Sunday, January 1, 2017

Happy Anniversary! NJ Pension Meltdown Hits Milestone

Happy New Year! But, more importantly, Happy Anniversary!

Who doesn't love an anniversary celebration? Well, let's get out the hats and noisemakers 'cause NJ's got a big one!




In exactly 10 years the lousiest pension fund in the United States—that's been raided for everything from plugging holes in state budgets to financing the construction of a now bankrupt casino during the height of the recession—the New Jersey public worker pension fund is scheduled to run dry! Yippee! See the counter on the right side of this screen.


But there are a couple of rays of hope:

  1. Lawmakers in both houses voted unanimously to approve a bill requiring the state make quarterly payments to the pension system
  2. Senate President Stephen Sweeney unveiled bi-partisan legislation that would allow the newly funded Transportation Trust Fund to beef up its ability to sell bonds directly to the pension fund
I do not claim to be a pension expert, but this does sound promising given that last November, NJ voters approved a constitutional amendment dedicating the gas tax to the transportation trust fund
Currently, the State Investment Council has a 10 percent cap on pension investments for any single bond sale. The proposed legislation would only remove the cap for TTF investments. 
Sweeney (D-Gloucester) argued it would give the state greater flexibility on a "risk-free return on investment." If, for example, the TTF borrowed $1.2 billion at a 5 percent interest rate, then the $60 million would go to support the pension fund, Sweeney said. 
"We're lifting the cap on investing in New Jersey," Sen. Dawn Addiego (R-Burlington), the bill's Republican co-sponsor, said. 

Both also argued putting TTF debt with the state's pension fund would save the state bond underwriting fees. 
"Why are we letting other people make interest off of us?" Sweeney asked at the Statehouse news conference announcing the legislation.
Both the TTF and the pension fund are on life support. If they can help each other—and we can pass a constitutional amendment to fund the pensions—this may just be a win-win situation. But, as Hetty Rosenstein, State Director of CWA NJ said: 
"CWA supports quarterly pension payments. However, unless the full amount due to the plan is appropriated, quarterly payments are meaningless... 
"When it comes to this state's pension, history shows we simply cannot rely on the word of the governor or legislature. So, without a constitutional amendment requiring payments, New Jersey's working men and women could be getting quarterly payments of nothing."

Last August, after promising state workers he would do so, Sen. President Steve Sweeney failed to post the Constitutional Amendment bill that would have given the voters the power to write pension payments into the state constitution. 

We must continue to demand that our state legislators to fight like hell to get that question on the ballot this year. 

ICYMI: check out this video from NJ.com. It gives a brief overview of how we got into this mess, and although it rightly claims that Gov. Christie has put more money into the pension system than the previous 6 governors combined, he has never made the full payments as required by law, and vetoed 2014 legislation requiring quarterly payments, which would go a long way toward fixing the problem.