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.
December 7,2017
the staff of the Ridgewood blog
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.”
November 27,2017
the staff of the Ridgewood blog
Trenton NJ, according to Michael Lilley in the article New Jersey Public Unions, Ascendant https://www.city-journal.org/html/new-jersey-public-unions-ascendant-15568.html ,
“New Jersey’s public-pension system currently holds less than 38 percent of what the state owes its retirees, which amounts to a $135 billion shortfall. Adding to this unfunded liability, the state also owes retirees $67 billion for future health-care payments, and has set aside no money for that obligation. That’s a combined tab of $202 billion. The entire state budget, by contrast, is $35 billion. To fund its obligations properly, the state would have to put aside $4.8 billion a year, or almost 15 percent of the budget; those costs are expected to grow to $11.3 billion by 2027. Unreformed, the cost of these benefits is unsustainable. During his campaign, Murphy promised to fix the pension system by fully funding it, though he wouldn’t give specifics.”
A very ugly reality for the governor elect , but even uglier for taxpayers is the fact that ,” Murphy’s problem, however, is that his biggest allies, especially the teachers’ union, contributed mightily to the pension mess over the years by winning plush benefits, acquiescing to accounting gimmicks that made the system look well-funded, and fighting against cost-saving reforms. Murphy has already proposed $1.3 billion in new taxes, and without making the changes to the pension system that the unions oppose, the state’s taxpayers face years of additional tax increases and spending cuts to pay the pension bill.”
Lilley goes on , “Murphy’s pledge helped win endorsements from the NJEA and other public-sector unions. By law, public school teachers must join the NJEA or, if they decline, pay a so-called agency fee to the union representing 85 percent of dues. The money is deducted from their paychecks, which are largely funded by local property taxes. Last year, the NJEA took in over $120 million in union dues and agency fees. Since 1994, the union has collected $1.85 billion, and it has invested much of this money in New Jersey politics: since 1994, the NJEA has spent $874 million on political activities, or about 56 percent of its annual operational expenditures, an average of $38 million a year.”
A beholden bought ad paid for politician and a massive pension short fall can mean only one thing ,massive new taxes .
Executive Order No. 2017-01, officially making Bergen County the first county in the state of New Jersey to adopt a $15 minimum wage for its full time county worker
” most employers cannot simply raise prices to cover the higher minimum wage, particularly in the competitive services sector”. True. But government agencies can cheerfully raise taxes and tell the folks it’s for their own good.
Minimum wages have been most strongly advocated by unions to reduce competition from non-union workers and, historically by Jim Crow and apartheid governments to reduce hiring of minorities.
file photo by Boyd Loving
October 30,2017
the staff of the Ridgewood blog
Ridgewood NJ, in the Tax Foundation’s annual comparison of state business climates New Jersey has once again ranked at the bottom of U.S. states as it has since at least 2015.
While neighboring states Delaware 15, Pennsylvania 26, Connecticut 44 , and New York 49.
The think tank ranked New Jersey 36th in unemployment insurance tax, 42nd in corporate business taxes, 46th in sales taxes, 48th in individual income taxes and dead last in number 50 in property taxes.
Joining New Jersey at the bottom of the ranking were New York, California, Vermont, Minnesota, Ohio, Connecticut, Maryland, Louisiana and Rhode Island.
Over two million people left New Jersey between 2005 and 2014, taking billions of dollars in income and economic activity with them, according to a state business group that blames high taxes for the exodus. Is anybody listening ?
Which American Cities Will File Bankruptcy Next?
by Tyler Durden
Oct 6, 2017 3:50 AM
We harp on the massive, unsustainable, yet largely unnoticed, debt burdens of American cities, counties and states fairly regularly because, well, it’s a frightening issue if you spend just a little time to understand the math and ultimate consequences. Here is some of our recent posts on the topic:
Luckily, for those looking to escape the trauma of being taxed into oblivion by their failing cities/counties/states, JP Morgan has provided a comprehensive guide on which municipalities haven’t the slightest hope of surviving their multi-decade debt binge and lavish public pension awards.
If you live in any of the ‘red’ cities below, it just might be time to start looking for another home…
To add a little context to the map above, JP Morgan ranked every major city in the United States based on what percentage of their annual budgets are required just to fund interest payments on debt, pension contributions and other post retirement benefits.
