“Retirement” will become a thing of the past…
New Jersey took a credit hit in November when S&P downgraded its credit rating. Now, it’s looking over New Jersey’s recently proposed budget and giving it the stink-eye, too. All because of New Jersey’s colossal pension debt.
Christie’s proposed spending plan for fiscal 2018, which starts July 1, would leave the state with small reserves and “some vulnerability to potential revenue shortfalls,” analysts David Hitchcock and John Sugden said Thursday in a report. Future budgets “look much worse,” according to S&P, which reduced its credit rating on the state in November to A-, the fourth-lowest investment grade…
“Underfunding in any year ratchets up future state liabilities, in effect pushing back the tide, as New Jersey comes closer to the day when it will be left with no choice but to confront its very significant retirement obligations,” the analysts wrote.
So here are the facts: New Jersey’s pension fund is staring down a $135.7 billion shortfall. That means it needs to make a $136 billion payment right now just to keep the fund growing at its assumed interest rate to pay out all the lavish pension promises the state has made to unionized workers.
Until then, New Jersey is, like the Federal government, facing unfunded liabilities valued at over $100 billion.
CLOSE, BUT NO CIGAR
Instead of making a $136 billion payment this year, the governor has proposed just a $2.5 billion payment. It seems tiny, I know. But here’s the thing, it’s larger than last year. In fact, Governor Christie, since being in office the last 7 years, has doubled the payments made by all governors in the 16 years prior to his taking office.
But it’s not nearly enough. It’s still less than $9 billion over the last 7 years.
Pension funds all over the country are hobbled. That’s because nobody can afford them anymore. They are going up in smoke, and the politicians are sensing this. If the fund is going to tank anyway, why keep funding it? Why throw good money after bad?
Besides, there are lots of other goodies that the politicians could use that money for, if it didn’t have to go towards keeping a pension fund from sinking…