
By Samantha Marcus | NJ Advance Media for NJ.com
on January 07, 2016 at 7:31 PM, updated January 08, 2016 at 8:19 AM
TRENTON — State Senate President Stephen Sweeney and labor leaders on Thursday defended his proposal to constitutionally enforce payments into the public pension system against arguments it’s a gift to special interests that will shackle New Jersey’s finances.
The scrap between Sweeney (D-Gloucester) and labor leaders vs. Senate Minority Leader Tom Kean Jr. (R-Union) and business lobbyists centered on what would be worse: a mandated pension contribution that would eat up so much money the state couldn’t respond to fiscal emergencies, or a pension system that continues hurtling toward insolvency.
Sweeney, the Democrat leading the charge on the amendment, told the Senate state government committee it’s in everyone’s interest to pay the bill now. Should a pension fund run out of money, the state would have to pay retirees’ pension benefits out of pocket, he said.
“If we don’t do this, by 2026 or 2027, when the pensions go broke, it’s nine or ten billion dollars. And that’s coming out of the budget. Directly out of the budget,” Sweeney said. “That’s armageddon.”
Ask yourselves, why is a constitutional amendment needed? Because the amount of money, “$9 or $10 billion” a year according to union thug leader Sweeney, would displace other federally and state mandated spending…. just to pay for past promises of excessive pensions. The public pensions and health benefits promised were excessive, so unless they diminish the benefits at the same time, and move all current employees to defined contribution, i.e. 401-k style pensions, this constitutional amendment is dead in the water.
Watch our for the old Sue & Andrew bipolar blogger on this post… apparently he’s been let off his leash
Listen to Sweeney speak, he’s a moron.
to # 1 and if wall street sinks, then what.
Ummm, 10:10 am the only pension system that Ridgewood residents need to be concerned about is the Teachers pension system, which is grossly underfunded. The Police, Fire and municipal employees pensions are adequately funded. Maybe you should educate yourself and start talking to the teacher’s Union Thugs and not be grouping ALL government employees into one group.
Ummmmm 6:49 why are other pensions fully funded and not the teacher’s pension? Teachers are not responsible for the negligence of politicans and government.
Great to see the teachers and PFRS see eye to eye…. You all get too good a deal, period. Time to diminish your benefits big time.
Keep dreaming while you reach deeper into your very deep pockets 8:59 AM. Time to pay your fair share is coming very soon.
Lawmakers approved a proposed constitutional amendment that mandates the treasury pay into the public pension four times per year — rather than annually. The measure has the backing of the state’s influential public labor unions, but has been vocally opposed by Republicans including Gov. Chris Christie who note this will limit the state’s spending flexibility and result in large state tax increases to pay for other state & federally mandated spending. This is a pure money grab by the union-controlled public pension pigs. Shameless greed, and the surest way to send NJ towards a state bankruptcy. Why no mention of diminishing the excessive and greedy pensions and health benefits first before pushing through with this guaranteed tax grab? As all of the $100K pension thugs like 10:04 above know, when you already spend the equivalent of +25% of your annual state budget ($9-10bn) just on pension checks every year, you have a problem. Can you imagine a private business spending 25% of its annual budget on pensions for retired employees, not even including their health benefits? It’s outrageous and beyond out of control. Time to diminish pension & health benefits now before any tax increases or constitutional amendments just to pay for pensions.
Read it and weep pension thugs… https://www.northjersey.com/opinion/a-public-pension-is-not-a-constitutional-right-1.1489107 Your moronic union apologists, Sweeney and Prieto, DO NOT want to just pick your pockets, they want to turn you upside down until the blood rushes to your head and you pass out. After that, even your gold fillings — if you have any — will not be safe. This is after Democratic/union controlled legislatures in Trenton have done everything in their power to destroy the NJ state economy for 30+ years. If Sweeney and Prieto are the best and brightest in NJ government, this once proud state of NJ is doomed to economic collapse. Have fun collecting your excessive benefits in state bankruptcy court! Maybe the AFL-CIO, NJEA, PBA or iron workers union lawyers can help you.
