ROI-NJ: Government spending has increased 35% in 4 years. Has your income? - Garden State Initiative



ROI-NJ: Government spending has increased 35% in 4 years. Has your income?

June 28, 2021


By Regina M. Egea

All the talk about inflation lately — whether it’s going to be “transitory” or “persistent” — got us at the Garden State Initiative thinking about what this could mean for New Jersey. How prepared are we to weather rising inflation? And what is our state government doing to prepare itself and our economy?

As a backdrop, we summarized recently the federal report on growth in household personal income in our state. The good news: Wages are going up. The terrible news is that growth in New Jersey’s household incomes continues to fall behind not just the nation as a whole, but all our neighboring states as well.

Regina M. Egea

Regina M. Egea

If we look at a more macro level at our state’s growth in Gross Domestic Product, we find the exact same phenomenon: Our state lags the U.S. and our neighboring states. So, we are recovering, but not in line with our peers. Our unemployment rate shows the same disastrous trend. At 7.2% unemployment, New Jersey significantly lags the nation’s 5.8% rate, and we have persistently experienced higher unemployment than our neighbors.

So, if the trend is that our earnings are growing slower than our neighbors’, and our economy’s recovery is slower than our neighbors’, we looked at our government’s trend and how that might be impacting both. The trend is in the opposite direction and is working against our recovery, not aiding us, as Trenton claims.

That’s correct: Spending by our state government has escalated nearly 35% over the last four years. The fiscal year 2018 state budget was $34.7 billion. The fiscal year 2022 budget that passed along party lines last week and will be signed by Gov. Phil Murphy next week with perhaps only the slightest adjustments, will come in at $44.6 billion — up 34% cumulatively. Even just compared with last year, spending by our state government is up 11%. Higher government spending above our earnings and more than our economic growth leads to higher taxes and higher cost of living — and that exacerbates inflation. New Jersey is becoming more uncompetitive and more unaffordable, not less.

Regardless of what industry you might work in, what your income level or what your political party affiliation, this should appall anyone who believes that government officials ought to act with a sense of responsibility to those who elected them, not their own self-interest. This level of spending on the backs of taxpayers is crushing our economy, crushing our earnings capability and will undermine property values long-term.

Don’t be misled by the recent spate of homebuying completed since the pandemic. Yes, New Jersey was an attractive refuge for many urban dwellers looking to escape the pandemic-compromised lifestyle of New York City, Philadelphia and even some of our own cities such as Hoboken and Jersey City. Make no mistake, when our job arrangements in terms of time in the office become more routine, when employers look to optimize their cost for office space and individuals “do the math” as to the cost of living in New Jersey versus Pennsylvania, Delaware or further south, New Jersey will be at the bottom of their list, as we unfortunately have become so accustomed to in just about every comparative analysis among states.

What should you do about it? Call your state representatives, who are all seeking your vote this November, and ask them:

Why should I vote for someone who has made New Jersey less, not more affordable in the last four years? How can you justify spending 35% more of my tax dollars when neither my household income, nor my home value have risen at that same rate?

Regina M. Egea is president of the Garden State Initiative, an independent research and educational organization dedicated to promoting new investment, innovation and economic growth in New Jersey. She previously served in the administration of Gov. Chris Christie.