Pension Crisis

Judge Won't Let Gov. Christie Abandon His Own Pension Reforms

Ordered to restore state payments he had cut

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I think his friendship bracelet is broken.
Credit: Gage Skidmore / photo on flickr

New Jersey's unfunded public employee pension obligations top more than $80 billion. According to a report from December, the state's two largest pension plans could run out of money by 2024 or 2027. Non-profit policy group State Budget Solutions estimates the unfunded obligations to be much higher, more than $200 billion, and calculates that only 30 percent of the state's public employee pension obligations are accounted for.

Regardless of whose numbers are more accurate, the fact is New Jersey's pensions, like many state employee pensions, are a disaster area. But how could this be? In 2011, Gov. Chris Christie and all parties involved (including a Democratic legislature) hammered out a plan that was going to fix it. Public employees would begin contributing more to their own pensions. In turn, the state, which had failed to put in the necessary funds for decades under governors from both parties, would ramp up its payments to close that unfunded gap by 2018. Problem solved!

And then in less than three years Christie screwed up his own plan. Facing revenue shortfalls, he chopped down last year's and this year's state pension contributions, shaving down $900 million and $1.5 billion respectively. The unions sued over Christie's betrayal. On Monday Mercer County Superior Court Judge Mary C. Jacobsen ruled against Christie and ordered him to restore the $1.5 billion cut from the budget.

From Reuters:

Superior Court Judge Mary Jacobson said New Jersey could not renege on its obligations to teachers, firefighters and police who sued the governor and state legislature, which is controlled by Democrats.

"The court cannot allow the State to 'simply walk away from its financial obligations,' especially when those obligations were the State's own creation," Jacobson wrote.

While New Jersey's projected budget shortfall was "staggering," the statute failed to adequately explain why the cuts were reasonable, the court said.

The lesson here should be that these pension systems are unsustainable. Christie should have kept his promise and just butchered the existing budgets of state agencies, forcing both the state employees and the state's taxpayers to get the point. Pension costs are eating up more and more of state budgets, making it impossible for the state to actually provide the services for which it exists. Check out the graph below, showing both the growth in the state's pension payments and its history of failure in meeting its obligations. It's interesting how unions are just now suing over the underpayments given how long this is going on. But now employees are actually paying more into the system:

Reason

According to Reason's latest polling, Americans are concerned about the state of public employee pensions, do recognize it as a crisis, and want public employees to take more responsibility for their own retirements. Read more about our poll results here.

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  1. I will state it again: No matter how hard they try, state constitutions cannot beat math.

    1. Guy is interviewing some accountant candidates. They all have their interviews and gather together afterwards. One is smug as shit for having got the job; the others are hang-faced and dragging their asses.

      The rejects all whine about the very first question: “What is two plus two?” How could anyone ask real accountants such a trivial question? But the winner just grins even more. They ask him what happened in his interview, didn’t he get that same question?

      Sure, he says. I just closed the blinds and asked him how much he wanted it to be. And he said I was hired.

  2. I don’t understand, if New Jersey needs more money, why don’t they just borrow more? Stupid Republican governor.

  3. Fuck just go for a big tax on your constituents. We decided to add a $5/policy for home and auto policies in Minnesoda because the police and fireman pension plans took it in the chin.

    http://www.twincities.com/ci_2…..boost-fire

    No one cared. No pitchforks. No torches.

    Sure a few whiners asked why they had to pay extra just so cops and firemen could retire with cushy benefits, but they were probably just tea party cretins.

    1. New Jersey is looking at raising the state gasoline tax.

      1. Failing that, they could always jack up the cigarette tax or crank out more lottery tickets. Because funding your state government on the backs of the lower classes is working out swell for other states.

      2. That’s a very unpopular option. Way less popular than the red light cameras that were killed largely due to increasing and very vocal disapproval.

  4. I saw a recent posting for a job in San Fran. It was there in the description that any new hire would have to immediately agree (as a condition of employment) to pay 2% of their salary to fund pensions for the already retired.

    So, in addition to the insane cost of living, you instantly make 2% less because some other people need to still get paid for doing nothing.

    1. http://joblist.ala.org/modules…../28807.cfm

      Benefits: All employees hired on or after January 10, 2009 will be required (pursuant to San Francisco Charter Section A8.432) to contribute 2% of pre-tax compensation to fund retiree healthcare. In addition, most employees are required to make a member contribution towards retirement, ranging from 7.5%-13.25% of compensation.

  5. NJ is just jealous of IL being the suckiest pension suckhole to ever suck and wants to catch up down.

  6. The only thing that will save most pensions, without huge tax increases, will be a Dow 30,000.
    So it seems insane to continually attack and tax corporations and other businesses whose value (and stock price) will be most helpful in
    ending the pension crisis. Rising stock values will also give more confidence to employees being asked to switch to defined contribution 401K plans.

  7. my friend’s aunt makes $62 an hour on the computer . She has been laid off for five months but last month her pay was $14934 just working on the computer for a few hours. Visit this site………
    ????? http://www.work-mill.com

  8. Christie is just another statist who believes he can do whatever he wants, regardless of the law. Just like Obama, Clinton and many others.

    Don’t vote for them, and ridicule them at every opportunity. They deserve it.

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