The Mercatus Center at George Mason University issued a new report today ranking the fiscal condition of the states and, as has become the case far too often, the news for New Jersey is terrible. According to the Mercatus analysis, the Garden State’s fiscal condition, as of FY 2012, ranked dead last, 50th in the nation.
The Mercatus ranking takes into account four indices in order to provide a thorough understanding of each state’s fiscal and budgetary condition: 1) Cash Solvency, 2) Budget Solvency, 3) Long-Run Solvency and 4) Service-Level Solvency.
New Jersey ranks last on two of these indices — Budget Solvency and Long-Run Solvency. Budget Solvency in effect is a state’s structural deficit or, as Mercatus states, our “ability to create enough revenue to cover its expenditures over a fiscal year.” Long-Run Solvency concerns a state’s ability to finance “long-term obligations such as guaranteed pension benefits and infrastructure maintenance.”
New Jersey’s enormous debt burden, caused by years of “using bonds without being able to pay for them”, coupled with massive unfunded liabilities have driven New Jersey into a deep hole. Unfortunately, rather than employing fiscal sanity to dig out of this hole, Trenton’s big-government agenda is only making it deeper.