The Recession’s Impact on the State Budgets of New York and New Jersey

11 Pages Posted: 16 Jul 2010

See all articles by Richard Deitz

Richard Deitz

Federal Reserve Bank of New York - Research Group

Andrew Haughwout

Federal Reserve Bank of New York

Charles Steindel

Federal Reserve Bank of New York

Date Written: June 15, 2010

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.

Keywords: Richard Deitz, Andrew F. Haughwout, Charles Steindel

JEL Classification: H70, H71, H72

Suggested Citation

Deitz, Richard and Haughwout, Andrew F. and Steindel, Charles, The Recession’s Impact on the State Budgets of New York and New Jersey (June 15, 2010). Current Issues in Economics and Finance, Vol. 16, No. 6, June/July 2010, Available at SSRN: https://ssrn.com/abstract=1640542 or http://dx.doi.org/10.2139/ssrn.1640542

Richard Deitz

Federal Reserve Bank of New York - Research Group ( email )

33 Liberty Street
New York, NY 10045
United States

Andrew F. Haughwout (Contact Author)

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States
212-720-2685 (Phone)
212-720-1844 (Fax)

Charles Steindel

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

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