New Jersey was infamously downgraded 11 times during the Christie administration, largely on account of its massive unfunded retiree liabilities, and due to continued insufficient funding of its public pensions, no upgrade is coming anytime soon. It’s a sad testament to the current situation that Gov. Murphy’s record $3.8 billion contribution is only 70% of what’s actually required. And remember that $3.8 billion is almost 10% of the state budget.
And the situation will get worse: funding for public pensions, retiree health benefits and the state’s other debts are expected to consume 26% of the state budget by FY2024. Where New Jersey will get the money for these payments remains an unanswered question.
What we do know is that Sen. Sweeney’s Path to Progress report calls for reducing active and retiree health benefits from a “platinum-plus” level to a “gold” level – the level of most private health insurance benefits – and using the savings to shore up the pension funds. Yet the state’s most powerful special interest, the NJEA, refuses to negotiate reduced health benefits – even to help save the pensions. In fact, it is calling for greater taxpayer subsidies for its platinum-plus benefits (by undoing earlier reforms that required that beneficiaries pay for their platinum-plus benefits – see their ubiquitous #FixTheUnfairness campaign).
There’s an old saying that goes: when you find yourself in a deep hole, stop digging. Sweeney wants to stop digging and start filling. The NJEA wants you, the taxpayer, to keep digging – for the NJEA’s benefit.
See the full NJBIZ story here.