Detroit may be moving to resolve their pension crisis, but New Jersey's pension problems are just heating up.
Gov. Chris Christie (R) says the Garden State's pension system—which is expected to hit more than $54 billion in unfunded liabilities by fiscal year 2018—needs to be fixed because it's unsustainable long-term. Christie's office now has launched a public relations campaign to raise awareness about the looming financial crisis, unless something is done.
Nationwide, dozens of cities and states are facing pension problems, according to a recent report from the Pew Center. But Detroit, Michigan and New Jersey are front and center on the debate. New Jersey's crisis, in fact, goes back decades, and the situation only has worsened in recent years.
This despite the enactment of several laws to reform New Jersey's system in 2010, including requiring public workers and taxpayers to chip in more. New Jersey this year faced an $807 million budget shortfall. State Democrats had proposed raising taxes on high-income earners and businesses to fill the gap. But Christie chose to cut two legally required pension payments to a combined level of $1.38 billion from $3.8 billion. Those cuts aren't enough though, according to Christie, so he has promised to introduce more reforms later this year.
Christie told a radio audience in June that the state is meeting its current obligations, but won't be able to meet the state's pension and health-care commitments to its 700,000 active enrollees and retirees long term. He said his promise of reform is to avoid the same problems that have plagued Detroit, which is working to exit Chapter 9 bankruptcy. Detroit's bankruptcy trial is scheduled for August 14.
"I don't want New Jersey to meet the same fate," Christie told the radio audience on New Jersey's "Ask the Governor" program.
As New Jersey works out a concrete proposal, public worker unions in the state are already fighting back.
Union officials say they intend to file a lawsuit in a bid to force Christie to make full pension contributions, and vowed to battle any proposal the governor makes to reduce pension benefits.