The results are staggering. To our great ‘shock’, Chicago residents win the award of “most screwed” with over 60% of their tax dollars going to fund debt and pension payments. Meanwhile, there are a dozen municipalities where over 50% of their annual budgets are used just to fund the maintenance cost of past expenditures.
As managers of $70 billion in US municipal bonds across our asset management business (Q2 2017), we’re very focused on credit risk of US municipalities.
The chart below shows our “IPOD” ratio for US states, cities and counties. This measure represents the percentage of a municipality’s revenues that would be needed to pay interest on direct debt, and fully amortize unfunded pension and retiree healthcare obligations over 30 years, assuming a conservative return of 6% on plan assets. While there’s no hard and fast rule, municipalities with IPOD ratios over 30% may eventually face very difficult choices regarding taxation, non-pension spending, infrastructure investment, contributions to unfunded plans and bond repayment
SCOTUS will hear Janus v. American Federation of State, County, and Municipal Employees, Council 31 this term.
Damon Root|Sep. 28, 2017 10:55 am
Today the U.S. Supreme Court agreed to hear a case that has the potential of delivering a death blow to the legal privileges enjoyed by public-sector unions.
The case is Janus v. American Federation of State, County, and Municipal Employees, Council 31. At issue is whether it is constitutional for state governments to compel public-sector workers to pay union fees as a condition of employment even when those workers are not union members.
The case was brought by Mark Janus, a state employee in Illinois who objects to paying mandatory fees to a union that he has refused to join. Janus argues that the state’s scheme violates his First Amendment rights by forcing him to support political speech and activity that he does not wish to support.
Janus’s overarching goal is to overturn the Supreme Court’s 1977 precedent in Abood v. Detroit Board of Education, in which the Court approved mandatory public-sector union fees on the grounds that non-union “free riders” should have to contribute something toward collective bargaining activities that benefit them too. That ruling provided a massive boon to public-sector unions nationwide.
https://reason.com/blog/2017/09/28/supreme-court-agrees-to-hear-major-case
A sea change in New Jersey politics is coming next year, not only because Gov. Chris Christie will be leaving office, but because many prominent voices in the Legislature will be gone or are shuffling into other positions.
A string of departures announced this year in the Assembly and Senate and the death of state Sen. Jim Whelan (D-Atlantic) will take a toll on the body’s institutional knowledge. And, depending on the outcome of the November elections, even more legislative leaders and longtime hands could be headed for the exit.
Assembly Speaker Vincent Prieto (D-Hudson) likely will be ousted from the top job in the lower house by his fellow Democrats and replaced with Assemblyman Craig Coughlin (D-Middlesex), and there’s a chance Senate President Steve Sweeney (D-Gloucester) could lose re-election in his district to a Republican challenger backed by the powerful New Jersey Education Association.
https://observer.com/2017/08/the-key-players-leaving-the-nj-legislature/
Erica JedynakPublished 11:28 a.m. ET Aug. 22, 2017 | Updated 1:54 p.m. ET Aug. 22, 2017
New Jersey’s pension system is failing, and it is going to take a lot of good people down with it.
That sad fact adds a touch of poignancy – along with a dash of frustration – to the latest bad news on the state’s finances. The Mercatus Center, a think tank based at George Mason University, recently rated New Jersey’s state finances as the worst in the country.
While some of the data might seem obscure to non-accountants, the problems are all too straightforward – over-promising and underfunding. Successive administrations and legislative majorities of both parties have made overgenerous commitments, then failed to fund them, leaving a tab that the state’s future taxpayers cannot possibly cover.
New Jersey’s public pension crisis is a stark case in point. With more than $235 billion in unfunded liabilities – $26,000 for every man, woman and child – the state’s retirement system is among the worst in the nation. And while you’re reading this, the problem – decades in the making – is getting worse.
Dustin Racioppi, State House Bureau, @dracioppiPublished 3:29 p.m. ET Aug. 15, 2017 | Updated 5:32 p.m. ET Aug. 15, 2017
Gov. Chris Christie’s new law shifting lottery revenue from education and social-service programs to the troubled public employee pension funds is being viewed as a “slightly positive” move by a Wall Street ratings agency, but not one that will fully relieve the pressure on the state to meet its obligations to workers.
