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Storm will bring spending to N.J., but may not be economic rebound

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An estimated $25 billion in Sandy cleanup and recovery doesn't account for capital losses from damage to homes and falling property values, according to a Rutgers University study. Here, a worker uses a truck to clean a section of the beach in Brick.
An estimated $25 billion in Sandy cleanup and recovery doesn't account for capital losses from damage to homes and falling property values, according to a Rutgers University study. Here, a worker uses a truck to clean a section of the beach in Brick. - (AARON HOUSTON)

It's clear that Hurricane Sandy will bring tens of billions of dollars of new recovery spending into New Jersey's economy, and give a much-needed lifeline to the construction industry and other sectors still reeling from the 2008 recession.

But that's not to say the storm will be an economic boon for the Garden State.

Joseph Seneca, an economist at the Bloustein School of Planning and Public Policy at Rutgers University, said it's true the rebuilding process will likely strengthen some economic indicators.

"It's a significant multiplier effect for additional employment, additional income and additional tax revenues," he said.

A January study by Seneca and his Rutgers colleagues estimated the state will spend about $25 billion through 2015 to pay for cleanup and rebuilding.

What those indicators don't show, however, are the capital losses resulting in property damage and falling property values.

"Those are very real losses, and they have effects, too," he said. "The owners feel and are poorer because of those damages."

Seneca said that will also have an effect on taxes, as municipalities work to account for losses in their ratable bases.

Still, Robert Briant Jr., CEO of the Utility and Transportation Contractors Association, said the rebuilding will help out a critical sector of the economy at a time when contractors are in need of new work.

"We've gone through this terrible four-year period," he said. "So hopefully this will solve our problems for a while."

Briant said the state was already behind on maintenance of its aging infrastructure before the storm, but municipalities, counties and the state were leery of spending the money at a time of recession. He said the federal Sandy recovery money should help, but only so much.

"It's going to help the backlog a bit, somewhat, in certain counties," he said. "But overall, we have a tremendous amount of backlog. There's not enough money to address it all."

E-mail to: jaredk@njbiz.com
On Twitter: @jaredkaltwasser

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