Tag: NJ fiscal crisis

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Analysis: N.J. budget can’t shake familiar problems

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Analysis: N.J. budget can’t shake familiar problems

JULY 5, 2014, 11:49 PM    LAST UPDATED: SATURDAY, JULY 5, 2014, 11:50 PM
BY JOHN REITMEYER
STATE HO– USE BUREAU
THE RECORD

Governor Christie’s latest state budget delays property tax relief, offers more tax breaks to businesses and slashes the state’s pension fund payment. It also highlights the fact that New Jersey is still struggling to overcome long-standing fiscal problems nearly five years into his tenure.

The state’s economy has recovered only half of the jobs lost to the last recession and borrowing has increased each year Christie has been in office, to a record $40 billion.

Property tax bills now average nearly $8,000, but revenue shortfalls have forced Christie to delay relief until next year. Sources of funding for transportation upgrades and open-space preservation have run dry.

And after several years of not making full state payments into the public employee pension fund, Christie is now using the poor health of the pension system to compare New Jersey to bankrupt Detroit.

All three major Wall Street ratings agencies have taken notice of New Jersey’s financial predicament with each one lowering the state’s credit rating and warning that additional downgrades may occur. A poor bond rating can compound the state’s fiscal problems by making it more costly to borrow for things such as new schools and bridges that cannot be funded in one budget year.

The state’s $32.5 billion budget, which Christie signed last week, could be thrown further into disarray if public employee unions are able to persuade a judge to block Christie from providing only a fraction of the state payment that actuaries say the pension system needs.

– See more at: https://www.northjersey.com/news/analysis-n-j-budget-can-t-shake-familiar-problems-1.1046801#sthash.ziRefILg.dpuf

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New Jersey’s warning for New York

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New Jersey’s warning for New York

New Jersey Gov. Chris Christie has faced heavy criticism since he announced that he’s deferring payments to the state’s pension system to balance his budget. But so far no one’s offering a real way out of Jersey’s pension dilemma.

Democrats blasted Christie for reneging on reforms passed in 2010 and 2011 to address the state’s massively underfunded pensions.

But they volunteer no reasonable alternatives to Jersey’s pension problems: Even more taxes on the rich don’t come near to fixing the mess.

Getting Jersey’s retirement system healthy is impossible without new ways of thinking about government in the Garden State — something that few in Trenton acknowledge.

Independent analysts rate the system as among the nation’s worst-funded, thanks to mismanagement and politically motivated self-dealing among politicians and union leaders dating back to the early 1990s.

The actual cost of beginning to pay down the state’s pension debt requires annual contributions of about $5 billion. But Jersey only collects about $32 billion a year in revenues.  (Malanga/New York Post)

https://nypost.com/2014/06/05/new-jerseys-warning-for-new-york/

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N.J.’s pension crisis growing deeper

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N.J.’s pension crisis growing deeper

JUNE 1, 2014, 10:52 PM    LAST UPDATED: SUNDAY, JUNE 1, 2014, 10:54 PM
BY JOHN REITMEYER
STATE HO– USE BUREAU
THE RECORD

Governor Christie is following the well-worn path of New Jersey governors who skipped or barely made payments to the pension fund and used the money instead to balance the yearly budget.

But Christie’s decision to skip the full payments now will have a much bigger impact on the underfunded pension system than the same move by previous governors, according to a an analysis by The Record of pension data compiled by both the Christie administration and the Legislature.

That’s because each time a full payment isn’t made, the difference between what governors need to pay to keep the pension system afloat and what they end up paying gets bigger, and by a compounding rate, the analysis showed.

For example, the $1 billion pension contribution Gov. Jon Corzine made in 2007 accounted for roughly 60 percent of the amount actuaries said the state needed to pay that year to keep the pension fund solvent.

– See more at: https://www.northjersey.com/news/n-j-s-pension-crisis-growing-deeper-1.1027240#sthash.16Kl2960.dpuf

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A limit to pension investing oversight as political donations from executives can go unchecked

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A limit to pension investing oversight as political donations from executives can go unchecked

MAY 27, 2014, 11:10 PM    LAST UPDATED: TUESDAY, MAY 27, 2014, 11:11 PM
BY MELISSA HAYES AND JOHN REITMEYER
STATE HO– USE BUREAU
THE RECORD

Last year, nearly 2,000 businesses doing $6.4 billion in public work reported — as required by state law — that they made $10.1 million in contributions to New Jersey’s various political parties and candidates.

But when it comes to New Jersey’s pension fund — and the increasing share of the nearly $77 billion in assets going to hedge funds, private equity and venture capital funds — such disclosures aren’t so clear-cut.

The pay-to-play law makes it clear that executives and their employees working on the state’s pension fund investments cannot make political contributions to New Jersey candidates and political committees. But those venture capital firms and hedge funds often take the state pension dollars and invest them in other companies whose executives do not have to disclose their political donations.

Now the pension fund’s directors are putting more money into those alternative investments. The complex nature of those investments, the inability of the pay-to-play law to cover all their financial relationships and the lack of any accompanying public database like the one for state contractors make tracking political connections difficult. That comes as Governor Christie has built a national fundraising network that includes donors with backgrounds in the finance industry.

And the state Department of Treasury relies on the investment firms themselves to determine which employees are covered by the law, and to disclose any political contributions made by them. The Election Law Enforcement Commission, which regulates other businesses with state contracts, also relies on companies to self-report contributions. But the commission also maintains a public database of campaign donations and state contractors that allows for increased scrutiny of the donors doing public business.

The council that oversees the state’s investments will meet today for the first time since Christie announced last week that he would cut nearly $900 million from this year’s pension payment to close a budget gap.

