Chris Christie just loves to brag on his pen/ben bill. He’s convinced he made “tough choices” and forced “shared sacrifice” and “stood up to the bullying unions” so he could get “real tax relief” for New Jersey.
The press and punditocracy have been happy to buy into this line. “It’s the first real reform we’ve had!” “We’re starting to bring costs under control!”
But the unfortunate truth is that all we’ve done is delude ourselves while delaying the inevitable:
Although New Jersey will have to pay less than it would have without the changes, state revenues still must grow by at least 3 percent a year simply to cover the added costs for increasing payments, a Gannett State Bureau analysis shows.
Even if state revenues rise by 5 percent annually, state pension contributions would consume nearly half of that extra money. That would put pressure on available funds for aid to schools, worker salaries, and a host of social and other programs.
Keith Brainard, research director for the National Association of State Retirement Administrators, said New Jersey’s big mistake was abandoning annual required contributions into the pension system in the late 1990s.
“Once the money is gone, the revenue stream must be re-created,” Brainard said. “They’ve taken a big step with the reforms, but ultimately they will have to find the money to make the contribution.”
State pension contributions must ramp up to $5 billion annually by fiscal year 2018, even under the new reforms. This year’s $468 million bill will double to $1 billion by next July.
I know Christie says we’re going to save all kinds of money, but his projection is over a 30-year time span; he may as well peg the number at $11 bajaillionty-million, because no one can predict what will happen to the economy or the labor force that far into the future.
Further, we don’t even know if the pension reforms are going to pass muster in court. 60% of the pension savings come from eliminating Cost Of Living Increases (COLAs), which may well be illegal.
There’s a parallel here to the national budget debate. Over the last decade, the United Sates fought two protracted wars of choice, gave away a huge gift in Medicare Part D to the drug companies, and slashed taxes, mostly for the very wealthiest.
Now they’ve convinced themselves that they can cut their way to fiscal responsibility. Sorry, but there’s just no way to balance the budget responsibly without raising taxes.
Same here in New Jersey: the governor, along with large numbers of the Legislature and the press, have convinced themselves that shifting pen/ben costs to workers and the magical, mystical “toolkit” will somehow save the state significant amounts of money.
But the ben/pen bill and the “toolkit” do nothing to address the two biggest cost drivers of the state: a 20-year pension holiday, and exploding health care costs. The holiday can only be solved by raising revenue; the health care inflation can only be solved by real reform that caps costs.
Nothing has been done by Christie to fix this. In fact, by delaying full pension contributions for seven years, Christie has ensured that the mess will not have to be dealt with until he’s long gone, even if he seeks a second term.
Christie – and anyone who buys into his pap – is living on borrowed time. This mess is simply not going away.