New Jersey’s Fiscal Cliff Explained - A REPORT FOR THE GARDEN STATE �N�T�AT�VE

Prior to the pan- demic, New Jersey was ranked the worst place in the country to do business, the highest in property taxes, and scored low on budget transparency and behavior that exhibited good financial manage- ment practices.2 Further, New Jersey ranks 49th nationally in one ranking of state long-term fiscal stability, ahead of only Illinois.3 The state was ill-prepared for a potential fiscal. [...] If the business tax were to absorb the $5 billion increase, the current tax rate – among the highest in the nation, would have to double – increasing the cost of doing business significantly in New Jersey. [...] As of 2023, New Jersey ranks last in the nation in the Tax Foundation’s overall business climate index that assesses the tax systems across the US.23 The state ranks 48th in the nation in both corpo- rate and individual taxes and 42nd in sales tax (all as they relate to business taxation). [...] 22 NEW JERSEY’S FISCAL CLIFF EXPLAINED As shown in Figure 5, the percentage change in pension liabilities – what New Jersey owes to current retirees and workers – has consistently outpaced the change in the economic activity within the state that must support these liabilities in the first place. [...] The current plan for funding pensions requires the state to make contributions in excess of $6.5 billion every year – which includes the net proceeds from the lottery which was transferred to the pension system in 2017 – and growing investment earnings to pay for obligations incurred in the past but not funded.47 Future payments for the pension sys- tem – required to just maintain the progress the.