You Disgust Me!

There have been more memorable rope line encounters with politicians but what happened at Governor Christie’s town hall meeting last Thursday in Ocean City should have at least gotten a higher footing in the media blabosphere above an insert on an NJTV story:

No word on whether this fellow was a disgusted Atlantic City employee or a public sector retiree or maybe even a good-government advocate but Chrisite admitted there were other incidents that day that didn’t even make NJTV:

Again, no explanation (or consideration) of why these people were disgusted.  Just a dismissal of them as malcontents that the governor is stoically tolerating.  I don’t know what the real concerns of these people are (and that’s not the story being told by those media folk) but the comments that Chrisite made at that Ocean City town hall meeting were disgusting and for these reasons:

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SEC Cracking Down on Municipal Bond Issuers/Liars?

For years now the only pieces of fiction I have been reading are either by Christopher Buckley or the auditors for Union County.  Whether it’s fudging OPEB disclosures or failing to mention raiding the Open Space Trust Fund (a $10 million annual tax that sunsets in 2020) to pay operating expenses this deceptive reporting (I mean by the auditors not Buckley) have kept investors, who heretofore have accepted as gospel that municipalities would somehow always pay back their bonds, in the dark and eventually out of luck and money.

Then came Detroit with their deceptive pension numbers and the SEC started worrying.

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Christie’s Incongruity

One of the problems with lying is that you pretty much have to stick to that lie even when it would be more convenient in another circumstance had you not lied.

So it is with New Jersey Governor Chris Christie claiming that he is making the “pension payment that takes care of all of the current employees”.

That pension payment comes to $681 million this year based on the July 1, 2013 valuation of the plans but if you look at the profile of those current employees that Christie claims to be covering:

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Why a Pension Study Commission?

Mark J. Magyar at NJSpotlight reports today:

Christie has been promising a plan to cut the state’s growing $90 billion unfunded liability for future pension and retiree health benefit costs for months, going all the way back to his February 25 budget address.


Christie promised to unveil that plan by the end of this month and, indeed, Republicans who met with Christie administration officials told NJ Spotlight that the plan was almost finished and would be unveiled either in late August or early September.

“Obviously, whatever plan Treasury came up with didn’t meet the governor’s political needs,” said one Republican who asked not to be identified. “That’s when he decided to go to a commission.

“This issue is more difficult and complex than I expected it would be,” Christie said in Parsippany on August 2 after signing the executive order creating the commission. “I came to the conclusion that I wanted outside help to come and give me some advice before I made a proposal. It’s no more complicated than that.”

Actually it’s a whole lot less complicated than even that.

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Job #1 of the New Jersey Pension Study Committee

Bottom line: lower the state’s required contributions.

How they get there is irrelevant.  New Jersey is budgeted to make a contribution of $681 million in June, 2015.  That number needs to get as close to $0 as possible.

The bad news for the committee is that it is impossible using any rational criteria.  The good news for the committee is that they have wide latitude as to means and their intended audiences are, on the whole, innumerate so any number they throw out there that is lower than $681 million will be accepted mindlessly.

But when one actually looks at the numbers without blinders the real extent of the problem (and the machinations to avoid such analysis) should scare us all.  For example, Governor Chrisite claimed last month*:

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Pension Study Commission Members Announced

I predicted they would be a combination of five patsies and quislings but apparently Governor Christie could not fill out that roster so he settled on some professional people but raised the number to nine so as to assure that his original intention (having this commission rubber-stamp whatever study the Divisions of Pensions is almost done with) will play out though not through blind obeisance as originally intended but through internal bickering which this commission is certain to have plenty of.  The members, per the press release:

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Consulting Scranton

I was in Pennsyvania last Friday for a business/pleasure excursion to my friend’s sprawling estate and, on the way home, picked up the local paper drawn by the lead story:

Scranton council passes commuter tax
By Jim Lockwood
Published: August 1, 2014

For the first time since 1994, Scranton will again impose a commuter tax, this time to shore up the strapped city’s severely underfunded pension system.

City council on Thursday adopted a 0.75 percent earned-income tax on nonresident workers to raise an estimated $5.1 million a year. Council voted 4-1, with President Bob McGoff and councilmen Pat Rogan, Joe Wechsler and Wayne Evans in favor and Councilman Bill Gaughan opposed, to adopt an ordinance authorizing the Act 205 earned-income tax on nonresidents who work in the city.

Despite pending changes to Act 205 that would require the city to levy the same tax on residents, Mr. Rogan and Mayor Bill Courtright insisted residents would not see a wage-tax hike.

I follow pensiontsunami and other public-pension-crisis sites regularly and I was aware that Scranton was considering bankruptcy but only when I happened upon this story did I realize that Scranton really is on the precipice with their pension system and I suspect they got there because they were allowed to do what had been expedient for them as corroborated, if not dictated, by the advice they bought at the time.

Scranton’s story,  as pieced together from local-paper articles and working backwards, is instructive….and likely typical.

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