Jerseyans leave at alarming rate
Outflow is damaging economy
Wednesday, October 10, 2007
BY JOE DONOHUE
Star-Ledger Staff
Residents are leaving New Jersey at three times the rate they were
just five years ago, a trend that is already doing real damage to the
state's economy and budget coffers, a new Rutgers University report shows.
The exodus is so bad, the study says, it could lead to an overall drop
in the state's population as soon as next year.
"The population outflow is real, is approaching worrisome dimensions,
and is exerting a small but increasingly negative impact on the New
Jersey economy," said the study by Rutgers economists James Hughes and
Joseph Seneca.
Last year alone, the loss of people cost the state economy about $10
billion in income, and about $680 million in state budget revenue.
While the economists said they are certain the exodus is growing, they
are less sure of why. Possible reasons include high housing costs and
the state's generally high cost of living. Society in general also is
increasingly mobile, they said.
Seneca said state leaders need a broad agenda to reverse the slide.
The solutions, he said, should include a further reduction in the
highest-in-the-nation property tax burden, more investments in
infrastructure, science and technology and new policies to restore
business confidence.
"These trends are not going to be reversed overnight," Seneca said.
In their study, Seneca and Hughes reviewed Census and Internal Revenue
Service data between 2002 and 2006. They found the gap between the
number of people leaving the state and new arrivals has more than
tripled. In 2002, the gap was 23,759. By last year, it had jumped to
72,547.
Only three other states -- California, Louisiana and New York --
showed bigger losses. Florida, Pennsylvania and North Carolina held
the most appeal for New Jerseyans, according to the study, which is
available at www.policy.rutgers.edu.
The trend could lead to an actual reduction in the state's population
as early as 2008, the study says. Annual population growth fell from
79,184 in 2002 to 21,410 last year.
"There has been a sharp deceleration of population growth in New
Jersey starting in 2002 and persisting since then," the report said.
"This has been primarily caused by the sharp acceleration in the
number of New Jerseyans moving to other states."
The slump in the housing market could slow the exodus: "Basically, if
you can't sell your house, you can't move," the report said.
And in the long run, other states may lose their allure because of
their own rising expenses and congestion.
William Dressel, executive director of the New Jersey State League of
Municipalities, said called the study "bad news. It has profound
implications not only for the state but local governments."
A decline in population not only would hurt the state's economy and
budget, but could cost New Jersey another congressional seat and
curtail population-based federal aid, he said.
Assembly Minority Leader Alex DeCroce (R-Morris) said it is no
coincidence the exodus swelled during a period in which Democrats
raised state taxes more per capita than any other state. The average
property tax bill jumped 29 percent to $6,170, also a national high.
"People just can't handle it anymore. You can't simply tax your way
out of a problem," said DeCroce, who called for deeper budget cuts at
all levels of government.
Philip Kirschner, president of New Jersey Business and Industry
Association, said the exodus of more than 231,000 people over five
years is alarming and signals the need for new state policies.
"When people vote with their feet, I think you have to take that very
seriously and see what we can try to do to limit that," he said.
While economists ponder the impact on future state budgets, Corzine
administration officials said yesterday New Jersey revenues were up
slightly during the first three months of the current state budget
year while several other states are having budget troubles.
The state collected $6.59 billion between July and September -- $93.3
million above projections, according to acting state treasurer
Michellene Davis. Last year at this time, the state collected $6
billion during the quarter, about $1 million below projections.
Despite the encouraging first-quarter news, the state must collect
more than $25 billion during the remaining nine months to meet
year-end goals.
"While we are pleased that collections are tracking close to targets,
we also know that it's early, and the revenue picture doesn't come
into real focus until later in the fiscal year," Davis said.
Even without a major revenue slump, state officials are projecting a
$2.5 billion shortfall next year. Yesterday, Gov. Jon Corzine said it
could be even higher.
"It sort of depends what the economic conditions are, and they're
pretty broadly in dispute among a lot of the prognosticators," he
said. "Revenues are coming in pretty well, as far as I know, at this
stage."
While the full scope of the state's budget problem remains unclear, a
report released this week by Strategas, a New York firm that advises
institutional investors, like pension funds, predicted serious federal
budget problems in coming months.
"Spending is set to more than double in the current fiscal year, while
tax revenue growth has come to a halt over the past few months due to
slower economic growth," it said.
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