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GOVERNOR MAKES CHOICE TO MEET BUDGET CHALLENGE..At press conference held in his outer office in Trenton, Governor Christie presented his solutions to deal with New Jersey’s budget shortfall for the current fiscal year of approximately $1 billion.
The Record - Christie to cut $2.4 billion from planned pension payments
Star Ledger - Chris Christie to reduce pension payments to fill $800M NJ budget gap
GOVERNOR MAKES CHOICE TO MEET BUDGET CHALLENGE
At press conference held in his outer office in Trenton, Governor Christie presented his solutions to deal with New Jersey’s budget shortfall for the current fiscal year of approximately $1 billion.
Taking The Following Actions:
· Managing down government spending, producing reduced supplemental spending and lapses of unspent balances totaling $160 million in the current year and approximately $128 million in savings for fiscal year 2015.
· Making a pension payment of $696 million this year and $681 million next year, a payment level that pays today’s bills. This payment level will not increase the accrued unfunded liability for active employees in the pension system, but does not pay down the unfunded liability accrued.
The Governor did not discuss specifics on unspent balances he plans to use to cut the deficit. Those should be available shortly.
Speaker Prieto responded to the announcement saying, “Sadly, we have no easy solutions to the problems created under this administration. Abandoning pension payments only makes things worse down the road, and that’s unfair to taxpayers who rightly deserve and expect better from someone who vowed to fix the state. We will review the governor’s plan and consider next steps, but are mindful of the need to resolve this crisis.”
Due To April’s Disappointing Revenue Results For Fiscal Year 2014 And Corresponding Adjustments For Fiscal Year 2015, The Following Changes Are Being Made To Revenue Projections:
· The Administration is projecting approximately $31.5 billion in total revenue for fiscal year 2014, a reduction of 3.2 percent from February.
· They are now projecting $32.7 billion in total revenue for fiscal year 2015, a 5 percent reduction from February.
· Overall this represents a revenue reduction of $2.75 billion across the two fiscal years.
The Record - Christie to cut $2.4 billion from planned pension payments
MAY 20, 2014, 11:26 AM LAST UPDATED: TUESDAY, MAY 20, 2014, 3:57 PM
BY JOHN REITMEYER AND MELISSA HAYES
STATE HOUSE BUREAU
Governor Christie said he is cutting the planned contribution into New Jersey’s public employee pension system by roughly $900 million to keep the state budget in balance in the final weeks of the fiscal year.
Christie, who announced the budget fix during a State House news conference Tuesday afternoon, also said he wants to lop off an additional $1.5 billion from the payment that was scheduled for the fiscal year that begins on July 1, saying he now doesn’t foresee enough revenue coming in to justify the $34.4 billion in spending he originally proposed back in February.
The cuts represent an about face on a promise Christie made during his first term in office, when he agreed to increase the state pension payment over a seven-year period to help bring the pension fund back into solvency. The payment originally included in the current fiscal year, which ends June 30, was $1.6 billion. Christie said it will instead be $696 million.
Christie shifted the blame for the shortfall to the benefits that public employees enjoyed up until 2011, when the governor and Democratic legislative leaders joined together to force employees to contribute more toward their pensions, end annual cost-of-living adjustments and other changes.
“Our problem is that we have made promises to people that we cannot keep so we have to adjust this going forward,” Christie said. “And if we don’t, I don’t care who is sitting in this chair, they’re just not going to be able to do this.”
He said he wants additional public employee benefit reductions, but did not identify any specifics Tuesday.
Assembly Speaker Vincent Prieto, D-Hudson, said cutting the pension payment “would only make things worse down the road.”
“That’s unfair to taxpayers who rightly deserve and expect better from someone who vowed to fix the state,” Prieto said.
Senate President Steve Sweeney, D-Gloucester, has previously threatened to shut down state government if the full pension payment wasn't made, but appeared to be backing away from that in a statement issued by his office. “As we have done in the past, Democrats in the Legislature will work to resolve this issue in a manner that is fair to the hard-working middle class people of this state,” Sweeney said.
Email: reitmeyer@northjersey.com
Star Ledger - Chris Christie to reduce pension payments to fill $800M NJ budget gap
By Sal Rizzo
on May 20, 2014 at 2:21 PM, updated May 20, 2014 at 6:11 PM
TRENTON— In a stunning reversal, Gov. Chris Christie today announced plans to grab, over two years, $2.43 billion meant for public workers' pensions to balance New Jersey's ailing state budget.
The plan threatens to derail one of Christie's signature accomplishments in Trenton — a series of reforms to replenish New Jersey's strained pension fund over the long term — but it would solve an immediate crisis for the governor, who has to find $2 billion somewhere to cover budget shortfalls for the current and incoming fiscal years.
