Thank you, Fox Business

Even if the Arnold Foundation might be paying for it Fox Business has done the best job among major media outlets of covering the public pension crisis and related matters with their Gathering Storm series.

Today they link to two stories very close to me: NJ Style Pension Funding & Diverting Money and Gov. Christie Warns of Fiscal Calamity Blames Pensions highlighting fiscal gimmickry in county budgeting and the impending unspecified pension cuts coming in New Jersey, topics that directly impact every New Jerseyan yet the state’s largest newspaper alludes to the pension aspect when it can be tied to some sensationalistic angle like threatening funds for cancer research.

There are three major stories here:

1. Detroit-Central Falls-Prichard pension cuts coming across the nation
2. No accountability in government accounting
3. State and federal governments ignoring (1) and (2) above

Fox Business is on them all.

Reason For New Open Space Preservation Tax

The Reason Foundation, in a new policy brief, wonders why, with Pension Costs Soaring, Should New Jersey Commit Billions to More Open Space Preservation?

The New Jersey Legislature is currently considering a bill—Senate Concurrent Resolution 84 (SCR84)—that would amend the state Constitution to dedicate six percent of the state’s Corporation Business Tax revenues from FY2016 to FY2045 for the purpose of open space, farmland and historic preservation, and it would send this amendment on the ballot for voter approval in the next general election (presumably November 2014).

The new funding stream would be used to cover loans or grants for: (1) preserving land for recreation and conservation purposes under the state’s Green Acres program (as well as to expand the “Blue Acres” program to purchase lands in flood-prone areas, or lands that buffer such properties, and demolish all structures and improvements thereon); (2) preserving farmland; (3) preserving historic properties; and (4) covering the administrative costs associated with these efforts.

Yet the state government already owns nearly 15 percent of New Jersey’s total land area outright and, altogether, it has set aside nearly one-third of its total land area as protected open space, according to state figures. That is on par with the amount of total state land area already developed.

It is unclear why additional land preservation is needed when a significant portion of the state is already off-limits to development. Nor is it clear why there is a rush to lock in three decades of massive funding for land preservation when far higher spending priorities—primarily, rapidly rising government retiree pension and debt service costs—loom.

Look at how county Open Space taxes are being spent now and the answer becomes obvious.

No Governor Schmuck

Every month New Jersey governor Chris Christie goes on the radio to answer selected listeners’ questions.  Yesterday’s program featured the pension issue three times and the clear impression left by the governor was that something big was coming but he could not say what it was though he did hint:

Pension Padding Payment Perversions

NJ Watchdog has yet another story about an elected official getting a job on the government payroll to obtain the 3 years of higher salaries that would greatly increase their pension.  This is particularly damaging to the New Jersey pension system since it creates massive additional late-service accruals which were not anticipated and, due to the simplistic way contributions are split among localities by overall salary, will not be properly funded.

There are several examples of this scam being played out and though I do not have the particulars on benefits that would be payable to former assemblyman and current Division of Motor Vehicles employee and Christie-backer Larry Chatzidakis there is the example of a former Union County freeholder that would serve just as well.

Employees Paying For Their Own Pensions In New Jersey?

Alicia H. Munnell, director of the Center for Retirement Research at Boston College, in a WSJ blog believes that benefit cuts for New Jersey retirees should not be considered  in part because “New Jersey benefits for current employees are now significantly below the national average and employees pay most of the costs.”

This statement strikes one as odd since the latest valuation reports show employee contributions at $1.93 billion while government contributions are at $2.98 billion but Ms. Munnell is obviously referring to the annual accrual of benefits known as the Normal Cost which, according to the July 1, 2013 actuarial reports, does show employee contributions covering 65% of that Normal Cost for the five largest plans ($1,874,252,148 out of $2,897,259,254 in this spreadsheet).  But there is a reason for that.

Civics Lesson

I don’t think they teach civics anymore but if they did and were honest about it this example should be lesson one:

Doing Nothing For Pensions

At another of New Jersey governor Chris Christie’s town hall meeting on Tuesday it was reported:

Christie compared New Jersey to bankrupt Detroit, saying for the first time the state will be spending more on benefits for retirees than for current employees.

“We are paying more for people who are doing nothing than people doing something,” he said.

Christie said he plans to introduce a plan to address the pension system but did not elaborate.

“We have to worry about the greater good. And wishing it away is not going to make it go away,” he said. “We are going to have this conversation. I am going to force the conversation.”

Two points demand to be made.