State of the State(s)

State of the State(s)

The popularity of the governors of New Jersey and Pennsylvania has hit a new low as they remain mired in controversies.

Gov. Chris Christie of New Jersey, newly inaugurated for a second term in office, is trying to stay above the fray caused by lane closures on the George Washington Bridge and accusations of holding back on Sandy funds to the city of Hoboken, both allegedly for "political" reasons.

Gov. Tom Corbett of Pennsylvania, who has clashed with the citizens of his state on a variety of issues, had to cancel a visit to Central High School in Philadelphia because hundreds of protesters were waiting for him at the school, where he was going to present Central and two other high schools with the Governor's Award for Excellence in Academics. Among the protestors were students, parents and teachers.

According to an article by Jared Shelly in the Philadelphia Business Journal on January 17, the problems of both states go much deeper than these controversies, which are serious in themselves. New Jersey was ranked 50th among the 50 states in fiscal condition, according to a study by Sarah Arnett, an economics professor at the Mercatus Center at George Mason University. Pennsylvania was not far behind, ranking 42nd, while Delaware ranked 37th.

New Jersey ranked at the bottom in budget solvency, largely due to a decrease in net assets of $6.4 billion. The state faces long-run solvency problems due in part to nearly 15 years of under-funding its state and local pensions. Its underfunded pension liability is estimated at about $25.6 billion, while its unfunded liabilities for the health benefits of retired teachers, police, firefighters and other government workers is estimated at $59.3 billion.

The article notes that New Jersey's fiscal problems stem from tax revenues that have not kept up with its expenditures and its "use of budget practices that only appeared to balance" its annual budget and "significant debt levels as a result of decades of using bonds without being able to pay for them."

According to Professor Arnett's study, Pennsylvania didn't do much better than New Jersey. It ranked 47th in cash solvency, 37th in budget solvency, 30th in long-run solvency and 26th in service-level solvency.

Delaware did much better in cash solvency, ranking 15th among the 50 states, but it ranked 49th in budget solvency, 39th in long-run solvency and 46th in service-level solvency.