I love it… Sweeney has decided to put the entire population of New Jersey on the same ship. There are not enough lifeboats. But in the private sector, companies go bankrupt and pensions may disappear. In places like Detroit, pension benefits have been greatly reduced. There are consequences to the good and bad decisions made by private and public employers. And many people suffer those consequences. But there also is no such thing as a constitutional right to a public pension unless Sweeney gets his way on this constitutional amendment. If voters approve such a proposal, the state would be required to make massive quarterly payments into the pension fund. If there was not enough revenue to make the payment, something would have to be cut or taxes would have to be raised. So if taxes don’t go up, services will go down. So why is there no mention of diminishing, i.e. reducing public pension and health benefits before it comes to this?
Interesting that 10:04 wants all of us to pay more taxes because he thinks we don’t pay our “fair share” already. He must be that landlord Ed Sullivan who insulted all residents at the parking garage meeting. Last I checked, NJ residents pay the highest state & local taxes combined in the United States. None of us in Ridgewood have seen any property tax relief, and most of us pay our quarterly property taxes on time. Yet, Ed wants more, always more…
Anonymous January 12, 2016 at 6:14 am, Read it and weep pension thugs…
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Hey 6:14 am, Maybe you should rely more on court decisions for your source of information rather than some opinion piece in a newspaper.
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I suggest you read the document at the link below dated February 27, 2015 from the N.J. Superior Court Burgos vs State MER-L-1267-14 (NJ Super. Ct. Law Div. which states ” Chapter 78 granted employees a contractual right to their Pensions” and while you are reading pay particular attention to page 4 under the heading of
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SIGNIFICANCE OF THE OPINION
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Which states ” In particular, this opinion deals with the issue in the context of a state government, which is INELIGIBLE for chapter 9 relief under the Bankruptcy code. I hoped you don’t mind if I use your opening line…….Read it and weep 6:14 am……LOL
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https://www.cgsh.com/files/News/2b17e269-552e-44b8-90c9-f9a350b4dab0/Presentation/NewsAttachment/25ad0391-4959-4f6c-8a04-fa138e0e1630/N.J.%20State%20Pensions%20-%20Veto%20of%20Pension%20Funding%20Violates%20Public%20Employees%e2%80%99%20Contractual%20Rights.pdf
I personally love the part of that document that states: “Plaintiffs sought a judgement that vetoing the 2015 ARC payment violated the Contract Clauses of the New Jersey and U.S. Constitutions, both of which prohibit laws impairing the obligations of contracts.”
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That sentence alone destroys the following comments and exposes the people who made those comments as ill informed
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6:07 am “Time to diminish pension & health benefits now before any tax increases or constitutional amendments just to pay for pensions.”
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6:20 am “So why is there no mention of diminishing, i.e. reducing public pension and health benefits
A public pension is not a constitutional right
6:14, they can promise you the moon in contractual rights to your pensions, but as Detroit’s bankruptcy proceedings proved, pension & health benefits can – AND WILL – be diminished. A public pension and health benefits are not a constitutional right. Sweeney’s trying to change that with his absurd constitutional amendment idea. Of course, you are all for that. Why? Because if public pensions become a constitutional right, NJ taxpayers will be bled dry to keep those pensions solvent. Democrats and their union masters who created this mess over 30 years of bad CBAs want voters to believe this is all Christie’s fault. A promised pension is a moral responsibility. But in the private sector, companies go bankrupt and pensions may disappear or be diminished. In places like Detroit, pension and health benefits have been greatly reduced. The public also should have been doing the math and realizing that if many special retirees could collect generous benefits for more years than they worked and paid into the system, the house of cards would have to fall eventually. But money will not grow on NJ trees, and sticking your blood funnel deeper into the pockets of over-taxed NJ families is not a solution, it’s a money grab.
LOL 4:21… yes, state government’s are currently ineligible for Chapter 9 relief under the Bankruptcy code, so keep consoling yourself with that fact. But remember, a public pension is not a constitutional right, and some very good constitutional lawyers have been working for many years on how to allow states like NJ, IL and CA to file for bankruptcy. Here’s an article from 2011 you can read to educate yourself: https://www.nytimes.com/2011/01/21/business/economy/21bankruptcy.html Just because you were promised a very generous deal to collect benefits for more years than you actually worked and paid into the system doesn’t mean the deal promised wasn’t a Ponzi scheme. Even if the state had made the stipulated payments, the pension formula was constructed on faulty math. It’s a sad state of affairs, but when the money runs out, states will find a way to declare bankruptcy, just like Detroit.
