Here's how New Jersey's finances fared in the 2010s after the Great Recession

Despite close to 10 years of national economic growth, New Jersey is still feeling the lingering effects of the Great Recession.

Governors of the past decade struggled to fill gaping budget holes when the money coming in to state coffers dropped dramatically, forcing leaders to put off investments in education and infrastructure, among other needs.

"In general, New Jersey has been a state that has lagged behind almost all other states in almost any of the major indices of state fiscal health that we look at," said Barb Rosewicz with the Pew Charitable Trusts. "Among them, New Jersey is one of the last to finally have gotten revenue back to the purchasing power before the recession."

Meanwhile, Govs. Chris Christie and Phil Murphy had to grapple with growing debt and pension and healthcare liabilities for public workers. Because leaders of the past few decades didn't make their payments to the pension fund on time, the amount the state owed grew exponentially, and now eats up a larger and larger part of the state's budget, which is already strapped. This, among other financial missteps, led to multiple credit downgrades from the three credit ratings agencies.

Here are some of the ways New Jersey's budget and finances have changed in the last ten years, and how it got here:

NJ state budget

The 2010 fiscal year budget was $31.2 billion, which included federal stimulus aid. The budget for fiscal year 2020 came in at $38.7 billion.

But after adjusting for inflation, New Jersey is one of more than half of states that is spending less than a decade ago, according to an analysis by the Pew Charitable Trusts.

"The state has not restored a lot of the budget cuts it made after the recession, like aid to local governments, higher education, hiring back state workers," Rosewicz said.

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Crippling pension payments and debt

Close to 10 percent of New Jersey's budget went to making its pension payment in the 2020 fiscal year: an unprecedented $3.8 billion. And that's still only 70 percent of the recommended amount that keep costs from growing out of control.

New Jersey needs to come up with $99.6 billion to afford future pension payments for retirees, according to the 2018 debt report, making its pension liability one of the worst in the country. Murphy will ramp up his checks to the fund by ten percent each year, reaching his full payment in 2022-2023.

Governors of both parties started slacking on what they needed to pay the fund in the 1990's, some years skipping payments altogether, assuming more optimistic rates of returns on investments than was realistic, or borrowing money to pay down the pension debt.

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In the last decade, Christie didn't make a payment in 2011, and while he started a schedule to get the pension payments back on track, he didn't stick to the plan when unrealistic revenue predictions and the expiration of Bush-era tax cuts led to a huge budget hole.

In 2010, the recommended payment to the fund was $2.5 billion. That more than doubled in 2019, up to $5.3 billion. Legislators and the governor will have to find a way to finally make the full payment, and pray they do it before another recession hits.

On top of that, New Jersey is on the hook for $90.5 billion to pay for retiree health benefits, according to the 2018 debt report. Compare that to 2010: the liability was a mere $10 billion a decade ago. And looking at taxpayer-backed bonded debt: New Jersey owes $45.2 billion as of 2018. That number was $37.7 billion in 2010.

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Average property tax bill, school aid

A New Jerseyan's average property tax bill increased from $7,576 in 2010 to $8,767 in 2018, according to data from the New Jersey Department of Community Affairs. That's a 15.7% increase when looking at numbers not adjusted for inflation.

It's a smaller difference when adjusting for inflation: The bill from 2010 comes to $8,713, while 2018's average property tax is $8,810.

But those payments are taking up a bigger percentage of residents' paychecks. An Asbury Park Press analysis found that a 1998 property tax bill took up 7.5 percent of the state's median income. Twenty years later, the average property tax represented 11.4 percent of median income.

At the same time, state aid to schools remained close to stagnant at the beginning of the decade, slowly increasing from $10 billion in 2011, $11 billion in 2012, up to $13.2 billion in 2017, according to data from the Department of Treasury. The Murphy administration passed budgets that injected $15 billion in 2019, and $15.4 billion in 2020 to education payments.

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Money stashed away

For the first time in 11 years, New Jersey stashed cash away in a "rainy day fund" in order to be prepared if a recession hits. Murphy's 2020 fiscal year budget placed $401 million into an account that can only be tapped in case of an emergency

"It gives the state a buffer if tomorrow the economy turns down, or the state doesn't collect as much capital gains revenue, or if there's another Hurricane Sandy and New Jersey is short of cash when waiting for FEMA," said William Glasgall with the economic nonprofit The Volcker Alliance. "It's not going to fix the state's finances, but helps them get over a hump without cutting a lot of its services."

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New Jersey emptied the entirety of the rainy day fund's $735 million in just one year, in the wake of the Great Recession in the 2008-2009 fiscal year, Treasurer Elizabeth Maher Muoio told lawmakers in a May budget hearing.

It went empty until Murphy's injection this summer, which is not nearly enough to protect from an economic downturn, according to financial recommendations. New Jersey is one of two states that isn't are not ready for when a recession hits, according to a study by bond rating agency Moody's Investor Investors Service.

Experts recommend that a state locks away anywhere to 5 to 15 percent of a state's budget, depending on how volatile the state's revenue is. For New Jersey, that would be $1.9 billion to $5.8 billion for fiscal year 2020, putting the state far from where it needs to be.

As for the overall surplus over the decade, New Jersey went from $502 million in fiscal year 2010 to more than double that, $1.3 billion in 2020, which includes the rainy day fund injection.

Ashley Balcerzak is a reporter in the New Jersey Statehouse. For unlimited access to her work covering New Jersey’s legislature and political power structure, please subscribe or activate your digital account today.

Email: balcerzaka@northjersey.com Twitter: @abalcerzak