A strong warning on New Jersey’s vulnerability to the next recession

The Star-Ledger reports that the rating agency Moody’s singled out New Jersey as one of the two states unprepared for a recession.  With its progressive tax code and its pension funds invested heavily in the stock market, both state revenues and pension assets would be hit hard.  In a particularly alarming warning, Moody’s predicts that if the teachers pension fund suffered steep investment losses, it would only be able to write pension checks for four years.  That’s a very short time horizon.

New Jerseyans must understand that it’s a matter of “when,” not “if,” the next recession occurs.  When that happens and pension fund assets are subsequently depleted, the state would have to pay pension checks out of general appropriations, which would blast a huge hole in the budget.

Read the full Star-Ledger story here.