Connecticut’s Fiscal Crisis Is a Cautionary Tale for New Jersey - A New Report by GSI

Connecticut provides a cautionary tale for the next governor of New Jersey, according to a report from the newly launched Garden State Initiative. With its “severe pension underfunding, a high tax burden and politically powerful government unions,” New Jersey is facing challenges that have already placed it near the bottom of national rankings of fiscal health, according to the author of the report, Stephen D. Eide of the Manhattan Institute. One of the only states to fare worse in recent years has been Connecticut, which mirrors New Jersey in many ways.  

Tax policy is one of the major themes of the campaign for governor of New Jersey. Since the Great Recession, the Garden State has cut some taxes and avoided raising income taxes, which has helped its recovery. Connecticut, however, boosted already-high taxes, counted on economic growth that didn’t materialize and now faces the repercussions, according to the 16-page report, “Connecticut’s Fiscal Crisis is a Cautionary Tale for New Jersey.”

Click here to download the PDF of the full report.

A Fiscal Crisis in New Jersey

New Jersey has a serious fiscal crisis on its hands, a crisis with two interrelated culprits: 1) painfully high taxes driven by 2) unsustainable public spending which includes out of control pensions reflected in unfunded liabilities. Our collective inaction is driving both residents and businesses to flee elsewhere. Even while the tax burden grows, essential services are increasingly being crowded out due to rising costs associated with the state’s public workforce.

The costs to New Jersey’s citizens and businesses are increasing by the year. They feel frustrated, marginalized, and powerless. With New Jersey’s tax climate for business ranked 49th by the Tax Foundation, and a ranking of 48th by Forbes magazine when examining the best and worst state tax burdens, it is no wonder that according to recent Gallup and Monmouth polls nearly 50 percent of New Jersey’s residents want to leave the state.

Exacerbating this dire financial equation is the paucity of independent organizations in the Garden State that seriously examine public policy options and offer alternative, intellectually honest solutions, instead of the typical “tax more, spend more” policies put forth by many elected officials at the state and local levels. The lack of serious, alternative voices and policy solutions in the state handicaps robust public discourse and, ultimately, hurts individuals, families, and employers in the state.

This is where GSI steps in. Imagine an organization that is: respected by the New Jersey political leadership; sought after by opinion leaders for its rigorous and independent analysis; a familiar name to the broader public based on media and public presence; and responsible for forging a new path for the state, one that is favorable to New Jersey’s economic health and the prosperity of its citizens. That is the role GSI will occupy.

The citizens of New Jersey are exhausted by the circuitous speeches and evasive answers to their very real problems; they want solutions, and they want them articulated in ways that they can actually understand. That does not mean over-simplifying answers. It means making answers understandable—presenting common sense solutions in a compelling way that persuades increasing numbers of citizens.

The policies pursued over the next several years by both government and the private sector will determine the trajectory of New Jersey’s economic growth. New Jersey doesn’t have to remain an economic laggard and suffer outmigration of jobs in many key industries (health and life sciences, manufacturing, financial services). The Garden State can perform at the same or higher than the U.S. average and experience prosperity once again if we jettison our attachment to the way things have always been and pursue new, innovative solutions proven to work in other states. The path we choose is up to us. For the good of our entire state—including individuals, families, businesses, and, most importantly, future generations—it is imperative that we choose wisely.