By Mark Lagerkvist / October 19, 2015
With an election for New Jersey Assembly two weeks away, the numbers don’t look good for the fiscal reform urgently needed in Trenton.
The staggering $194 billion liability for public employee pension and health benefits is seldom debated in campaigns for the 80 Assembly seats up for grabs on Nov. 3.
The status quo is a 47-32 advantage for Democrats over Republicans with one seat vacant – a balance not likely to change much. The incumbents have outspent challengers $10 million to $2.2 million, according to a report by a New Jersey election commission.
Even more lopsided, incumbents enjoyed a 10-to-1 cash-on-hand advantage – $5.2 million to $496,000 – over their opponents, as of Oct. 2.
That big edge in campaign finances helps them run for re-election while running away from their failure to solve New Jersey’s fiscal dilemma. The Assembly has been in recess since June – a spell approaching four months.
“The situation is not only getting worse, but is fast approaching a point at which it will be beyond remedy,” warned Gov. Chris Christie’s bipartisan, blue-ribbon Pension and Health Benefit Study Commission in a report released in February.
Keeping benefits at their current level would require a 29 percent hike in state income taxes or increasing the sales tax to 10 percent, the study estimated.
“The already narrow window for a reasonable solution is closing fast. Only decisive action now can preserve a solid foundation of public employee benefits before the ever-growing hole the state has dug itself into becomes too deep for the state to dig itself out of without crushing tax increases and deep cuts to employee benefits and public services,” the commission stated.
That was eight months ago. Since then, Christie and lawmakers have failed to realign New Jersey’s costly benefits to a level comparable to what private-sector employers offer their workers.
Now the unfunded liabilities have reached a staggering $194.5 billion, according to aNew Jersey Watchdog analysis of State Treasury records. Here’s a breakdown of that debt:
New Jersey’s public pensions are underfunded by $113.1 billion. The state bears $80.5 billion of that burden. Local governments are responsible for the remaining $32.6 billion.
State and local governments are also on the hook for $81.4 billion in unfunded health benefits for retired and active workers. The state owes $65 billion; the local share is $16.4 billion.
The total shortfall is nearly six times higher than New Jersey’s total annual budget, currently $33.8 billion. To wipe the liability clean, each household in the state would need to write a check for more than $60,000 per household.
At the present pace, the shortfall for public employee pensions and health benefits will exceed $210 billion next year.
“That, in brief, is New Jersey’s future without meaningful public employee benefits reform – a future that is bleak, burdensome and unacceptable to everyone,” the commission concluded.
None of the New Jersey Senate’s 40 seats are on the Nov. 3 ballot. The next statewide election will be in 2017, when Christie’s second and final term expires.