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“Only swift and Broad Reforms Stand a Chance of Rescuing a System in Crisis” in New Jersey

money-printing-press

December 7,2017

the staff of the Ridgewood blog

Ridgewood NJ, Gov. Chris Christie’s special commission on public pensions and health benefits released its final report on Wednesday: only swift and broad reforms stand a chance of rescuing a system in crisis.

New Jersey’s benefits for state government workers are now on track to consume a quarter of the state’s annual operating budget in 2023, and “the cupboard of relatively easy reforms is now bare,” the report said.

As it was for Christie, the pension system will be one of Gov.-elect Phil Murphy’s most pressing and imposing tests.

Christie earned national acclaim for working with Democrats to revamp benefits for government workers by increasing the retirement age, freezing cost-of-living adjustments and forcing workers and state government to contribute more to the system., but the Christie’s administration didn’t live up to its own ambitious payment plan, making deep cuts to the pension contributions, and he eventually set the state on a slower, more modest ramp up to the full payment recommended by actuaries.

Governor elect Phil Murphy has said he’d like to meet or beat the Christie schedule, But according to the commission “something more is needed, and quickly,”  The commission report went on “Neither the 2010-11 reforms, nor the limited initiatives taken since then, will do anything to stop benefits from consuming 26 percent of the budget five years from now.”

Christie could barely scrape money together to get through the first half of a 10-part ramp up to full pension funding with a $2.5 billion payment this year , but the state will need  more than $6 billion in yearly payments .
Murphy has already promised to raise roughly $1.3 billion in new taxes , but measured under national accounting standards, the state is $134 billion short of what it needs to pay for current and future retirement benefits. Combined with local government employers, the total system has racked up $168 billion in unfunded liabilities and has assets to cover just 31 percent of its debts.

2 thoughts on ““Only swift and Broad Reforms Stand a Chance of Rescuing a System in Crisis” in New Jersey

  1. If New Jersey were a corporation it would have declared bankruptcy years ago. Murphy want to “tax the rich” to raise only a fraction of what the state needs to meet its obligations. The Republican tax plan beats him to the punch by removing the deduction for state and local taxes which are already unsustainably high. Things will only get worse as the wealthiest individuals start to leave the state in greater numbers and the mess will be left to the middle class to clean up.

    So, about those union pension payments, can we cut a deal on them now or would you rather we default on them later?

  2. Doing something “swift and broad” will be far harder in light of the coming mass exodus of big dollar taxpayers caused by the double whammy of Herr Trump’s corporate tax hand outs (paid for by blue state property tax payers) combined with Murph’s soak-the-successful tax plan. The iceberg has been spotted, NJ is closing in on it fast and they are running out of other people’s money.

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