New Jersey’s “looming fiscal crisis over the next four budget years is more dire” than economic forecasts from 2023 projected, according to a study by the Sweeney Center at Rowan University
The state is living off of deficit-driven budgets, the report says, with the budget adopted last June spending $54.35 billion, or $1.55 billion more than the Treasury Department anticipated in revenues. The difference was made up by using state surplus dollars to fund the deficit.
So with the election over, the state returns to a situation that includes, according to the New Jersey Policy Perspective, “major red flags” that “undermine the sustainability of essential public services and programs.”
Both the Sweeney Center and Policy Perspective criticize state lawmakers and the executive branch for using “record-setting revenue collections” to fund costly programs in the face of revenue projections that are not at levels that make the current level of state spending sustainable.
The Sweeney Center’s Multi-Year Budget Workgroup says there is an 80% chance that state revenues will fall between $3.2 billion to $7.1 billion short of the amount needed to continue state programs and state aid at current service levels.
New Jersey has the highest property tax rates in the country, with an effective rate of 2.08% of house value. There is a graduated income tax that runs from 1.40% to 10.75%, and a state sales tax of 6.625%. There is an inheritance tax and assorted excise taxes. Yet crises abound in school funding, pension support, NJ Transit and more.
If the Sweeney study proves out, the next governor, elected in November 2025, will be handed several years’ worth of deficits that will force a review of current service levels.
The Tax Foundation’s State Tax Competitive Index, published on Oct. 31, puts New Jersey 49th out of the 50 states.
Contact the reporter, Vince Conti, at vconti@cmcherald.com.
