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The recession's impact on the state budgets of New York and New Jersey

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Author Info

  • Richard Deitz
  • Andrew F. Haughwout
  • Charles Steindel

Abstract

In the wake of the most recent U.S. recession, both New York State and New Jersey have faced multibillion-dollar budget gaps. An analysis of the makeup of their budgets reveals that the states' heavy reliance on personal income taxes--particularly from high-wage earners in the finance sector--has exacerbated revenue shortfalls. To close their budget gaps, New York and New Jersey have had to make difficult choices about tax increases and service cuts. In the future, the states might take steps to avert such budget quandaries by establishing "rainy day" funds or restructuring taxes to make them less sensitive to the business cycle. Subseries: Second District Highlights

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Bibliographic Info

Article provided by Federal Reserve Bank of New York in its journal Current Issues in Economics and Finance.

Volume (Year): (2010)
Issue (Month): Jun/Jul ()
Pages:

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Handle: RePEc:fip:fednci:y:2010:i:jun/jul:n:v.16no.6

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Related research

Keywords: Budget ; State finance ; Federal Reserve District; 2nd ; Recessions ; Economic conditions ; Budget deficits;

References

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  1. Jaison R. Abel & Richard Deitz, 2010. "Bypassing the bust: the stability of upstate New York's housing markets during the recession," Current Issues in Economics and Finance, Federal Reserve Bank of New York, issue Mar.
  2. Jesse Edgerton & Andrew F. Haughwout & Rae Rosen, 2004. "Revenue implications of New York City's tax system," Current Issues in Economics and Finance, Federal Reserve Bank of New York, issue Apr.
  3. Sobel, R.S. & Holcombe, R.G., 1992. "Cyclical Variability in State Government Revenues," Working Papers 1992_06_7, Department of Economics, Florida State University.
  4. Stavros Peristiani, 2007. "Evaluating the relative strength of the U.S. capital markets," Current Issues in Economics and Finance, Federal Reserve Bank of New York, issue Jul.
  5. Andrew F. Haughwout, 2001. "Fiscal policy in New York and New Jersey: 1977-97," Current Issues in Economics and Finance, Federal Reserve Bank of New York, issue Jul.
  6. Jason Bram & Michael Anderson, 2001. "Declining manufacturing employment in the New York-New Jersey region: 1969-99," Current Issues in Economics and Finance, Federal Reserve Bank of New York, issue Jan.
  7. James Orr & Giorgio Topa, 2006. "Challenges facing the New York metropolitan area economy," Current Issues in Economics and Finance, Federal Reserve Bank of New York, issue Jan.
  8. Jeremy Gerst & Daniel Wilson, 2010. "Fiscal crises of the states: causes and consequences," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue Jun 28.
  9. Jason Bram & James Orr & Robert Rich & Rae Rosen & Joseph Song, 2009. "Is the worst over? Economic indexes and the course of the recession in New York and New Jersey," Current Issues in Economics and Finance, Federal Reserve Bank of New York, issue Sep.
  10. Donald Bruce & William F. Fox & M.H. Tuttle, 2006. "Tax Base Elasticities: A Multi-State Analysis of Long-Run and Short-Run Dynamics," Southern Economic Journal, Southern Economic Association, vol. 73(2), pages 315–341, October.
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Cited by:
  1. James Orr & John Sporn, 2012. "The American Recovery and Reinvestment Act of 2009: a review of stimulus spending in New York and New Jersey," Current Issues in Economics and Finance, Federal Reserve Bank of New York, issue Sept.

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