Can NJ afford a housing slump?

From Bloomberg:

Housing Slump Erodes Budget Gains From Florida to California

Florida’s tax receipts are falling for the first time since 1975 as a slump in construction and home sales dims the economy of the Sunshine State.

“We’ve been on a pretty steep incline,” said Florida State Senate Majority Leader Daniel Webster, a Republican from Winter Garden. “There was always going to be an end to that, and it’s flattened out.”

States from New Jersey to California are getting pinched, just a year after many enacted the biggest spending increases in almost two decades. They’re drawing down $16.6 billion from reserves this year — 29 percent of their total savings — even as legislators debate tax cuts and plans to expand programs such as government-subsidized health insurance.

“A lot of states are starting to worry,” said Iris Lav, who follows state budgets for the Center on Budget and Policy Priorities, a nonprofit Washington group that monitors state finances. “We have yet to see the effects of the bursting of the property bubble.”

The slowdown in tax collections comes after five years of expansion, surging demand for new homes and soaring real estate prices produced windfalls that gave many states surpluses. California and New York won improved credit ratings and the borrowing climate remains favorable — for now.

In New York, Spitzer has battled lawmakers to limit increases that he says would lead to an $8 billion mismatch between spending and revenue next year.

New Jersey, the most densely populated state and the one with the highest average property taxes, is facing a $2.5 billion budget shortfall next year, putting the strain on state agencies as Governor Jon Corzine pursues a cut to property taxes that soared along with home prices.

“We remain one of only six states with a structural deficit after four and a half years of national economic expansion,” Corzine said this month.

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4 Responses to Can NJ afford a housing slump?

  1. James Bednar says:

    From the Star Ledger:

    Treasurer optimistic on filling feared $625M budget deficit

    State Treasurer Bradley Abelow said yesterday he remains hopeful that a $625 million budget shortfall over the next 15 months — projected by legislative budget analysts — will end up a mirage.

    During an appearance before the Senate Budget and Appropria tions Committee, Abelow said it is still too early to tell which forecasters are more accurate.

    Abelow said the nonpartisan Office of Legislative Services is basing its more pessimistic forecast largely on the fact that revenues so far this year have been disappointing. Treasury analysts think tax receipts will rebound before the budget year ends June 30 because the state and federal economies re main sound.

    “We deeply respect the professionalism and integrity of both fis cal forecasting offices,” Abelow said. Most of the disagreement involves the income tax, and “April returns should allow us both the opportunity to better clarify the picture once the spring collections are received and taken into ac count,” he said.

  2. investorDavid says:

    I was just wondering.. is it possibly that NJ can be annexed to a better managed state? CT? or is it possible a new state can be formed by putting together lower Connecticut, Westchester, NYC, LI and northern NJ?

  3. bergenbubbleburst says:

    #2 Investor David: We will tolerate no talk of secession in the Peoples Republic of NJ.

  4. syncmaster says:

    northern NJ includes Newark and surrounding ghettos.

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