The Economic State of New Jersey

Writing at RealClearMarkets, the Manhattan Institute's Josh Barro argues that New Jersey Gov. Chris Christie is starting to restore some fiscal sanity in the Garden State:

Here's some good news for New Jersey residents, who pay more in state and local taxes than people anywhere else in the United States: earlier this month, New Jersey Governor Chris Christie released a budget proposal that contains no tax increases. He would even sunset, on schedule, a one-year "temporary" increase in the state's income tax.

This is a refreshing shift for the Garden State, where thirty years of governance by Republicans and Democrats has pushed state and local taxes ever higher, from the 10th-most taxed state in 1980 to #1 today, according to the Tax Foundation. And it means Christie has made an impressively austere proposal, given that New Jersey's $10.7 billion budget gap is one of the country's largest, on a percentage basis.

The best thing about Christie's approach is its comprehensiveness. He's not just saying "cut spending"—though of course, he is saying that, in all areas of the state's budget. He also recognizes that state and local spending are interrelated issues, so he's proposed a property tax cap to make sure that state spending cuts don't just drive up local property taxes. And he's proposing institutional reforms that will enable localities to cope with aid cuts by reducing spending.

Read the whole thing here. Back in January, economist Eileen Norcross explained what it will take to end New Jersey's fiscal nightmare.