“The lower [bond] rating reflects our concern regarding the stresses from the state’s poorly funded pension system, substantial post-employment obligations and above-average debt levels.” – Standard & Poor’s analyst Jeffrey Panger (02/09/11)
Governor Christie has been delinquent in carrying out his duties to fund the pension system. In early 2010 he removed monies in Governor Corzine’s budget and did not make the anticipated State contribution to the plan. Likewise, in his current budget he has no funds to pay into the plan. Nor has he committed to making a payment in the upcoming year. It is not surprising for an analyst to point out “the state’s poorly funded pension system.”
The Democratic led legislature in March 2010 working with the governor passed reforms that required public workers to contribute 1.5 percent of their salaries toward health insurance and removed part-timers from the system. This week Senate President Sweeney introduced a plan that in part would in part create labor-management boards to set workers’ annual pension contributions based on the solvency of the system. The Governor and Republican legislators have their own more draconian proposal.
Borrowing with reasonable rates is important for all states. However, Christie’s efforts to blame the lower bond rating on the Democrats is lame. It is a shared responsibility, and with roots in past administrations. Rather than his “My way or the highway,” approach, it is time for the governor to engage in substantive negotiations with the Democrats. Those who have invested into the system have every reason to demand him to contribute to the plan and to seek a workable solution with the legislature. The problem is real, but posturing and playing the “blame game” won’t solve it.