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New Jersey residents are not the only ones whose friends, neighbors and relatives have been enduring unemployment and mortgage defaults. Citizens of all states are struggling to put the recession behind them, but the effects linger just the same. Just like New Jersey’s Governor and legislators, nearly every state government official is coping with reduced revenue, pension shortfalls, and out-of-control health care expenses.

New Jersey’s December 2010 unemployment rate of 9.1%, though higher than that of some of its neighbors, was comparable to that of the nation as a whole. The State’s rate was matched or exceeded by 21 other states. Only five relatively small states (Nebraska, New Hampshire, North Dakota, South Dakota, and Vermont) had unemployment rates under 6%. Ten states — including California and Florida, the most populous and the fourth most populous states — had rates above 10%. Most states saw only modest growth in available jobs over the course of 2010.

State governments are recovering, but still grappling with severe budget problems. As in New Jersey, legislators and governors in other states are trying to live on less revenue than just two or three years ago because their economies are still operating at far below pre-recession levels. Federal stimulus aid, a non- recurring revenue patch, has expired; unemployment insurance trust funds need to be replenished; and the pressure to restore expenditures persists even as the difficult times continues. Legislators and governors from coast to coast are faced with choices that are as tough or tougher than last year. Like New Jersey, many are trying to cut public sector employment and restrain government salaries and benefits. Unlike most states, however, New Jersey began to enact strong fiscal discipline a year ago.

Almost all states are facing major issues in financing employee pensions. The Pew Foundation reports that in 2008, the 50 states collectively had only $2.35 trillion in assets to finance an estimated $3.35 trillion in future employee retirement benefits. Since then, given the generally reduced levels of pension fund market values and continuing growth in the expected retirement bill, the discrepancy has grown. Many states are considering major changes to their retirement systems, in an effort to reduce the cost burden on taxpayer households and businesses.

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