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

Author Info

Listed author(s):
  • 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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Article provided by Federal Reserve Bank of New York in its journal Current Issues in Economics and Finance.

Volume (Year): 16 (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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Keywords: Budget ; State finance ; Federal Reserve District; 2nd ; Recessions ; Economic conditions ; Budget deficits;

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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, vol. 16(Mar).
  2. Jesse Edgerton & Andrew F. Haughwout & Rae D. Rosen, 2004. "Revenue implications of New York City's tax system," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 10(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, vol. 13(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, vol. 7(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, vol. 7(Jan).
  7. James A. Orr & Giorgio Topa, 2006. "Challenges facing the New York metropolitan area economy," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 12(Jan).
  8. Jeremy Gerst & Daniel J. Wilson, 2010. "Fiscal crises of the states: causes and consequences," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue jun28.
  9. Jason Bram & James A. Orr & Robert W. Rich & Rae D. 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, vol. 15(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. Rajashri Chakrabarti & Sarah Sutherland, 2013. "New Jersey’s Abbott districts: education finances during the Great Recession," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 19(Jun).
  2. James A. 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, vol. 18(Sept).
  3. Chakrabarti, Rajashri & Sutherland, Sarah, 2013. "Precarious slopes? The Great Recession, federal stimulus, and New Jersey schools," Economic Policy Review, Federal Reserve Bank of New York, issue Dec, pages 41-65.
  4. Bhalla, Ravi & Chakrabarti, Rajashri & Livingston, Max, 2017. "A tale of two states: the recession’s impact on N.Y. and N.J. school finances," Economic Policy Review, Federal Reserve Bank of New York, issue 23-1, pages 30-42.
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