N.J. pension to get record boost in governor’s budget

New Jersey plans to make a record $4.6 billion pension payment under Gov. Phil Murphy’s proposed budget for fiscal 2021.

He’s pledging to close the pension fund’s gap between assets and liabilities, though his payment would still fall short of the amount needed to keep the debt from growing.

“We’re already put in the two largest pension payments in the history of the state, and we’re going to up the ante in a big way,” Mr. Murphy said during an “Ask The Governor” phone-in program broadcast by News 12 New Jersey on Monday night.

Mr. Murphy also seeks a record $589.5 million for NJ Transit, the ailing commuter bus and rail operator that he has pledged to rebuild.

Mr. Murphy would pay for the move with funds for energy ratepayer fees and highway tolls, plus a shift to the agency’s operating budget from capital-improvement accounts.

The Democrat has criticized such practices, but says the money can’t be sourced elsewhere. Under former Gov. Chris Christie, the subsidy fell to a low of $33.2 million, leading to rising breakdowns and declining reliability, and

Mr. Murphy has promised to turn around the agency.

His proposals already face a legislative hurdle. Days before the budget address, Senate President Stephen

Sweeney, a Democrat often at odds with Mr. Murphy, outlined his own NJ Transit funding plan that would block a key source of the governor’s planned bus and train spending. And Mr. Sweeney said Monday he wants even more money for the worst-funded pension among U.S. state governments.

Mr. Sweeney, who has twice rejected a millionaire’s tax to fund Mr. Murphy’s progressive priorities, indicated that he would be more willing to support the levy if the governor backs his proposals.

The Senate president, who has been leading legislative committee hearings on NJ Transit’s troubles, is proposing a $500 million annual dedicated funding stream based in part on a corporate-tax increase. He also would ban the capital-to-operating shifts.

“We’re going to move $465 million from capital to operations, and then we have to borrow $500 million for new trains and buses,” Mr. Sweeney said in a telephone interview Monday. “If we weren’t taking that money, there’d be no need to borrow. We’re digging the hole deeper.”

Even with Mr. Sweeney’s pension push, the retiree fund would be about $500 million short of the actuarially required payment, after years of skipped or lower payments by governors from both parties. New Jersey’s pension fund has just 38.4% of the assets promised to about 800,000 members, according to S&P Global Ratings, making it the least-funded of its kind among U.S state governments.

“I want $1 billion for the pension on top of the proscribed payment,” Mr. Sweeney said. “I’ll be open to the millionaire’s tax if we can get to fully funding the pension that much sooner.”

But a bigger retiree-fund commitment would risk other Mr. Murphy priorities, including adding $2.3 billion to surplus and emergency funds, a step viewed favorably by credit-rating companies. Still, Mr. Murphy said he was optimistic about the passage of a millionaire’s tax, which he said would help make the state more affordable.

Mr. Murphy, 62, a retired Goldman Sachs Group senior director, disclosed on Feb. 22 that he will undergo kidney surgery in early March to remove a tumor that probably is cancerous. On Twitter he said he has a “very good prognosis,” and expects to recover at home for much of the month.

“I feel great and I feel blessed,” Mr. Murphy said during the television program.