This story about New Jersey from the WSJ.
In 1990 the state was $3 billion in debt. Borrowing has since grown at a compound annual rate of about 13%, and now the state is $32 billion in the red. Throw in unfunded pensions and health benefits for retirees, and that number swells to $113 billion, or $3,400 for every man, woman and child in the state. That’s three times per capita higher than the national average, making New Jersey the nation’s fourth-most indebted state…
…Mr. Corzine is like a new homeowner who finds rotting floorboards once he moves in. And he deserves credit for acknowledging the problem. He’s raised the retirement age to 60 for new state hires, instituted defined-contribution plans for elected officials, and insisted that state employees contribute at least something for health insurance. He’s also pushing a spending freeze, but that would only stop the accumulation of new debt…
…The real problem is tax and spend governance, by both political parties. State revenues have grown at an average annual rate of 3% over 20 years, while spending has increased by an average of 7%. And that’s despite a tax burden that is already nearly the country’s highest (see nearby table). Mr. Corzine’s predecessor, James McGreevey, jacked up the top income tax rate to 8.97% from 6.37% in 2004, giving more hedge fund managers a reason to move to Connecticut.
Mr. Corzine’s toll-hike plan is well meaning but unlikely to work and is already encountering bipartisan opposition. If it fails, he ought to consider the only real solution, which would be a state constitutional tax and spend limitation. He’d be a hero to taxpayers, and it might even save the state from bankruptcy.
Does anyone else notice that no one is calling for more casinos? Not even the tax and spenders.
Hold on tight, Massachusetts. Governor DeVille is trying to do to you what NJ has been doing to its taxpayers for years.
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