New Jersey May Not Make Pension Payment in Fiscal 2012, Christie Says

By Terrence Dopp - Jul 30, 2010 1:51 PM EDT Fri Jul 30 17:51:43 UTC 2010

 

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July 28 (Bloomberg) -- New Jersey Treasurer Andrew Sidamon-Eristoff talks about the state's budget situation and shortfall projections for fiscal 2012. Sidamon-Eristoff, speaking with Margaret Brennan on Bloomberg Television's "InBusiness," said projections that the state faces a gap of more than $10 billion for the year that begins July 1, 2011, are "wildly inflated." (Source: Bloomberg)

Governor Chris Christie of New Jersey said the state may not be able to make a required pension payment in the next fiscal year.
Christie’s comment contrasts with those of his treasurer, Andrew Sidamon-Eristoff, who told Bloomberg News July 28 that the state planned to make a $512 million contribution to the pension system in fiscal 2012, its first in four years.
“I think the treasurer got a little bit out in front on that,” Christie, 47, told reporters today during a news conference in Trenton. “We’ll go forward and we’ll make that contribution if the state is in a position to make that contribution.”
The governor, who took office in January, skipped a $3 billion payment into the $66.9 billion fund in his first budget as he coped with a record $10.7 billion deficit. The fund, which provides benefits for almost 800,000 current and retired teachers and government workers, had a gap between assets and anticipated payouts of $46 billion as of June 30, 2009.
The payment “is something that is required under current law,” he said. “Laws change all the time. That’s our current intention, but that could change.”
The ability to make a pension payment depends upon the state’s financial condition, Christie said. The nonpartisan Office of Legislative Services projected the state may face a deficit of $10.5 billion next year even as revenue grows $1 billion if Christie fully funds all programs and makes a recommended pension payment of $3.5 billion.
Pension Costs
The governor said he intends to work with lawmakers later this year on a series of changes to lower future pension costs. Those initiatives may include scaling back a 9 percent pension increase enacted in 2001 and reducing future benefits for current workers, he said.
In March, the first-term Republican signed a package of bills barring part-time workers from the pension system, capping payouts for unused sick-time and requiring employees to pay 1.5 percent of their salaries for health insurance.
“Six years from now, public workers are going to thank me because there will be a pension there to collect,” Christie said. Public workers and government officials can’t “continue to bury our heads in the sand and believe that somehow the forces of the market or good luck are going to get us out of this.”
Christie, the first Republican elected governor of New Jersey since 1997, closed the gap in his $29.4 billion spending plan for the year that started July 1 by skipping a $3 billion pension payment and cutting aid to public schools by $820 million and municipalities by $445 million. He also suspended almost $1 billion in property-tax rebates in a state where residents pay the highest real-estate levies in the U.S.
To contact the reporter on this story: Terrence Dopp in Trenton at tdopp@bloomberg.net