New Jersey

Neither Major Party Gubernatorial Candidate Has a Serious Plan to Fix New Jersey's Pension Crisis

The state has a $135 billion pension debt, but Phil Murphy and Kim Guadagno would rather spend the campaign's final days fighting the culture war.

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Kyle Mazza/newzulu/Newscom

New Jersey, depending on how you count, has the nation's worst public pension debt or it ranks in the top three along with Illinois and California. The Garden State's estimated $135 billion pension debt—that's a tab of $15,000 for every man, woman, and child living in the state—is a serious problem for its long-term solvency.

If you spent any amount of time on Sunday watching football in the Philadelphia media market, you may have been surprised the pension crisis went unmentioned in the blizzard of campaign ads for Republican Kim Guadagno and Democrat Phil Murphy in the race to replace New Jersey Gov. Chris Christie (who is not seeking re-election but remains deeply unpopular in the state).

Which is not to say that pensions haven't been discussed at all during the campaign. The two candidates sparred a bit over the pension crisis during an October debate, and both candidates' websites offer bare-bones plans for tackling the budget-busting problem.

What they've offered, though, leaves much to be desired.

Murphy seems to be a runaway favorite in tomorrow's election—though some polls show Guadagno closing the gap, slightly, in the race's final weeks—so let's start with his proposal. He says he will fully fund the state pension system, which is a step in the right direction.

Underfunding the pension system for decades is a major reason why the state now finds itself in such dire straits. But Murphy has given himself a lot of wiggle room with that promise. "We will fully fund our pension obligations, and we'll get there as fast as we can," he said last month, according to Philly.com.

Getting there will require either massive tax increases or huge cuts to government services. Fully funding the pension system this year would have required a $4 billion contribution, but the state is paying just $700 million. Even if Murphy is able to deliver on his promise to generate $1.5 billion in new revenue by legalizing and taxing marijuana, and increasing taxes on New Jersey's highest earners, he won't get close to meeting the pension obligations.

"We have a very, very, credible plan to … fully fund the pensions over the next several years as rapidly as possible," Murphy said during October's debate, according to NJ.com. "At least as fast—I hope a lot faster than this administration has been funding them."

Despite the fact that he's a Democrat, Murphy's plan sounds a lot like the Republican Christie's: ramping up contributions too slowly to make a dent in what the state owes. Most recently, Christie proposed shifting revenue from the state lottery into the pension system, a risky gamble considering that lottery sales have been declining in recent years.

Guadagno says fixing the pension problem is in everyone's best interest. "This problem will only be resolved by sides sitting down at the negotiating table and hammering out a solution," her campaign website proclaims. She's got some good ideas for structural reforms to the pension plan, like moving employees into so-called "cash balance" plans, a bit more like private sector retirement plans, and removing loopholes that allow some public officials to "double dip," or collect a pension from one public sector job while continuing to work at another.

But she has stopped short of pushing for funding changes necessary to save taxpayers from crushing pension costs. Guadagno says her administration would "honor our commitments to current retirees," but would "talk responsibly" about making changes for new hires. Changing the pension formula for future workers is a good idea—one that should have been implemented years ago—but it does nothing to address the existing $135 billion debt, which is entirely owed to current workers and retirees.

Peter Rohrman, the Libertarian Party nominee for governor, also calls for eliminating the "double-dipping" loopholes and says he would "make the public pension system voluntary instead of forcing employees into a bankrupt system."

In politics, when you can't propose a way to fix a problem, you try to blame your opponent for the existence of the problem. When it comes to New Jersey's pension crisis, both parties share the blame. The current unpaid tab for retired state workers and public school employees is the result of two decades of Republican and Democratic governors happily looking the other way while the state pension system was deliberately underfunded and making promises of retirement payouts to public sector employee unions crucial to electing them.

"New Jersey's politicians—both Republicans and Democrats—have succumbed to this clout and largely given the [New Jersey Education Association, the state's teacher's union] what it wanted," says Mike Lilley, an adjunct scholar at the American Enterprise Institute, a conservative think tank. "Too often, New Jersey citizens and taxpayers have been left out of the discussion, and yet it is they who will foot the bill."

Whoever wins tomorrow's election will have to take on the entrenched interests of the NJEA and other public sector unions, which survived Christie's attempts to bully them into giving concessions on the pension front. The election will determine the direction of New Jersey for the next four years, but there's no rosy outcome likely for taxpayers.

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34 responses to “Neither Major Party Gubernatorial Candidate Has a Serious Plan to Fix New Jersey's Pension Crisis

  1. “Phil Murphy and Kim Guadagno would rather spend the campaign’s final days fighting the culture war.”

    New Jersey has a war on culture? I knew it!!

    1. It explains much, doesn’t it.

        1. Hey, fuck you too, jabroni!

          Fact: this is considered a polite greeting in New Jersey, and FS and i are now besties.

  2. Phil Murphy and Kim Guadagno would rather spend the campaign’s final days fighting the culture war

    That’s what it’s there for. One giant distraction to get focus away from the important things.

