Pennsylvania, New Jersey: No cash to spare
"Least prepared" for recession, says Mercatus
Pennsylvania and New Jersey rank with Arkansas among the "least prepared states," with no cash reserve to prevent program cuts or tax increases in the next recession, writes economist Erick M. Elder, in a report for George Mason University's Mercatus Center.
Like liberal Illinois, Pa. and N.J. are squeezed by large and fast-growing public-worker pension costs; like Wisconsin, Kansas and Maine, three states with conservative free-market governors, they have little or no "rainy-day" reserves set aside to cover school and public safety programs the next time state sales or income tax collections drop.
The states "best-prepared" for recession include West Virginia, Alaska, Wyoming, Nebraska, Iowa, South Dakota. Delaware and Maryland, with their AAA credit ratings (which save millions off the borrowing costs for lower-rated PA, NJ, IL), are "somewhat prepared," according to Elder. Read his short report here.
Are we facing a recession soon, or later? The economy keeps growing, barely. More people are working, more wages are going up. The Fed still says it is likely to raise interest rates, later this year.
You know where else the budget is extra-vulnerable to recession? Philadelphia, where city government and schools are spending this year's windfall real-estate transfer tax revenues, which notoriously dry up when the economy and home sales slow -- usually around the same time as real estate, wage and business tax collections stall, too.
