How NJ's economy could impact a Trump-Christie ticket

New Jersey Gov. Chris Christie delivers his budget address for fiscal year 2015 to the Legislature, February 25, 2014 at the Statehouse in Trenton, New Jersey.
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New Jersey Gov. Chris Christie delivers his budget address for fiscal year 2015 to the Legislature, February 25, 2014 at the Statehouse in Trenton, New Jersey.

As the Republican presidential convention approaches, New Jersey Gov. Chris Christie is on a short list of potential running mates for Donald Trump.

With his combative campaign style and large-state electoral votes, Christie could provide the Trump ticket with a strong political boost, touting his record on a number of issues attractive to GOP voters.

His economic record, though, has a lot less to offer.

On Wednesday, Democratic rival and former Secretary of State Hillary Clinton, made a campaign stop in Christie's back yard to blast Trump for getting rich by taking advantage of American workers.

Standing outside one of Trump's bankrupt Atlantic City, New Jersey, casinos, Clinton said that his campaign is trying to appeal to voters who "are the same people he has been exploiting for years — working people, small-business people trying to support their families."

In a statement released shortly after Clinton's remarks, Trump defended bankruptcy as an "effective and commonly used practice in business."

"I created thousands of jobs and made a lot of money in Atlantic City, which was what, as a businessman, I am supposed to do for my company and my family," Trump said in the statement.

A Christie representative could not be reached for comment. Christie has said that, under his administration, New Jersey's economic and fiscal have dramatically improved since he took office. "New Jersey is better off than it was last year at this time, and it is certainly far better off than it was just five years ago," he said in his State of the State speech this year.

Since he was inaugurated the Garden State's 55th governor in January 2010, New Jersey's overall economic growth has lagged the national pace of recovery. As of the first quarter of this year, the U.S. economy is 22.4 percent bigger than when Christie took office; his state's economy has grown by 18.2 percent.

That means that incomes also have risen more slowly in New Jersey. Aside from crimping household budgets, lower overall personal income growth makes it harder for a state to keep up with increasing costs of delivering services without raising taxes.

Those state-funded health-care costs will rise from about 4.2 percent of GDP in 2015 to 6.3 percent of GDP in 2064, according to a GAO report forecast.

Wage growth in New Jersey also has stagnated for those at the bottom end of the income ladder. In 2013, Christie vetoed a bill that would have raised the state minimum wage from $7.25 to $8.50 an hour.

Under Christie, the state's job market has expanded payrolls more slowly. In the last two years, the pace of job creation has accelerated, helping to close the gap with the national average. But job growth has stalled since the beginning of this year.

Despite spending cuts by the Christie administration, New Jersey is among many states facing widening deficits as the rising costs of Medicaid and pensions continue to expand faster than economic growth, which is needed to boost sales, income and property taxes.

To close that long-term budget gap, the GAO estimates that states will have to cut spending (or raise taxes, or a combination of both) by 5 percent every year for the next 50 years.

New Jersey has more work to do on that score than most states. Thanks to a budget deficit that could top $1 billion over the next two years, the state's fiscal mess lands it third from the bottom in a recent ranking by the Mercatus Center.

Many states and Puerto Rico have borrowed money to fill the gap. Over the years, New Jersey has accumulated a debt pile that amounts to more than $9,200 per person — second only to Puerto Rico.

Christie has worked to close budget deficits with spending cuts, but the budget doesn't fully reflect the state's large unfunded pension liability.

In 2014, Christie closed a budget gap by paying less into the pension fund than required by a 2011 law, prompting labor unions to sue the state. Last year, the New Jersey Supreme Court ruled that it was up to Christie and the legislature to figure out how to make up the pension funding shortfall.

The Democratic-controlled legislature then approved a budget with tax hikes to help close the pension gap. Christie then used a line-item veto to rescind the tax hikes and restore the pension cuts.

While he has held the line on tax rates, Christie has raised additional revenue by cutting back on tax breaks like the earned income tax credit and property tax relief programs.

But New Jersey residents are among the highest taxed in the nation. Both in the average tax per person and the share of overall state income paid in taxes, New Jersey ranks third highest.