Like the swallows' annual return to San Juan Capistrano, New Jersey legislators are flocking to the state capital in Trenton to address the annual dilemma of the state budget and the health of the $73.6 billion New Jersey Pension, Trenton.
This year's budget-pension adventure has more moving parts than usual, and each moving part plays a role in the financing and/or management of the pension system.
The legislature must approve and Gov. Chris Christie must sign a balanced budget by June 30 — a state constitutional requirement. For the fiscal year starting July 1, he has proposed a state payment for the pension system of $2.51 billion, up from the $1.86 billion for the fiscal year that ends June 30.
The New Jersey Pension Fund's overall funded ratio was 56.5% based on a July 1, 2016, actuarial valuation, according to the state's Treasury Department. The overall pension fund combines a state component, which has a funded ratio of 44.7%, and a local government component, which has a funded ratio of 73%.
The overall unfunded actuarial accrued liability was $66.2 billion as of July 1, of which $49.1 billion was the state's responsibility.
Other key issues, such as the governor's proposal to use the state lottery to help finance the pension system, do not have a rigid deadline. Aside from the balanced budget, some observers doubt there will be much action on any pension, tax and budget issue until the unpopular, term-limited Mr. Christie leaves office in January.
During his tenure, Mr. Christie has angered public employee unions by withholding some scheduled state payments to the pension system and winning court challenges to withholding payments and to suspending of cost of living adjustments for public employees in the pension system.
“The unions can wait” until next year, hoping voters will elect a Democratic governor and retain Democratic majorities in the General Assembly and Senate, said Carl Golden, senior contributing analyst with the William J. Hughes Center for Public Policy at Stockton University. “A lot of things Christie blocked could be signed by a Democratic governor.”
In his February budget message, Mr. Christie warned that a rising state payment to the pension system “eats up so much of our revenue,” adding that unless there are reforms to state pension and health-care spending, “there is going to continuously be enormous pressure on the state budget.”