New Jersey Plans to Make First Pension Payment Since 2008, Treasurer Says
July 28 (Bloomberg) -- New Jersey Treasurer Andrew Sidamon-Eristoff talks about the state's budget situation and shortfall projections for fiscal 2012. Sidamon-Eristoff, speaking with Margaret Brennan on Bloomberg Television's "InBusiness," said projections that the state faces a gap of more than $10 billion for the year that begins July 1, 2011, are "wildly inflated." (Source: Bloomberg)
New Jersey intends to contribute $512 million to its pension funds for teachers and government workers in fiscal 2012, its first payment in four years, State Treasurer Andrew Sidamon-Eristoff said.
The contribution would be made in tandem with proposals to trim employee retirement costs that Governor Chris Christie plans to present to lawmakers later this year, Sidamon-Eristoff said in an interview today in Trenton. Such moves may include reducing the rate at which current employees earn retirement credits or scaling back annual cost-of-living increases for retirees, he said.
Christie, a Republican who took office in January, skipped the state’s $3 billion pension contribution in his first budget to help close a record $10.7 billion deficit for the fiscal year that began July 1.
Sidamon-Eristoff, 47, in a separate interview today on Bloomberg Television’s “InBusiness With Margaret Brennan,” said a legislative analyst’s projection that New Jersey faces a $10.5 billion deficit for the fiscal year that starts July 1, 2011, is “wildly inflated.” The gap “will not be anything near” $10 billion, the treasurer said.
Past Spending Ways
The projection from David Rosen, chief budget officer for the non-partisan Office of Legislative Services, “assumes that New Jersey will return to spending habits of 2008 and 2009,” said Sidamon-Eristoff, who was appointed by Christie. “Those spending commitments were unsustainable and out of control.”
Rosen’s estimate, outlined in a July 12 memo to Democratic lawmakers, includes the assumption that New Jersey will make a pension payment of $3.5 billion in fiscal 2012 to address a deficit that was calculated at $46 billion as of June 30, 2009.
Reducing that payment to $512 million, which Sidamon- Eristoff said is the minimum required under a new state law, would cut Rosen’s deficit projection by $3 billion, to $7.5 billion.
Rosen’s estimate also assumed the state would fully fund local aid programs for schools and cities, adding $2.6 billion in new spending to the 2012 budget. Those payments will not necessarily be forthcoming, the treasurer said.
Christie plans to “start with fiscal 2011 and determine what our long-term capacity is,” he said. “We have to bring our expenses into line with our capacity to meet them.”
First Since 2008
Next year’s payment into the pension system would be the first since fiscal 2008, when former Governor Jon Corzine, a one-term Democrat, made a $1 billion payment, state bond documents show.
Christie and the Democratic-led Legislature filled this year’s budget deficit largely with spending cuts. The plan cut aid for school districts and municipalities and scaled back property-tax rebates.
Senate Budget Committee Chairman Paul Sarlo, a Democrat from Wood-Ridge, said Rosen’s deficit projection reflects obligations the state must meet.
“The structural deficit is still the same,” Sarlo said. “They still have a legal obligation to pay those bills. It’s definitely wishful thinking on their part.”
New Jersey is the third-most indebted in the U.S., trailing only California and New York in terms of total net tax-supported debt, according to Moody’s Investors Service.
Government Spending
The current budget “represents a new baseline for New Jersey,” said Sidamon-Eristoff.
The governor on July 13 signed legislation capping annual increases in New Jersey’s property taxes, the highest in the U.S., at 2 percent. He is seeking legislative approval of a 33- point proposal that would help local officials cut spending to stay within the limit.
His proposals would allow towns to opt out of civil-service laws, cap contract awards, curb payouts for unused sick-leave and vacation days and end the “bumping” rights that let the highest-paid, senior workers avoid layoffs.
In March, the governor signed measures requiring teachers and government workers to contribute 1.5 percent of their pay toward health-insurance costs and removing future part-timers from the system. Christie, the first Republican elected New Jersey governor since 1997, has said he’ll seek additional changes for current workers later this year.
To contact the reporters on this story: Dunstan McNichol in Trenton, New Jersey, at dmcnichol@bloomberg.net; Terrence Dopp in Trenton, New Jersey, at tdopp@bloomberg.net
Rate These Stories
Rate this Page