At a Statehouse news conference today, the Republican governor said his plan is to take $2.43 billion budgeted for the pension fund during this fiscal year and the next one. He ruled out alternatives such as raising the state income tax or cutting funds for schools and Medicaid.
VIDEO RECAP: Christie's news conference
A payment to the pension fund scheduled to be made before June 30 will be reduced — from $1.6 billion to $696 million — via executive order, Christie said.
The governor also intends to shrink a $2.25 billion payment that was set for the next fiscal year to $681 million, but said he will seek the Democratic-controlled Legislature's approval for that move.
"We will not make the payments that apply to the sins of the past," Christie said.
The new, lower payments he has proposed will cover the cost of employees currently active in the pension system, the governor said, but will not chip away at the total unfunded liability in the pension fund accrued before he was governor.
UPDATE: NJEA says it will sue to block Christie from cutting pension payments
Christie laid the blame on his predecessors in the Statehouse, governors and lawmakers, who skipped or reduced several pension payments over the last 17 years, digging a hole that Christie said was too deep to fix. Now that hole, under Christie's plan, would become the next governor's problem.
"We're still digging out of problems two decades in the making," Christie said, conceding that his moves so far to repair the pension fund have not made "much of a dent."
"Today I'm going to pledge to make the payments to not make the hole any deeper," Christie said.
Reducing the pension payments is a high-stakes maneuver that could trigger lawsuits from public worker unions and credit-rating downgrades from Wall Street, but it would solve an immediate concern by plugging an $807 million shortfall in the $33 billion state budget. And it gives Christie considerable breathing room for the next fiscal year.
Democrats and public worker unions lashed out at the governor today, saying the state would not be in the throes of crisis had Christie been a better steward of the state budget. They blamed Christie for overestimating his revenue projections by billions of dollars over the last three years, a trend that was also cited by the three major Wall Street credit-rating agencies this year as they downgraded New Jersey's debt.
Ledger Live animates NJ's pension messLedger Live for Monday March 28th, 2011 - Ledger Live with Brian Donohue. On today's show: We explain New Jersey's state pension, the mess we're in, and how the state got to this point - the simplest way we can: with cartoons.
Assembly Speaker Vincent Prieto (D-Hudson) said that "abandoning pension payments only make things worse down the road, and that’s unfair to taxpayers who rightly deserve and expect better from someone who vowed to fix the state."
“We will review the governor’s plan and consider the next steps, but are mindful of the need to resolve this crisis," Prieto said in a statement. The speaker had proposed a higher tax rate on New Jersey's wealthiest earners as a way to bridge the budget shortfall, but Christie ruled that out again today and took a shot at Democrats for promoting "class warfare" against the rich.
"Protecting millionaires while the working class pays the price for festering budget problems was never an acceptable solution," Prieto said. "It’s finally time for the governor to understand this simple concept.”
Hetty Rosenstein, the state director for the Communication Workers of America union, called on Democratic leaders in the Legislature to fight back and "be the adult in the room."
"It’s time Christie realizes what everyone else knows: cutting taxes for the super-wealthy, while stealing money from pensions hasn’t worked yet. And it won't work this time," she said in a statement. "At every turn, Governor Christie has chosen the path of economic instability, due to his wrong priorities and callous actions towards New Jersey’s working families."
Senate President Stephen Sweeney (D-Gloucester), who threatened to shut down the government earlier this year if Christie reneged on his pension commitments, did not go that far today.
"The governor's proposals are callous and yet another attempt by this administration to point the finger at someone else," Sweeney said in a statement. "This administration has overestimated revenues for years. And while they have asked the middle class and the working poor to suffer, they have rewarded the state’s wealthiest. ... As we have done in the past, Democrats in the Legislature will work to resolve this issue in a manner that is fair to the hard working, middle class people of this state."
The Republican governor devoted much of his first term to a major overhaul of state workers' health and retirement benefits. The pension system alone, under his plan, would have taken approximately 30 years to get back to financial stability.
The overhaul shifted more costs to public workers, raised their retirement age to 65, and froze yearly cost-of-living adjustments. In exchange, Christie and lawmakers agreed to make bigger payments each year to the pension fund to repair the financial damage after years of governors who paid nothing at all.
Now, reducing the payments would increase the financial pressure on the pension system, which already faces $52 billion in unfunded liabilities, and would erase some of the progress Christie and Democratic lawmakers made after they overhauled the pension system in 2011.
"I made the decision that we were not going to blindside our students, we were not going to blindside our seniors," Christie said, noting that he was unwilling to make cuts to schools or Medicaid to plug the $807 million budget gap.
Christie also announced that his administration had found $165 million in fund lapses, or unexpected savings, in the current budget year, and $128 million in the coming fiscal year, which begins July 1.
Asked whether he had any other plans to reform the pension system before he leaves office, Christie said he did, but that he would not be ready to announce those until next month.
