The Ridgewood Blog Brings a Free Market Laissez-faire Point of View to Local, New Jersey State and National Issues.
Gov. Chris Christie is scheduled to present his next state budget to lawmakers in less than two weeks. And it looks like he’ll be able to deliver that address feeling some confidence about how his spending plan for the current fiscal year is holding up. John Reitmeyer, NJSpotlight Read more
DECEMBER 27, 2015, 10:29 PM LAST UPDATED: MONDAY, DECEMBER 28, 2015, 7:23 AM
BY SALVADOR RIZZO
STATE HOUSE BUREAU |
THE RECORD
As Governor Christie heads into a crucial stretch in his campaign for the White House, back home, another pension dispute with multibillion-dollar consequences has reached a critical stage at the state Supreme Court.
A loss could spark another major budget crisis for Christie, potentially in the middle of a presidential campaign in which he often promotes his experience as a tested leader who can reform the United States’ fiscal problems and rein in $19 trillion in debt.
A group of retired prosecutors and public-worker unions is challenging a law Christie signed in 2011 that suspended yearly cost-of-living adjustments for retirees. When Christie tells voters in the rest of the country about having “fixed” New Jersey’s notoriously underfunded pension system and saved more than $100 billion over 30 years, he is referring largely to this cost-saving measure.
And the Supreme Court is being asked to strike it down as an unfair violation of workers’ rights.
Attorneys for all sides have now filed hundreds of pages of legal briefs. The court is expected to hear oral arguments next year and could issue its ruling just as Christie is competing in key primary states, or during the general-election season.
If they win, thousands of retirees — but perhaps not all of them — could begin to see bigger pension checks every year there is an increase in inflation as measured by the Consumer Price Index.
https://www.northjersey.com/news/pension-challenge-may-cost-new-jersey-billions-1.1481189
N.J. revenues fell further behind Christie projection in November
New Jersey tax collections so far this year were set back further in November by increasingly sluggish corporation business tax collections. Samantha Marcus, NJ.com Read more
Paterson looks to hold emergency meeting to make Friday’s payroll
NOVEMBER 30, 2015, 10:16 AM LAST UPDATED: MONDAY, NOVEMBER 30, 2015, 10:16 AM
BY JOE MALINCONICO
PATERSON – Officials were scrambling Monday morning to schedule an emergency City Council meeting later in the day in an effort to issue Friday’s paychecks to Paterson’s 1,800 municipal workers.
The mayor has said the council must approve temporary budgets for December and January on November 30 in order for the employees’ next checks to be issued on time.
The employee checks were placed in jeopardy last week when the council objected to the administration’s lack of spending cuts and voted 4-4-1 to reject its proposed temporary budget.
The state on November 25 sent the city council a letter criticizing its action. “The City Council’s failure to act on a temporary budget jeopardizes the fiscal well-being of the City,” wrote Timothy Cunnnigham, director of the New Jersey Division of Local Government Services.
Cunningham said the council should “work with the administration to identify specific budget cuts” and approve the temporary budget in the meantime so that Paterson could meet its financial obligation to employees, vendors and bondholders.
It’s not clear whether the council would budge at an emergency meeting. Under laws government fiscal decisions, the administration needs six votes to get the temporary budget passed. That means at least two council members among the five who abstained or voted against it would have to change their minds.
All of the changes contained in the 2011 law that haven’t already taken effect will be fully implemented in just over 1 year. This law wasn’t designed to show a substantial immediate savings. It was designed to implement changes over a period of years and once ALL of those gradual changes were completed the impact of those changes going forward would have a positive effect on the states financial condition. Immediate solutions for long term problems, are just not reasonable or possible.
The full story on the Chapter 78, P.L. 2011 pension reforms… the problems are unfortunately still very much with us. Here are the facts: cost-of-living adjustments (COLAs) were suspended for current and future retirees and beneficiaries from July 2011, but there’s been no inflation in NJ since 2008, so this is not an issue. The increases in employee contribution rates towards their own pensions are only gradual: from 5.5% to 6.5% plus an additional 1% phased-in over 7 years through 2019 for TPAF and PERS; from 3% to 12% for JRS phased-in over seven years; from 8.5% to 10% for PFRS members; and, from 7.5% to 9% for SPRS members. Given the “special” retirement option available only to PFRS members, who can retire after 20-25 years and earn more from their defined benefit pensions for life in retirement then they earned in compensation while serving, they should be contributing more than 10%. As for the increased health benefit contributions, employees subject to any collective negotiations agreement in effect on the effective date of the law in July 2011, i.e. CBAs, that had an expiration date on or after the expiration of the health care contribution provisions of the law, haven’t been subject to the new higher contribution rates yet. In Ridgewood, only Fire is now paying a higher contribution amount, while the PBA and the REA haven’t yet agreed to new CBAs that would trigger higher health benefit contribution rates… so Ridgewood taxpayers have yet to see much, if any benefit from the pension reforms of 2011.
