With the next governor presumed to be a Democrat, New Jersey’s pension woes will likely fall on taxpayers’ shoulders.
Under Republican Governor Chris Christie, New Jersey taxpayers paid more into the state’s public employee pension funds than under the previous five governors combined.
Even with that, it is not enough to plug the hole that is sinking the state’s pensions with debt, according to NJ.com.
The state’s unfunded liability is a portion of the overall debt. The local side of the system is in much better shape but still $17.1 billion short of what it would cost to pay for future retirement benefits. The combined unfunded liability rose from $59 billion in the 2015 fiscal year to $66.2 billion in the fiscal year that ended in June.
The Teachers’ Pension and Annuity Fund has only enough assets, $27.2 billion, to cover 47 percent of its liabilities, $57.9 billion. It accounts for the largest share of the state’s unfunded liabilities. [Emphasis added.]
With New Jersey taxpayers having among the highest tax burdens in the nation, the responsibility lies with public employee unions which refuse to any comprehensive change to address the pension crisis.
However, the problem also rests with bad decisions the politicians in the state’s capitol Trenton made, as this video explains.
To make matters worse, the average ‘required contribution’ for public pensions more than tripled nationally from 2001 to 2013, mostly because investment returns have been sub-par, according to Forbes.com.
Although many other states have crippling pension crises, Bloomberg has reported that New Jersey’s is the worst in the nation, stating New Jersey has “$135.7 billion less than it needs to cover all the benefits that have been promised.”
Right now, there does not appear to be any viable solutions in sight. The statehouse is in gridlock and, although Chris Christie doesn’t leave office until January 2018, his successor—a likely Democrat—will be loathe to anger his public union backers.
As a result, New Jersey taxpayers will either end up shouldering more of the public employee pension burden or New Jersey’s politicians will continue to kick the can down the road, which will only make it worse.