By Matt Rooney
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Is the United States talking itself into a recession? Maybe.
What is clear: if one happens in the next six months to two years, Save Jerseyans, the State of New Jersey is screwed.
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We’ve written about over-leveraged, over-taxed, sluggishly-growing New Jersey’s vulnerability to a recession before, but a new analysis from our friends at Garden State Initiative is eye-opening.
The broad strokes: (1) our GDP growth continues to lag our neighbors (1.8% for Q1, considerably slower than Delaware (3.9%), New York (3.8%), and Pennsylvania (2.9%)); (2) the state workforce is still 60,000 workers SMALLER than the average workforce size in 2008; and (3) Five of nine major state industrial sectors are shedding jobs as opposed to adding them.
Ominous? Yes. We’re a chronically sick patient who can’t survive the flu if it strikes.
And it gets worse. Yes… worse.
GSI took a look at Thursday’s monthly Treasury revenue report.
The Corporate Business Tax (CBT) accounted for $177.8 million in July. That’s $43.8 million more than July of 2018.
Good news? Not really, and not just because New Jersey’s CBT is now America’s second highest and our state’s over-taxed business community is running for the exits.
The treasury noted how New Jersey was, as of July, “more than halfway through the second year of a temporary, two-year 2.5% surtax in the CBT on income above $1 million. Beginning in January, the temporary surtax will decrease to 1.5% for two more years before phasing out.”
This is another theme we’ve discussed before; how building a fiscal framework around millionaire’s taxes is an idiotic approach to budgeting. What’s the plan to replace this revenue in the future? There isn’t one. Not as of yet, and if the economy contracts and business revenues collapse, New Jersey will face an asteroid crater-sized budget hole of apocalyptic proportions.
Aaaaaaaaand it gets even worse. Gas tax revenues are down $11 million over the past twelve months. The gas tax rose AGAIN last fall since the increases are tied – by law – to consumption. Commuters and companies are therefore PUNISHED as economic activity falls and gas consumption correspondingly drops (e.g. less trucks on the road, less people taking vacations, etc.). Trenton thought it was a brilliant idea! Remember?
I’m not of the opinion that a recession is a foregone conclusion in the near future, Save Jerseyans. Inevitable? Of course. The economy cycles naturally, but many fundamentals of undergirding our national economy remain robust.
But New Jersey isn’t America at-large, and our state’s piss-poor leadership is setting us up for a straight-up depression without immediate and dramatic reforms to the way Trenton does business IF (or when) the national economy shrinks.
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