State governments have had a hard time restoring budget reserves since the last recession, and New Jersey remains among those struggling the most, according to new state-by-state fiscal data released by The Pew Charitable Trusts. John Reitmeyer, NJSpotlight Read more
New Jersey is more than $10 billion short on what it would cost to fully fund schools, pensions, transportation projects, Medicaid and other programs, according to an estimate prepared by the state’s nonpartisan Office of Legislative Services and obtained by NJ Advance Media. (Samantha Marcus, NJ.com)
July 11, 2015
Most U.S. state governments are nearly back to fiscal normalcy following the Great Recession of 2007–09, but there still exist troubling signs that states are ignoring the risks in unfunded programs, according to a new study from the Mercatus Center at George Mason University. States that appear to be fiscally robust must take stock of their long-term fiscal health before making future public policy decisions in order to avoid serious trouble if another financial crisis were to occur, the study warns.
Building on previous research about state fiscal conditions, Mercatus Center Senior Research Fellow Eileen Norcross ranked each state’s financial health based on short- and long-term debt and other key fiscal obligations. The study provides snapshots of each state’s fiscal health in an easily understood format.
Norcross analyzed the states’ own audited financial reports, which include basic financial statistics on revenues, expenditures, cash, assets, liabilities, and debt. The states were ranked based on five categories of fiscal solvency, including cash solvency, budget solvency, long-run solvency, service-level solvency, and trust fund solvency. These factors determine states’ ability to cover short- and long-term bills.
The top five states, which are considered fiscally healthy relative to other states, still face substantial long-term challenges with pension and health care benefits systems. The study attributes the high ranking of these five states — Alaska, North Dakota, South Dakota, Nebraska, and Florida — to their significant amounts of cash on hand and relatively low short-term debt obligations.
The bottom five states — Illinois, New Jersey, Massachusetts, Connecticut, and New York — have low amounts of cash on hand, large debt obligations, and high deficits. Based on their billions of dollars in unfunded liabilities, including unfunded pensions and health care benefits, they are at risk of “fiscal peril.”
Read the full Mercatus Center study, “Ranking the States by Fiscal Condition.”
(Reuters) – Many U.S. states balance their budgets by using short-term techniques to make it appear spending does not exceed revenue, according to a report released on Monday that singled out New Jersey for using these budget-balancing maneuvers.
The report by public policy nonprofit Volcker Alliance, founded by former Federal Reserve Chairman Paul Volcker, said New Jersey has produced a balanced budget by shifting resources intended for other programs to its general fund and increased borrowing. Governor Chris Christie is a potential Republican presidential contender in 2016. (DiNapoli/Reuters)
APRIL 16, 2015, 10:13 PM LAST UPDATED: THURSDAY, APRIL 16, 2015, 10:18 PM
BY SALVADOR RIZZO
STATE HOUSE BUREAU |
THE RECORD
Moody’s Investors Service announced a downgrade of New Jersey’s credit rating Thursday night, citing a “lack of improvement in the state’s weak financial position” and recent pension-funding shortfalls.
The state’s bond rating fell one step, from A1 to A2, at a time when Governor Christie and state lawmakers are building a state budget for the coming fiscal year. Christie, a Republican, has proposed a $33.8 billion spending plan that would make a $1.3 billion contribution to the pension funds, less than half what is legally required under a 2011 pension overhaul he signed.
Shorting the pension payments for the third year in a row, as Christie proposes, would saddle the retirement system with more long-term costs. Moody’s raised concern that the system may run out of money in nine to 12 years unless state officials make further changes to pension laws.
one of New Jersey’s many sins of the past Jon Corzine
Christie not responsible for ‘sins of the past’, but says he’s committed to fixing them
FREEHOLD — Appearing comfortable in this overwhelmingly Republican town, where former Massachusetts Gov. Mitt Romney won solidly over President Barack Obama in 2012, Gov. Chris Christie went about reassuring residents this afternoon that he is not responsible for the “sins of the past” that have left the state facing major fiscal problems — but that he won’t shy away from solving them either. (Brush/PolitickerNJ)
Xanadu exec says company was asked for Menendez contribution after key federal permit was issued
FEBRUARY 3, 2015, 4:40 PM LAST UPDATED: TUESDAY, FEBRUARY 3, 2015, 4:47 PM
BY HERB JACKSON AND JEFF PILLETS
STAFF WRITERS |
THE RECORD
A top executive from the Virginia company that first proposed the failed Xanadu project in the Meadowlands said the firm was asked to raise $50,000 in 2005 for then-Rep. Bob Menendez after it received a critical permit from the Army Corps of Engineers, court documents show.