The New Jersey State Investment Council, which manages the $76.76 billion pension system, is set to discuss three alternative investment proposals and get an update on its plan for the coming fiscal year. The meeting comes as questions have been raised over the legality of Christie’s scaled-back pension payments and amid claims that the state awarded investments to campaign contributors who support the governor.

From the council’s agenda, it’s unclear whether it will discuss Christie’s reductions or the pay-to-play allegations. A spokesman did not respond to a request for comment Tuesday.

The New Jersey Education Association and the Communications Workers of America, which represents state employees, are already threatening to sue Christie after he signed an executive order last week setting the pension payment for this year at $696 million, down from $1.58 billion. The governor is also calling on lawmakers to approve a $681 million payment for the fiscal year beginning July 1, down from the $2.25 billion the state was supposed to contribute under phased-in payments Christie signed into law in 2010.

The governor said the state cannot afford to pay for the “sins of the past” and acknowledged that the contributions he agreed to are too burdensome. Christie said he plans to announce additional changes to public employee pensions next month.

– See more at: https://www.northjersey.com/news/a-limit-to-pension-investing-oversight-as-political-donations-from-executives-can-go-unchecked-1.1024284#sthash.0VZzacRs.dpuf

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Christie Embraces Irresponsible Spending says credit agencies are the ‘same group of folks who allowed the financial crisis to occur’

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Christie Embraces Irresponsible Spending says credit agencies are the ‘same group of folks who allowed the financial crisis to occur’

TRENTON – Don’t put too much stock in those Wall Street rating agency downgrades, says Gov. Chris Christie.

The governor, whose administration has been at the helm during six credit rating downgrades over the course of his tenure to date, says he’s not worried about additional downgrades. Christie said he finds it interesting they “continue to downgrade the people who try to act responsibly,” but added he doesn’t live in fear of rating agencies.

“No, I don’t fear it,” he said Wednesday during a Statehouse news conference.

“This is the same group of folks who allowed the financial crisis to occur,” he said, arguing they “sat on their hands collecting huge fees” from clients during the financial collapse and essentially got paid “to look the other way,” he said.

“I don’t know how much credibility these places have,” Christie said.  (Arco/PolitickerNJ)

Christie says credit agencies are the ‘same group of folks who allowed the financial crisis to occur’ | Politicker NJ

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Christie puts off property-tax rebates to ease budget problems

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Christie puts off property-tax rebates to ease budget problems

MAY 21, 2014, 11:39 PM    LAST UPDATED: WEDNESDAY, MAY 21, 2014, 11:47 PM
BY JOHN REITMEYER AND MICHAEL LINHORST
STATE HO– USE BUREAU
THE RECORD

Senior citizens, disabled residents and other homeowners who are among the more than a million people enrolled in New Jersey’s Homestead program will not get their property tax relief this year.

That relief — in the form of a credit on annual property tax bills — is again being delayed by Governor Christie and his administration, who blame another bad budget year.

The latest delay means people won’t see this benefit until May 2015 — nearly two years since the last time the tax-relief credit was available.

“When you’re running out of money, you’ve got to manage your cash carefully,” Christie said on Wednesday, defending the decision to delay the credit as part of a plan to reduce his proposed budget by $1.7 billion. “You’ve got to prioritize your bills and decide which ones you absolutely must pay.”

Christie has now postponed the Homestead program three times since taking office in early 2010. Property taxes in New Jersey are still rising, but not by as much as they had when Christie took office and before he pushed for a 2 percent cap on increases. But they are still growing, to a record high statewide average of $7,988 last year.

– See more at: https://www.northjersey.com/news/christie-puts-off-property-tax-rebates-to-ease-budget-problems-1.1020679#sthash.NJ3hvI3O.dpuf

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Moody’s downgrades New Jersey credit rating

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Moody’s downgrades New Jersey credit rating

MAY 13, 2014, 8:45 PM    LAST UPDATED: TUESDAY, MAY 13, 2014, 8:46 PM
BY JOHN REITMEYER
STATE HO– USE BUREAU
THE RECORD

For the third time this year a major Wall Street ratings agency has lowered New Jersey’s credit rating, citing revenue shortfalls and other budget problems.

Moody’s Investors Service announced Tuesday that it was downgrading the state’s credit rating by one step because of New Jersey’s “weakened financial position resulting from recurring revenue shortfalls and ongoing reliance on non-recurring resources.”

Last month, the state Department of Treasury made public an $807 million budget shortfall and said it was largely due to income tax collections falling short of the estimates used to support state spending. The gap between what officials expected to collect in taxes and what people actually paid is the latest in a series that Governor Christie has had to deal with since taking office in early 2010.

– See more at: https://www.northjersey.com/news/moody-s-downgrades-new-jersey-credit-rating-1.1015225#sthash.Zvl9HiI4.dpuf

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Christie may cut budget to close growing shortfall, Treasury says

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Christie may cut budget to close growing shortfall, Treasury says

TRENTON — New Jersey’s budget shortfall will grow to a staggering $807 million at the end of April, state officials announced Monday while warning of a fiscal emergency that could force Gov. Chris Christie to make deep and unexpected cuts to several programs.

The state Treasury, in a rare announcement last night, said the Republican governor is bracing for a tough financial blow when the month wraps up tomorrow. Despite the setback, Christie “will take any and all actions necessary” to find the money to shore up his $32.2 billion budget — even if it means slashing property tax rebates or other programs, Treasury indicated.

An early look at major tax revenues by Treasury officials showed the state will be $600 million short of Christie’s estimates for April. (Rizzo/Star-Ledger)

https://www.nj.com/politics/index.ssf/2014/04/christie_may_cut_budget_to_close_growing_shortfall_treasury_says.html#incart_river