If you haven’t read today’s WSJ editorial about our State’s public pension problem it’s a must read. One quote sums it up: “…the state’s pension and retirement health benefit liability is four times the size of its annual budget, and pension payments are forecast to double over the next four years.”
Read the article here at WSJ site or below: //www.wsj.com/articles/saving-new-jersey-if-thats-possible-1534114165?mod=e2tw
Even the Senate President gets it. Why won’t Gov. Murphy do anything about it?
Article can be found here:
Wall Street Journal
Legislative leaders discover they have a public pension problem
If the first step to recovering from an addiction is admitting you have a problem, at least a few Democrats in New Jersey are sobering up. Behold recommendations last week by a bipartisan legislative commission to scale back public-employee benefits.
Democratic Senate President Steve Sweeney convened the legislators and economists in February to examine changes to state spending and taxes. Mr. Sweeney worried that the new federal limit on the deductibility of state and local taxes will make it harder for Democrats to soak the wealthy to pay for unsustainable promises to workers.
Democrats recently raised corporate and individual income taxes—again—so it’s no surprise that the commission punted on serious tax reforms. But the commission’s recommendations on pension and health benefits could save taxpayers money, though still not commensurate to the problem.
One idea is to shift new workers to hybrid pension plans that include a modest pension as well as a defined-contribution component. State employees and retirees currently receive platinum-plated health benefits with a 97% actuarial value. The commission recommends shifting all employees and retirees to “gold” plans with an actuarial value of 80% that are comparable to what the most generous private employers offer.
This change alone would save taxpayers $587 million annually—about $140 million more than this year’s tax increase is expected to raise. Other recommendations include capping unused sick and vacation leave at $7,500 at retirement and encouraging towns to share public services.
The legislature will probably junk the recommendations as it did those of a 2005 benefits review task force chaired by none other than current Governor Phil Murphy, who at the time had recently retired from Goldman Sachs . Mr. Murphy, who has since become a de facto spokesman for the state’s public unions, sniffed at Mr. Sweeney’s report this week.
But Mr. Sweeney is spoiling for a debate, and the Assembly majority leader and budget chairwoman signed onto the report. “We’re in a crisis right now, it’s here, it’s now,” Mr. Sweeney declared. Alas, Mr. Murphy is still in denial.