New Jersey public sector pension funds are in trouble, now predicted to go broke in 10 years. John Reitmeyer and Melissa Hayes have the story in northjersey.com.
[Governor Chris] Christie Christie believes these new figures, called “depletion dates” by analysts. They reinforce his view that reforms to benefits and the pension system as a whole are needed on top of changes that were made in 2011.
The impact of the new figures on the court case is unclear, but for Christie the stakes are high. The judge could order the state to come up with the money to properly fund the pension system, which could be several billion dollars. That would mean making deep budget cuts or significantly raising taxes.
States by law cannot go bankrupt, so if the pension funds run out of money, the full burden of paying out benefits would shift to state taxpayers.
The panel released an initial report in September that said every New Jersey household would have to write a $12,000 check to cover the pensions owed to the state’s public workers. And that bill comes even as the pension system has made up some ground in recent years thanks to strong returns on the investment of assets, which now total $80 billion counting local government funds.
Treasury has started to use a more realistic accounting system to keep tabs on the health of the system, which covers the retirements of roughly 770,000 current and retired public employees in New Jersey.
Christie’s spokesmen referred questions about the new figures to Treasury, where spokesman Chris Santarelli said they underscore “the urgent need for additional, aggressive reform.”
But the unions who filed suit against the state to block Christie’s pension cuts argue the new numbers show there is now a desperate need for the state to cover its obligations.
“Regardless of how the liability is measured, the state’s record of underfunding its annual contributions to the pension system is at the root of its deterioration,” said Dominick Marino, president of the Professional Firefighters Association of New Jersey, one of the unions challenging Christie’s pension cuts.
But the unions are also challenging Christie’s plan to reduce a scheduled $2.25 billion payment for this fiscal year to $681 million to again solve budget problems. The latest legal briefs in the case are due over the next two weeks and oral arguments are scheduled to be heard in Trenton on Dec. 19.