Pension Ruling Could Lift Christie’s Presidential Bid, But Doesn’t Relieve State

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The recent decision passed down from the New Jersey Supreme Court – affirming that Gov. Chris Christie could legally slash 2015’s pension payment by $1.6 billion – solved a short-term political problem for Christie.

But the ruling did nothing to absolve Christie, or the state, from pension funding problems that will increasingly rear their heads in years to come.

From Philly.com:

Though the legal victory over public-worker unions averted immediate crisis, it did not relieve Christie – or state lawmakers – of a reality less worthy of campaign-trail celebration: an unfunded pension liability that continues to strain the state budget and funds for many workers at risk of running out of money within the next decade.

Credit-rating analysts warn that New Jersey’s failure to at least keep pace with the escalating pension payments prescribed by a 2011 law Christie championed will increase its liabilities, though the governor argues that the state cannot afford the payments without large tax increases.

No clear solution is on the horizon. Top Democratic lawmakers say they will pass a budget for the fiscal year beginning July 1 that includes a full pension payment in accordance with the law, even though Christie is expected to veto a tax increase on income over $1 million and other increases likely to underpin it – similar to the scenario that played out last year.

And while a Christie-appointed commission earlier this year proposed a pension system overhaul that would freeze the existing plans and pare health benefits, union leaders say they are unwilling to negotiate with a governor they accuse of failing to hold up his end of the bargain.

The state’s pension system was 54 percent funded as of 2014. On Christie’s proposed payment schedule, the system will achieve 74 percent funding by 2043.

 

Photo By Walter Burns [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons

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