Years of Failed Trenton Democrat Policies Destroyed New Jersey’s Public Pension System
In 1990 we were in a recession, Save Jerseyans, and Governor James Florio responded with a $2.8 billion income and sales tax increase to balance the budget. Facing a budget shortfall, he also turned to the state pension system. With just about unanimous support in the legislature, he pushed through the Pension Revaluation Act of 1992, lifting the projected rate of return on the fund’s investments to 8.75% from 7%.
Yes, Christine Todd Whitman invested the pensions into the stock market, but no one was complaining when the funds were making money. She left in 2000 and the funds continued to do well with annual investment returns of 8.75 percent until the dot.com bust of 2001 when the markets took a massive dive.
Pension underfunding and budget shortfalls were also caused by decisions made, and actions taken, well after the GOP governor left office. In 2002, James McGreevey had hoped that professional money managers would improve the plan’s returns. He was wrong…
Florio was the first to use the pension fund as a fallback in a time of crisis, but the combo of the Florio and Whitman pension policies were both led to the downfall of the pension system.
Even with decisions made after Whitman, the fund’s returns had pretty much tracked the broad stock markets. The real problem can be traced to 20 years of underfunding.
Look at the history: in 2001, benefits for the NJ’s government employees and teachers were increased by 9%, creating an additional $4.2 billion in underfunded liabilities. In 1999, the state approved a “20 and out” measure that allowed firefighters and local police to collect pensions equal to 50% of their pay after 20 years of service. A perk that was previously available only to the state police. Benefits added since 1999 have increased liabilities by more than $6.8 billion alone!
Even if the pension payments owed were made, as long as double dipping, pay-for-play, no show jobs, paid for life benefits are permitted to mushroom, New Jersey taxpayers will always be stuck playing a cruel (and unaffordable) game of catch up. Is it any wonder why we continue to run deficits heading into every budgeting cycle?
The problem isn’t so much the pensions themselves. For the real problem, look to the escalating number of people receiving pensions and the actual amount of their increases since only 2003. The number of public employees receiving annual government pensions of at least $75,000 or earning government salaries of at least $100,000 or more with above average benefits is staggering. Double and triple dipping pensioners subsist at the expense of the average government worker and NJ taxpayer; throughout that entire period of time, not one legislator made tackling this problem a priority.
Many of the positions are not worth the salaries paid, and they’re only used as a catalyst to boost salaries for higher retirement pay.
Retirees paid 80% of their former salaries with health and other perks included… who thought THAT was a good idea?
And you think your taxes are high now, Save Jerseyans? By 2018, state taxpayers will begin paying more than $5 billion a year for pensions, about 10 times higher than the current payments being made. Matt Rooney recently said “the pension bomb is still ticking.” Are Trenton Democrats deaf to it? Or is this just one giant game of chicken where the taxpayers are the only ones with skin to lose?
You can place the blame anywhere you want, but before Chris Christie arrived in Trenton, not a soul took affirmative steps to address the core problem.