  3. When i doubt vote for the male, because as we know women can’t be trusted to have power.

    1. We’re so close to finally be free of their tyranny.

        1. I wonder how future writers and poets will remember these dark days.

  4. If you spent any amount of time on Sunday watching football in the Philadelphia media market, you may have been surprised the pension crisis went unmentioned in the blizzard of campaign ads for Republican Kim Guadagno and Democrat Phil Murphy in the race to replace New Jersey Gov. Chris Christie (who is not seeking re-election but remains deeply unpopular in the state).

    Maybe instead of watching Filthadelphia football, New Jerkseyans should be asking their candidates whey they’re not bringing an NFL franchise to the state instead of letting the Big Crapple’s teams play there.

    1. They can have the Chargers, and the Rams for that matter. LA had the perfect number of NFL teams for so many years.

    2. Calm down with the puns there Mikey.

    3. Those of us in South Jersey watching Eagles games would happily burn down MetLife while both the Giants and Jets were inside, because fuck New York and its North Jersey quislings.

      1. Giants and Jets fans both would happily join you. Remove that eyesore of a stadium and blow up those two very bad football teams? Win-win.

  5. Lot’s of us “double dipped” in the private sector when we spent a career with more than one employer. I understand the level of public pensions are ludicrously high, but what is wrong with getting a pension for, say, being a cop for 20 years, and the high school janitor for another 20?

    1. Should be interesting to see how bad Jon Corzine II screws up the state.

      1. I try to explain to people why Christie is actually the least terrible governor we’ve had in decades, and that his being a massive douchebag is irrelevant to what he actually tried to do for the state, but all I get is “he’s a fat fuck”.

        1. Yes, the fat fuck had nothing to do with the $135 billion pension hole

    2. I double-dipped by moving my 401k from one company to another. Corporate employers and sane states no longer offer defined benefit retirement plans.

    3. Lot’s of us “double dipped” in the private sector when we spent a career with more than one employer.

      Where did you work in the private sector that allowed double-dipping?* There’s only one dip in my private sector world, and that’s called a 401k. I have to put money into it. Yes, I get to KEEP putting money into it if I go to another employer (that offers a 401k, hopefully), but I’m not getting a guaranteed, predefined retirement.

      *besides Railroads and other union-run entities.

    4. Two pensions for two 20 year careers is fine. Just don’t allow the larding up in the last year by cashing in your accrued vacation and working overtime so your pension is 200 percent of the average CEO’s pay. Make it 75 percent of your average salary for the last 5 years you worked.

  6. I did a double-take at the sight of a national political site actually mentioning the NJ gubernatorial race (even if only the day before the election). The way the press has been covering it, you’d think that Virginia was the only election this year.

    1. On a scale of 1 to 10, how much of a referendum on Trump is the NJ election?

      1. 1.5ish. Murphy tried to nationalize things shortly after the primaries, but he went dark soon after and only reappeared on TV in the last few weeks. No point wasting your money when the race is in the bag.

        The name of the game for every Democrat up and down the tickets has (sensibly) been “Christie, Christie, Christie.”

        1. The real Trump referendum is in NYC. DeBlasio’s entire campaign boils down to “ignore my incompetence and corruption – send a message to Donald Trump!” It’s the sort of stupidity that can only work when your party has a 6:1 reg advantage.

      2. 0

  7. “I receive a New Jersey pension… and I vote!”

  8. The plan is to kick the can.

    But seriously, why don’t all of these states just stop giving pensions to new hires tomorrow morning? Make them get by with 401K’s like everyone else. The problem would fix itself over time.

    Better yet, stop hiring new state workers all together. When the last state employee retires, turn out the lights. No one will miss them.

    1. “But seriously, why don’t all of these states just stop giving pensions to new hires tomorrow morning? Make them get by with 401K’s like everyone else.”

      Here’s why:

      “Bailout gave Clinton right to take over Democratic National Committee”
      […]
      “Former Democratic Party Chair Donna Brazile told the truth about how Hillary Clinton’s operation took over the Democratic National Committee and used it to help her beat Bernie Sanders in the 2016 presidential primaries.
      And guess what? There was nothing wrong with that. Nothing corrupt or dishonest.
      Like it or not, political parties are private businesses. The DNC was broke, and Clinton bailed it out. And like any investor in a business being saved from bankruptcy, Clinton had the right to do want she wanted to do with the operation. After all, she was paying the bills.”
      http://www.sfchronicle.com/bay…..331294.php

      The DNC is an organiszation which is not listed on any exchange, but it is bought and sold regularly. I understand the Teachers’ Unions are majority owners.

    2. Like they do in red states like Kentucky

  9. Knowing that a Democrat would win NJ, this is how reason.com spins it. Focus on a problem that is not going to be solved by “whoever wins” and give a free pass to the Republican Christie. About the most criticism is to compare Christie to Murphy.

    Now, were this the national scene, say the tax bill, the article would be laden with how Obama ran up the debt, how spending should cut, and very little on how the deficit increase is not an issue by not mentioning it.

    1. Fuck off, troll.

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