The bond-rating agency Fitch came out with its annual State Liability Report, which measures a state’s total liabilities against state personal income. For NJ, this is an important measure because NJ is a rich state and this fact has often been used to downplay the dire nature of NJ’s pension crisis. To cut to the chase, NJ came in 48th in the nation, with its debts (including its pension liabilities) amounting to 21.4% of state personal income. Only IL (27%) and CT (25.9%) were worse. All of NJ, IL and CT have been among the bottom states for the past four years.
This puts NJ solidly among the negative outliers. Thanks to a buoyant economy, states’ personal incomes rose more than liabilities, and ratios have improved, so the median ratio for a state was a mere 5% (vs. NJ’s 21.4%). A full 37 states had ratios below 10%.
Fitch notes that a big driver for NJ and the other bottom five states was that these states have assumed responsibility for teachers’ pensions. As detailed in Sunlight’s most recent report, over decades, the NJEA worked to ensure that teachers’ pensions remained an obligation of the state. The NJEA also participated in legislative deals that increased pension benefits (and liabilities) but also undermined the funding of the pensions. So here NJ is today, 48th in the nation.
Fitch makes clear: NJ is a rich state, but not rich enough to handle the massive debt burden that has been placed on it by politicians and the powerful special interests that dominate them.