Newspaper article The Record (Bergen County, NJ)

Showdown Looming on Fixing State Pension Fund

Newspaper article The Record (Bergen County, NJ)

Showdown Looming on Fixing State Pension Fund

Article excerpt

A constitutional amendment to mandate quarterly payments to the state's public pension system could have "potentially cataclysmic consequences" on the quality of life in New Jersey, requiring more than $3 billion in tax increases by 2022, according to a new report.

The New Jersey Pension and Health Benefit Study Commission, appointed by Governor Christie in 2014, has proposed cutting public workers' health benefits and using estimated savings of $2 billion a year to replenish the state's underfunded pension system.

Democrats who control the Legislature say the plan is a non- starter because it proposes to fix the pension system only by raising costs on public workers. The problem, they say, was created by a succession of governors and lawmakers who have neglected to fund the retirement system since 1997.

Senate President Stephen Sweeney and Assembly Speaker Vincent Prieto, both Democrats, instead are moving ahead with a proposal to amend the state constitution to mandate quarterly payments to the pension system. Natural economic growth would cover the cost, they say, but they have not said how they would keep up with the pension costs in the event of an economic downturn.

No other state requires quarterly pension payments through its constitution. The plan must be approved by voters, and Democrats expect to have it on November's ballot.

"Because it would impose a significant, irrevocable burden on the state without specifying how that obligation would be paid for, the commission believes that the Legislature and the public as a whole should approach the proposed amendment with extreme caution," the report's authors wrote.

Even with natural economic growth, the commission estimated that New Jersey officials would have to make massive cuts to schools and property tax relief payments in the state budget -- or pass heavy tax hikes -- to capture enough revenue for the pension amendment. …

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