A headline in today’s Star-Ledger N.J. Political Roundup is misleading. It states “Voters say no tax hike to fund pensions.” It’s accurate to indicate that the Quinnipiac poll shows only “12% of voters say increase taxes.” However the poll asks respondents how to make up the pension shortfall and offers three choices: increase taxes, or reduce the amount owed to workers, or a combination of increased taxes and reduced payments. In fact “53 per cent of voters say use a combination of increased taxes and reduced payments.” Only 26% say “reduce the amount owed to workers.”
So voters in the poll do support increased taxes in combination with a reduction in the amount owed to workers. Such is a reasonable response to the quandary NJ faces. In the governor’s appointment of Pen/Ben commissioners he tasks them to develop “reform recommendations.” There is no charge for them to consider increased taxes although such is unrealistic.
Our unfunded pen/ben liability for retirees as NJ Spotlight points out is now “$90 billion and rising.” A key reason the liability is rising is because Christie made a $900 million cut (from $1.558 billion to $695 million) in last year’s pension contribution and plans a $1.5 billion cut (from $2.24 billion to $681 million) in this year’s contribution. Because of these cuts the state contribution stipulated in the 2011 Pension Law would likely jump in 2018 from $4.8 billion to $5.5 billion” – an astonishing amount for a NJ budget.
Christie’s “No Pain No Gain” campaign speaks of a long term solution and hints at reduction in pension benefits and possibly a move to a “hybrid plan” which could include a 401 (k). However, regardless of the plan (and at the moment it is opposed by the Democratic legislature) it would have no impact on the current year and little when the FYI 2016 contribution required would likely exceed $3 billion.