The report by Moody’s Investors Service is the latest analysis by one of the three major ratings agencies that have collectively downgraded New Jersey’s credit under Christie a record 11 times. They often cited the state’s heavily underfunded pension system as the main driver of the downgrades.
Even if one were to wave a magic wand and make these business-friendly changes, it’s way too late. NJ is operating in a state of virtual bankruptcy and servicing its debt is beyond anything changes like these could address. The world is changing, and location is no longer an issue. Businesses can be anywhere now and will always seek the lowest possible cost in terms of employees and real estate. It’s hard keeping anything in the USA, even in its lowest cost areas, when these businesses (or really competing businesses) can operate in places in China, the Philippines, India, etc. If NJ didn’t have such a massive debt load, it could probably ride this transition for many years, but we do have it, and the can is only kickable for so long until financial reality kicks in.
JOHN REITMEYER | JULY 28, 2017
Starting this month, New Jersey’s chronically underfunded public pensions are going to benefit from Lottery funds as well as from more regular payments by the state
The New Jersey public-employee pension system traditionally has received cash contributions from the state in one lump sum — and only if the annual budget has been healthy enough at the close of each fiscal year to provide the full amount set aside by lawmakers.
But thanks to two recent policy changes that took effect earlier this month with the start of a new fiscal year, the pension system is going to receive more regular cash infusions from the state, and from two different revenue sources.
Monthly contributions will come in from the state Lottery under a complicated new law that was enacted earlier this month by Gov. Chris Christie and lawmakers that effectively transferred the Lottery enterprise into the pension system for a period of 30 years.
In fact, official figures that were outlined during a public meeting of the New Jersey State Investment Council yesterday indicate pension-fund managers expect to receive just over $1 billion throughout the 2018 fiscal year from the Lottery, with monthly infusions averaging $83.4 million.
By Christian Hetrick • 06/28/17 4:03pm
New Jersey’s next governor and Legislature must make cuts to retiree health care costs and raise several taxes to diffuse the “fiscal time bomb” created by inadequate payments to the public worker retirement system, according to a new policy report released Wednesday.
The report, “New Jersey’s Prosperity Depends on Immediate Fiscal Reforms,” was produced by The Fund for New Jersey and is aimed to shape the debate during this election year, with the governor’s office and all 120 seats in the Legislature open. The report largely focuses on the huge gap between what the state sets aside each year for pensions and retiree health care and what those obligations actually cost.
https://observer.com/2017/06/report-solving-nj-pension-crisis-requires-tax-hikes-benefit-cuts/
By CHARLES V. BAGLIMAY 31, 2017
A $1.1 billion bond offering to help complete construction of the American Dream mall in the New Jersey Meadowlands went forward this week, nine months after the sale was originally planned.
In the story of the mall’s creation, the delay was a minor speed bump. Thirteen years after it was first announced, the project is on its third developer and is being built in the face of growing doubts about the viability of shopping malls and retail stores across the country. The associated-risks section of the bond offering runs to 38 pages.
But the current developer, Triple Five Group, contends that American Dream’s blend of retail stores and entertainment venues — the sprawling complex is to include a six-acre indoor water park, a Ferris wheel, movie theaters and an indoor amusement park, as well as Saks Fifth Avenue, Hermès, Toys “R” Us and Old Navy — is the future and the “complete opposite of a traditional mall.”
Updated on May 29, 2017 at 1:53 PMPosted on May 29, 2017 at 11:02 AM
BY TERRENCE T. MCDONALD
The Jersey Journal
A lawsuit between a conservative group and the Jersey City teachers union will proceed after a judge denied the union’s bid to dismiss the suit on Friday.
The legal spat focuses on “release time,” a provision in the union’s contract with the public-school district that allows two top union officials to devote all of their time to union activities while getting paid by the district.
Judge Barry Sarkisian dismissed the Jersey City Education Association’s efforts to derail the lawsuit during a roughly 30-minute hearing on Friday morning.
JCEA President Ron Greco declined to comment. Greco is one of the two officials permitted to work full time for the union. The JCEA has argued that freeing Greco of his teaching duties allows him to resolve “potentially disruptive disputes” between the 28,000-student district and its staff.
