Where Christie Fails

New Jersey governor Chris Christie seemed to get the urgency of the public pension/benefit problem in this excerpt from his speech yesterday at the Brookings Institution:
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until the end.  “Return those funds to solvency”? Was he delusional? As he kept talking….

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$1.1 billion is 2/7ths of the ARC (an understated number based on bad assumptions to begin with) by law (NJ law) and is grossly inadequate to fund promised benefits. This is nothing to brag about.

Then we have:
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A 2% ‘hard cap’ yields average tax increases of 2.4% (with some places much higher).

Governor Christie seems to grasp that there is a major problem but he also seems to have been sold on the idea that his piddling reforms will ‘return those funds to solvency.’  The question I have is whether it’s a failure of his advisers to tell him the whole truth or his own failure see a truth that he’s not prepared to deal with.

29 responses to this post.

  1. Posted by Tough Love on July 10, 2012 at 2:59 pm

    His failure to address fully funding the unfunded liability as well as the granting of future accruals as the current excessive rate is simply the political answer to a currently unsolvable political problem …… because the democratic Legislature won’t freeze or SIGNIFICANTLY reduce (by 50+%) future accruals as well as significantly increase employee contributions.

    He’s letting it die by starving the Plan.

    Greed HAS consequences.

    Reply

  2. Posted by Javagold on July 10, 2012 at 3:28 pm

    he is a LIAR …….. stop paying your property taxes and kill the machine that christie is a part of

    Reply

    • Posted by Tough Love on July 10, 2012 at 3:31 pm

      Moving is an option for many.

      Not paying your property taxes is a really lousy idea (an not a realistic option) for property owners.

      Reply

    • Posted by CountyWatcher2 on July 10, 2012 at 4:31 pm

      Property taxes are not state controlled. CC has nothing to do with it.

      Reply

      • CC cut all school funding to my town in 10′ in 11′ he gave us 5% if he gave us 100% of what we send to Trenton our taxes would be cut in half if not more …so he most certainly is responsibly for my towns highest taxes in Monmouth co !

        Reply

        • Posted by Tough Love on July 11, 2012 at 6:37 pm

          If your town rec’d !00% of what it sends to Trenton ?

          Then the State would have no money to pay for anything. Does that makes sense ?

          Reply

  3. Posted by CountyWatcher2 on July 10, 2012 at 4:31 pm

    It is foolish to pay into a failing system. Either enact the needed reforms, raise retirement age, etc, or let it go bust.

    Reply

    • Posted by Tough Love on July 10, 2012 at 5:42 pm

      I agree, as long as the “reforms” include a 50+% reduction in the pension accrual formula (and an increase in the unreduced full retirement age to 65, 62 for police officers) for CURRENT, not just new workers. If that can’t be done ……… starve the beast.

      And …… a MAXIMUM retiree healthcare subsidy of 50% of the cost a MODEST (not Cadillac) healtcare Plan with 35 or more years of FULL-TIME service, with a proportionately smaller subsidy for less service.

      Reply

  4. Posted by MJ on July 10, 2012 at 8:25 pm

    Couldn’t help but notice all of the newly going bankrupt cities—seems it is only a matter of time. It is worse for the publics to string them along–make the reforms now for current retirees, current workers and futrue workers so that those who will never see the light of day have time to properly prepare for retirement. It will be harsher in the end to delay the reforms. Will it solve all of NJ problems? No, but it would be a great start. Does anyone know if the cadilac tax slated for 2018 includes the publics with the cadalic health plans?

    Reply

  5. Posted by Anonymous on July 11, 2012 at 12:26 am

    The pension fund just ended June 2012 with about $71-72B. This is almost exactly the same amount as in June of 2006 (six years ago) and in June of 2001 (eleven years ago) and $4B more than in June of 1998 (fourteen years ago).

    Barring a significant financial meltdown over the next few years, me thinks the fund may hang on much longer than all you bankrupcy happy wishers think. It might plod along forever…boy, would that really piss some of you off.

    Reply

    • Posted by Tough Love on July 11, 2012 at 12:43 am

      Plan payouts are multiples greater than they were in those earlier years. The current (and increasing) net outflows will kill the Plan in 5-10 years assuming the 1/7 2/7, … contribution grade-in continues as scheduled.

      If you expect to be on the receiving end of one of these pensions, I surmise you’ll be the one pissed-off.

      Reply

    • I’m a retiree I have the same balance in my 401K that i did 7 years ago …I’m carful never to touch the principal only interest and dividends ,my withdrawal amount has decreased in dollars by 30% over the years simply because of lower interest rates ,this is something the pension plan can’t do reduce payouts ,If I were to have withdrawn a fixed 4% over the last 7 years my principal would be down 35% simply due to poor performance of the stock market and low interest rates ….which means their is a possibility I might outlive my 401K …..

