flat after accounting for inflation.”
Maciag says earnings in New Jersey are up 0.7% from pre-pandemic levels – better than one-third of states but trailing two-thirds.