New Jersey faces ‘hard truth’ of services versus pensions


By Mark Lagerkvist | New Jersey Watchdog

New Jersey’s public pension crisis will soon hit the fan.

Gov. Chris Christie sounded the alarm near the end of his 2014 State of the State address. After speaking of plans to improve education, fight crime, expand health care, lower taxes and grow jobs, the state’s chief executive told the “hard truth.”

HE SEES IT: New Jersey Gov. Chris Christie said in his State of the State Address that something has to give with the state’s public pension debt.

“We cannot afford to do it right now,” Christie said. “For the fiscal year 2015 budget, the increase in pension and debt service could cost as much as $1 billion.

“That’s nearly $1 billion we can’t spend on education, that we can’t invest in infrastructure improvement, that we can’t use to put more cops on the street, that won’t be available to improve access to health care,” he warned.

It’s actually worse than that.

The state ultimately will face an unpopular choice between slashing existing services or breaking pension promises to its retirees, concludes a new study released by the Common Sense Institute of New Jersey, a nonprofit policy group. The study found:

  • New Jersey and its local governments should be paying $5.9 billion a year into the pension system, according to state actuaries.
  • For fiscal 2014, the expected contribution is $3.3 billion. That figure is scheduled to increase annually until 2018, when state and local governments are supposed to start shouldering their full responsibilities under a 2010 pension reform law.
  • However, that full share would be $8.7 billion a year if the calculations were based on market values of pension assets instead of misleading actuarial calculations, say the study’s authors.
  • The state pension system faces a shortfall of $45 billion, state actuaries estimate. Using market valuations, the study pegs the unfunded liability at $56 billion.

In the best of scenarios, New Jersey and its $33 billion annual budget are on the brink of big trouble.

“Ethics, or more specifically the lack of, has played a key role in getting us to the current situation,” said Jerry Cantrell, president of Common Sense Institute. “Everything from double and triple dipping, to outright dishonest acts and malfeasance have all taken their toll over the past few decades.”

Even the governor, besieged by scandal and desperate for good news to tell taxpayers, could not ignore the obvious.

“We need to have the conversation now about further changes to our pension system and to adding further to the state’s debt load,” Christie said. “If we do not choose to reduce our soaring pension and debt service costs, we will miss the opportunity to improve the lives of every New Jersey citizen, not just a select few.”

Christie is likely to save any specific proposals for his annual budget address before the State Legislature next month.

Contact Mark Lagerkvist at

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