(The Center Square) – New Jersey has the second-highest taxpayer burden of all 50 states and would need $58,300 from every taxpayer to pay its bills.
That’s according to a new analysis from Truth in Accounting (TIA), which gave the state a financial grade of “F.” It found the Garden State had $31.7 billion available to pay bills totaling $216.9 billion, giving the state a $185.2 billion debt burden.
“Like all other states, except Vermont, New Jersey has a balanced budget requirement for good reasons,” Sheila Weinberg, founder and CEO of TIA, told The Center Square.
“One is so it doesn’t accumulate unsustainable debt. The second reason is accountability,” Weinberg added. “Citizens, including voters, have not been able to hold their elected officials accountable for their spending because current and past elected officials have spent more for services and benefits than they have included in the budget.”
While New Jersey has seen an influx of federal money during the COVID-19 pandemic, the state’s financial condition “did not improve.” Federal leaders responded to the pandemic by handing out billions of dollars, much as they did amid the financial crisis of 2007-08.
“We thought it was a bad precedent for the federal government to bail out the banks,” Weinberg said. “Now, people around the country seem to be relying on the federal government during times of crisis. During this crisis, New Jersey and other states received hundreds of billions of dollars from the federal government.
“What if in the future the federal government couldn’t borrow or print enough money to help the states, other governments, and citizens?” Weinberg added. “Federal government grants usually come with strings attached.”
Last week, the Garden State Initiative (GSI) released a report that found New Jersey was “on an unsustainable trajectory” fiscally. The past year-and-a-half only exacerbated the state’s predicament, the report found.
The TIA analysis found New Jersey’s financial problems primarily stem from unfunded retirement obligations. The state ranked last for its fiscal health over the past six years but moved up one place this year as Connecticut’s fiscal health deteriorated during the pandemic.
“To climb out of this hole it needs to bring more money in, cut spending or reduce pension and retiree health care promises,” Weinberg said, noting that TIA maintains political neutrality and does not advocate for any solutions besides better budgeting and accounting practices. “New Jersey’s hole is so big that it will most likely have to do a combination of all of these.”
Ultimately, taxpayers can reduce their burden by holding their elected representatives accountable.
“Our representative form of government is being greatly harmed because citizens, including voters, are receiving misleading financial information,” Weinberg said. “This is causing cynicism and mistrust of our governments. Citizens cannot [knowledgeably] advocate for tax and spending policies because they don’t know the true financial condition of their governments or the true costs of government.
“Governments are able to expand beyond the amount of money taxpayers are willing to pay. Governors and legislators may have been re-elected because voters were told their state budget has been balanced,” Weinberg added. “Therefore voters assumed the governor and legislators were living within the state’s means.”