New Jersey won't make a required $3.06 billion state pension contribution for the fiscal year starting July 1, Gov. Chris Christie said today.
Mr. Christie made his remarks during a speech outlining his proposed fiscal 2011 budget, which contains severe spending cuts to address what he called the worst fiscal crisis in the state's history.
An outline of the state budget, posted on the governor's website said that “it is understood that the deferral of this $3.06 billion payment will lead to a larger unfunded liability and greater costs” in future years.
In the speech before the state Legislature in Trenton, Mr. Christie said withholding the pension payment “results from recognizing that our pension system must be reformed before we can or should fund a broken, out-of-control system.”
Between 2002 and 2008, pension payments to retirees grew at three times the rate of inflation, he said. “Our benefits are too rich, most public employees contribute too little and the taxpayers have had enough,” he added.
The New Jersey Division of Pensions and Benefits said last month that the state pension system's estimated unfunded liabilities climbed to $46 billion for the fiscal year ended June 30, up $12 billion from the previous fiscal year.
The market value of New Jersey's seven public pension plans was $67.4 billion as of Jan. 31, according to the state Division of Investment, which oversees state pension fund investments. The divisions of Investment and Pensions and Benefits are part of the state Treasury Department.
New Jersey's pension system was identified recently as one of the most troubled in the U.S. by the Pew Center for the States, a unit of the Pew Charitable Trusts.
Pew graded the states on three pension qualities — a funding ratio at 80% or better, an unfunded liability below covered payroll, and payment on average of at least 90% of the actuarial required contribution during the past five years. The maximum score was four points; New Jersey was one of eight states with zero.