People that think filing for bankruptcy is a potential approach may want to consider that NJ is one of the wealthiest states in the nation. Push this to a bankruptcy court and you will see more funds redirected from general operating expenses to the defined benefits buckets… Detroit had nothing on the asset side and it was still a drawn out process. This state has an abundance of wealth (believe it or not) and if you’re worried now, see what happens if the state is forced to redistribute more to the pension coffers- the way to do that will be raising taxes, cutting services or a combo of both…
Sorry January 13, 2016 at 8:32 am, but your shoveling sand against the tide. Only the teachers and state pension systems are failing. Municipal and county pension plans are adequately funded, so even if the state of New Jersey could declare bankruptcy on their pension debts it will not impact municipal or county Police, firefighters or municipal and county government employees. So wish all you like for a bankruptcy. The people you are targeting will not be impacted by the state going bankrupt.
wealthiest state in the nation? Guess you forgot about the worst debt finances of any state plus $200 in unfunded liabilities…. NJ already pays well above other states for municipal bonds and maybe you’d missed the seven consecutive downgrades of the state’s debt rating. Your solution is to raise taxes… On the highest taxed people in the country. Keep dreaming
1056, ONE of the wealthiest states in the nation… look at per capita income… I hope the solution is not to raise taxes, just stating likely outcomes… you miss the whole issue… We send 25-35 bil more than we get back from Washington to subsidize those “tax friendly (and usually red) states… do you really think the feds are going to allow bankruptcy and jeopardize that cash flow? Or the state? I suggest that YOU keep dreaming. The poster 1025 is absolutely correct… it will impact everyone except the “targeted” groups. Sorry to shatter your dreams with facts.
Bankruptcy might allow a Federal take over , to sure up NJ’s pension system . A way for NJ to get some money back from the Feds?
James- I think the threat of any type of bankruptcy approach may force some flow back from dc, if our reps gin up and back some sort of return of money that’s OURS to begin with… also the hidden 800 pound gorilla is the PGC, which has not had to bail out a non private sector program yet… it should be interesting to see how all sides posture on this during the coming year…
Paul, sorry but per capita income is cashflow. The $200bn is an unfunded liability on the balance sheet of the state and municipalities, along with the accumulated net state and municipal debt. The cashflow is mobile, i.e. wealthy residents and succesful businesses can leave and move to PA, FL, CO or GA. However, the unfunded liabilities remain. It’s a typical union trick; talk about the operating budget but ignore future unfunded liabilities.
Or you could just take money from the more solvent plans to prop up the less solvent ones, i.e. I’m sure the municipal PFRS retirees will be happy to prop up their brothers in the state PFRS plan, right?
The apologists above are ridiculous – “soak the rich and make them pay their ‘fair share'”; or, “it’s Christie’s fault”… What is wrong with you people, are you communists? Case in point: why are all of us tax paying residents subsidizing $26,000 annual health benefit plans that the public employee only contributes a max of $480 towards? That may be “legally binding” but iby any other lens, that’s theft.
An unfunded liability is the amount at a point in time like now, of which FUTURE payment obligations exceed the PRESENT value of funds available to pay them. Which means the hole is not $200 billion. Yes, there is an unfunded liability that definitely needs attention, but scare tactics by manipulation of statistics only provokes reactions from both sides. Yes cashflow is mobile, but as older residents move, younger residents take their place and the track record is as it’s always been. Yes, something needs to be done but an honest assessment of the true gap is the way forward, not dealing in simplicities and not referring to people as union thugs as well as people fortunate enough to receive those benefits laughing at those who complain. The polarized approach is a lose lose proposition for us all.
Anonymous January 13, 2016 at 2:26 pm said, Or you could just take money from the more solvent plans to prop up the less solvent ones, i.e. I’m sure the municipal PFRS retirees will be happy to prop up their brothers in the state PFRS plan, right?
Sorry 2.26 pm, Nope, not gonna happen. You failed to keep track of the politicians YOU voted for and they stole the money from the state pension systems to fund their pet projects. So now you have to pay your stupid tax. Don’t expect anyone else to pay what you are legally responsible for. Nice try though. Dig deeper my friend.