Jim Dausch said in testimony in 2008 he believed Menendez’s efforts led the Army Corps’ top manager in the New York area to hand-deliver the permit in March 2005, and within two months Menendez telephoned him — a call he assumed was about the contributions.
Related: Ferriero wants U.S. attorney disqualified from RICO case; prosecutors cite new evidence against ex-Democratic leader
Dausch said he could not remember if the initial request to raise $50,000 came directly from Menendez, or from two others working with the Mills Corp. on the project, Teaneck attorney Bob DeCotiis or lobbyist Kay LiCausi, who is a former member of Menendez’s staff.
“But one way or the other, it was clear that the request was coming from Menendez and, and it was in anticipation, we understood, of a run that he was planning to make for the Senate in 2006,” Dausch said.
Standard & Poor’s lowers New Jersey credit rating
SEPTEMBER 10, 2014, 12:15 PM LAST UPDATED: WEDNESDAY, SEPTEMBER 10, 2014, 6:00 PM
BY JOHN REITMEYER
STATE HO– USE BUREAU
THE RECORD
Another Wall Street ratings agency has downgraded New Jersey’s credit rating as a response to Governor Christie’s decision earlier this year to cut funding for the public employee pension system.
Standard & Poor’s said in an announcement released Wednesday that the lowering of New Jersey’s credit rating by one step to “A” is in response to recent contributions into the pension system that are well below what actuaries say is needed to keep the system solvent.
“The downgrade reflects our view that New Jersey will face increased long-term pressures in managing its long-term liabilities and that the revenue and expenditure misalignment will grow based on reduced funding for the state’s unfunded actuarial accrued liability,” said Standard & Poor’s credit analyst John Sugden.
– See more at: https://www.northjersey.com/news/standard-poor-s-lowers-new-jersey-credit-rating-1.1084904#sthash.G3QRWVz7.dpuf
Fitch downgrades NJ’s credit rating once again, citing pension shortfalls
SEPTEMBER 5, 2014, 5:12 PM LAST UPDATED: SATURDAY, SEPTEMBER 6, 2014, 12:16 AM
BY JOHN REITMEYER
STATE HO– USE BUREAU
THE RECORD
New Jersey’s credit rating has been cut in Wall Street’s first official reaction to the move by Governor Christie to scale back legally mandated payments to New Jersey’s pension fund, a move he made to balance the state budget.
Fitch Ratings announced Friday afternoon that it lowered the state’s credit rating one step to A, citing a “repudiation” of the pledged pension payments.
The downgrade announcement also cited “the absence of long-term, fiscally sustainable solutions” to close recent budget gaps, “overly optimistic revenue forecasts” and a state economy that “continues to lag that of the nation.”
The ratings action comes as public employee unions are challenging the pension payment reductions — which total $2.4 billion over two fiscal years — in state Superior Court. It also puts New Jersey’s credit rating in a tie with California’s, and above only Illinois among U.S. states.
The downgrade is the second this year from Fitch, which had already lowered the credit rating to A+ after the Christie administration announced in April that tax collections had fallen $807 million short of projections.
Two other major ratings agencies, Moody’s Investors Service and Standard & Poor’s, also lowered New Jersey’s credit rating around the same time.
The credit rating is an important factor in determining how cheap and easy it is to borrow money for capital projects such as schools and bridges that cannot be funded in one budget year.
The latest downgrade is also a blow for Christie, a Republican who has tried to make the case that his fiscal policies and reforms have rescued the state from years of mismanagement under Democratic leadership. And though the state’s unemployment rate has improved in recent months, the loss of roughly 5,000 jobs from the closure of two Atlantic City casinos earlier this week signals that more bad economic news could be coming.
– See more at: https://www.northjersey.com/news/fitch-downgrades-nj-s-credit-rating-once-again-citing-pension-shortfalls-1.1082031#sthash.9mSK3Y9w.dpuf
Senator Joseph Kyrillos and PJ Blogger in Ridgewood
Sweeney, Kyrillos to sponsor bill that would cap unused sick pay
TRENTON – Senate President Steve Sweeney and Senator Joseph Kyrillos are renewing efforts to cap unused sick pay for public employees, according to a statement released by the state Senate today. (Brush/PolitickerNJ)
https://www.politickernj.com/76926/sweeney-kyrillos-cap-unused-sick-pay