As reported by NJ.com, lawmakers voted overwhelmingly to send Governor Chris Christie a bill that will require the State to make quarterly payments to New Jersey’s ailing public worker system. The proposal, which cleared the Senate by a 35-0 vote and the Assembly 72-0, is a reworked version of similar legislation Christie twice vetoed. It would require the Governor to make pension payments on a quarterly basis by September 30, December 31, March 31, and June 30 of each year, instead of at the end of the fiscal year in June. In exchange, the pension fund would reimburse the State Treasury for any losses incurred if the State has to borrow money to make a payment.
The bill resembles a provision of a proposed constitutional amendment that Senate President Stephen Sweeney once back before pulling his support over concerns about the State’s ability to make the payment. Sweeney’s reversal drew outrage from public worker unions. In his 2014 veto of the bill, Christie called it “an improper and unwarranted intrusion upon the longstanding executive prerogative to determine the appropriate timing of payments” so those expenditures line up with tax collection cycles. But the change in the bill which would have the pension fund pick up the cost of borrowing if needed may address the Governor’s concerns.
The bill’s passing was met with only a lukewarm response from the State’s largest public worker union, the Communications Workers of America, which favors a constitutional amendment to require full pension payments. “CWA supports quarterly pension payments. However, unless the full amount due to the plan is appropriated, quarterly payments are meaningless,” Hetty Rosenstein, state director of CWA NJ, said.
Decades of underfunding have weakened the pension system, as have more recent poor investment returns. The fund lost 0.87 percent in the fiscal year that ended in June, based on unaudited figures, and investment returns in the year before were 4.16 percent. As of July 1, 2015, New Jersey’s state and local pension funds have just 37.5 percent of the funding it needs to pay for future benefits. That is based on new reporting standards that require the State to project lower investment returns and had bleak consequences for the State’s estimates. If Christie signs the measure, New Jersey would join California, Indiana, North Carolina, and Pennsylvania in states that have rules requiring quarterly pension payments.
Please continue to check this blog periodically to ascertain updates regarding this bill.