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Legislation

New Jersey approves budget, shifting state lottery to pension fund

New Jersey Gov. Chris Christie signed into law a fiscal 2018 budget that includes a $2.5 billion state contribution to the $73.6 billion New Jersey Pension Fund, Trenton, of which an estimated $1 billion will come from the proceeds of the state lottery.

The governor signed the $34.7 billion budget bill on Tuesday. A dispute between Mr. Christie, a Republican, and General Assembly Speaker Vincent Prieto, a Democrat, led to the state missing its constitutionally mandated deadline of June 30 for enacting a budget for the fiscal year beginning July 1. As a result, the state shut down all but essential services, resuming full services Wednesday

The state's $2.51 billion contribution for fiscal 2018 to the New Jersey Pension Fund represents a 35% increase from the $1.86 billion for the 2017 fiscal year. By using lottery proceeds, the recently passed budget law means the contribution from general operating funds will be reduced to approximately $1.5 billion, assuming the lottery receipts meet projected totals.

The governor had proposed a pension-lottery bill in May, and several members of the state Senate and General Assembly subsequently introduced and passed bills incorporating his recommendations. When he signed the budget bill, the governor also signed the separate state lottery bill.

The lottery is now a pension system asset. Based on an independent valuation of the state lottery being worth $13.54 billion, Ford Scudder, the state treasurer, issued a report in May saying the lottery would add $37 billion to the pension system during the next 30 years and would immediately raisethe New Jersey Pension Fund's overall funding ratio to 58.7% from 44.7%.