Governor Murphy, GOVERNMENT THAT WORKS
Bond Buyer: Murphy’s full pension payment revives debate over New Jersey overhaul
By Paul Burton
Gov. Phil Murphy’s call for New Jersey to make its first full pension contribution in 25 years is generating questions about retirement-system overhaul in one of the nation’s lowest-rated states, and how might the capital markets respond.
Murphy on Tuesday revealed the proposal to pay toward pensions roughly $6.4 billion, or about 14% of his $44.8 billion fiscal 2022 budget proposal to lawmakers. Overall spending would rise 10%. Democrat Murphy’s election-year budget would increase aid to schools and provide income-tax rebates to low- and middle-income families.
Making the full actuarially required contribution will need an additional $1.6 billion expense, according to Murphy. New Jersey was initially scheduled to earmark 90% of its full contribution this year under a ramp-up plan.
“We’re now on the road to fixing one of the biggest financial problems of any state in America,” Murphy said during his fourth budget address, this time pre-recorded in an empty Trenton War Memorial. He bypassed the traditional speech to lawmakers because of COVID-19 protocols. “And when we keep making this pension payment, we will go from a pension system that many said was destined for bankruptcy to one that is solvent, healthy and sustainable.”
Postponing or reducing pension contributions would risk a collapse of New Jersey’s retirement system, Pew Charitable Trusts said last October. Pew showed New Jersey’s pensions 38% funded, with lllinois only slightly better at 39%. Illinois is the only state with lower ratings than New Jersey, and pensions are the big drag on both.
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