Meant a TRUE unfunded liability factoring in projected incoming fund as in actual projected deficit… whether the inflow is overstated or understated the TRUE whole is NOT 200 billion… 200 bil is a theoretical number
4:10, you’ve lost me again… Could you enlighten us with which politicians stole money from the state pension systems to fund their pet projects? Which projects are you talking about? I’ve never seen a property tax rebate or declining state and property taxes myself. You mean pet projects like the American Dream Meadowlands which started off as Xanadu in 2004 in the swamp? That won’t be done until 2017. Or Revel in AC? As far as I can tell those were both make-work projects for union labor, sanctioned by Democrats I never voted for. Christie’s been making the largest payments ever in to the pension system. Whitman borrowed $2.7bn which is being paid back with over 7% interest so that’s in the pension funds’ favor versus what they get on treasuries and the $1.0bn in discounted PFRS mortgages.
Paul, I agree with you that an honest assessment of the true gap is the way forward, and the polarized approach is a “lose-lose” proposition for us all. However, I think you’re being disingenuous to say that as older residents move, younger residents take their place and the track record is as it’s always been. The fact is that NJ has net migration OUT of the state, and businesses are leaving, i.e. Mercedes and Hertz. We’re competing with other states (and countries) for jobs and people and frankly NJ is just not competitive. Job creation has lagged the region and the country in the current economic recovery. My point here is that the fixed cost, unlimited liabilities don’t leave the state along with the elderly, i.e. wealthy residents and businesses. Those fixed costs for defined pension, accumulated leave and health benefits are growing much faster than inflation and the 2% property tax cap and they an increasingly large weight in the state and municipal budgets. In Ridgewood, 60.1% of the 2015 Village budget goes to fixed cost, contractual obligations (see p.17 of https://mods.ridgewoodnj.net/pdf/manager/2015BudgetPresentation.pdf) and that number is up from the mid-40% range 15 years ago. This means the Village can only spend 40c of every dollar it takes in on variable expenses like capital improvements, quality of life improvements for residents, Parks & Rec, Shade Tree, etc. As those fix costs crowd out other budget items, either you cut services, raise taxes, or do both. So the track record is not as its always been because the pension math is wrong – you have special retirees drawing pensions and “Platinum” health benefit plans that pay 95% of the cost of essential care from an average age of 52. That means if they live to the male average lifespan of 86.6 years, they’ll draw that pension for 34 years vs. only 25 years of service, with less than 10% of their earned wages made as pension contributions. That’s a Ponzi Scheme and the cost of paying for that will crowd out state and municipal budget flexibility unless we reduce benefits, i.e. downgrade current employees to “bronze” health benefits, shift current employees to defined contribution pension schemes like 401(k) plans, and only let early retirees start collecting their pensions from age 62. Only then would it be possible to ask for increased state, local and consumption taxes as a fair trade-off with NJ taxpayers, who are already the highest taxed Americans. Just throwing more money at a failed status quo solves nothing, it’s nothing more than a money grab. An honest assessment of the true gap is the way forward, and a solution requires shared sacrifice and the willingness to let go of the failed status quo.
813, your reply is incredibly clear and to the point. Yes there is an outward migration of large businesses but in terms of net people migration, I wonder what the median age is in NJ versus 10 years ago. Younger families that have more than average incomes are staying put in urban environments longer but I still think eventually many of these young families will pack up stakes to go to the other side of the Hudson. And yes, the dreaded shared sacrifice will be foisted on us one way or another eventually. Medical benefits especially are unsustainable not just for us footing the bill but also for our own coverage. That issue is much bigger than a union issue.
What are the unions giving up here? Seems like they get everything they want and more under Sweeney’s proposed change to NJ’s constitution to force the state to pay for excessive benefits when NJ public sector employees contribute less than any other state towards their own pensions and healthcare? You’d need massive tax increases and cuts in state spending to fund the additional $4 billion a year needed to pay for this, and yet the unions aren’t giving up anything? https://www.dailyrecord.com/story/opinion/letters/2016/01/25/pension-amendment-danger-nj/79211662/
Amazing how overtaxed NJ residents are, and yet the union controlled legislature in Trenton still can’t afford all they’ve promised as the state finances collapse. this constitutional amendment will lead to $4 billion in new taxes because the unions don’t want their members to give up anything, i.e. REA’s refusal to negotiate a new contract in good faith over health benefit contributions. Voting “yes” on this amendment is voting for a big tax increase on everyone to keep funding excessive benefits for a small minority with public sector pensions and benefits, make sure to call your elected officials and say “No!” before this ever comes to a voter referendum where the unions will get out their vote and destroy the state