      Reply

  6. Its funny how Chris Christie cries about democratic graft and corruption when Morris Cty leads the state in misuse of taxpayers wasted money. Some Morris and Essex County retired employees are making 50000 thousand dollars and haven’t been vested for 10 years. Dental Life Insurance Gov Perscription Plan HMO’s paid in Full on the Morris Essex County dole. When R Gov Chris Christie Talks No One Should Listen…

    Reply

    • Posted by Tough Love on July 11, 2012 at 12:47 pm

      “Some Morris and Essex County retired employees are making 50000 thousand dollars and haven’t been vested for 10 years.”

      Via pensions and salary ? Please name them.

      If it’s a retiree, say a lawyer now in private practice with legal engagements with a NJ gov’t, that’s a bit more tricky as to whether it’s improper (Are we getting our money’s worth? Would another equally competent firm, do the same work cheaper ?)

      Reply

      • logon to datauniverse.com and enter morris county essex county look for the 10 year pensioneers..and put a sock in your mouth you plooker…

        Reply

        • Posted by Tough Love on July 11, 2012 at 6:41 pm

          Seems like you’re a Civil Servant trying to divert attention form the excessive pensions paid to ALL (yes ALL) Public Sector workers by pointing out the few with even bigger excesses.

          While the latter problem should be fixed, that’s not where the big money is …. the big money is the excesses paid to ALL Public Sector workers.

          Reply

          • Posted by WeightWatchers of Drumwacket on July 11, 2012 at 7:32 pm

            Sorry not a Civil Servant but a Private Sector employee, wondering why NJ allows idiots to continue draining our budgets until there is nothing left in the till. And with the looks of this governor his plate always looks like its filled…giving millionaires budget tax cuts and draining the middle class like dried green tomatoes, another tasty treat for the governor…

  7. Posted by Al Moncrief on July 11, 2012 at 2:31 pm

    PROOF THAT COLORADO’S GOVERNMENT LIES: COLORADO PERA’S ATTEMPT TO STEAL FROM RETIREES.

    When I was young I held the belief that public service in the United States is honorable, that the United States of America was exceptional in the world, that governments in the United States, while flawed, deserved the respect of citizens.
    Now that I am old, I see that I was naive . . . that governmental entities in the United States will intentionally deceive to achieve their goals, and that over two centuries our soldiers have died for a country that will countenance, and even celebrate, base behavior on the part of its public sector instrumentalities. It saddens me, but if this state of affairs persists in the United States . . . Honor is dead.

    Some background . . .

    You may know that an entity of Colorado state government, Colorado PERA, is attempting to breach its public pension contracts with its retirees. Colorado PERA is attempting a retroactive taking, a “clawback” of accrued, fully-vested pension benefits that were earned by retired PERA members over decades.

    Colorado PERA public pension benefits include a “base benefit” that is set at retirement and a “COLA benefit” that adjusts pensions annually to compensate for inflation. The “base benefit” and the “COLA benefit” are set forth in Colorado statutes with identical force of law and legal status.

    In its attempt to breach retiree contracts Colorado PERA has created a contrivance. The contrivance that Colorado PERA is using is that somehow the “base benefit” is a contractual obligation, but the “COLA benefit” is not a contractual obligation, in spite of the fact that both pension benefits are set forth in law in an identical manner. What this boils down to is attempted, unabashed, theft by government.

    Whether or not Colorado PERA’s attempt to take fully-vested public pension benefits from PERA retirees is ultimately successful in the courts, one fact has been incontrovertibly established . . . Colorado PERA, as an instrumentality of the State of Colorado, is an organization that will lie to achieve its policy goals.

    This is a sad fact for the many employees of Colorado PERA, for the trustees that have served on the Colorado PERA Board of Trustees over 80 years, and for the thousands of PERA members and retirees.
    And now, the proof of the deceit . . .

    Colorado PERA has told us, in writing, that the PERA COLA benefit IS a contractual obligation of PERA . . . and then, after initiating their attempt to breach contracts, Colorado PERA has told us, in writing, that the PERA COLA benefit IS NOT a contractual obligation of PERA. Both of these statements cannot be true.
    Colorado PERA in a written document, to the Colorado General Assembly’s Joint Budget Committee on December 16, 2009 states that the PERA COLA benefit IS a contractual obligation of PERA:

    “The General Assembly cannot decrease the COLA (absent actuarial necessity) because it is part of the contractual obligations that accrue under a pension plan protected under the Colorado Constitution Article II, Section 11 and the United States Constitution Article 1, Section 10 for vested contractual rights.”

    Link:

    http://www.kentlambert.com/Files/PERA_JBC_Hearing_Responses-12-16-2009_Final.pdf

    Colorado PERA on page 23 of its May 6, 2011 “Reply Brief” in the pension case Justus v. State states that the PERA COLA benefit IS NOT a contractual obligation of PERA:

    “Plaintiffs seek to create a contract right that has never existed—an unchangeable COLA for life triggered (inconsistently) by either the date of their retirement or ‘full vesting.’”

    Link:

    http://saveperacola.files.wordpress.com/2011/06/2011-05-13-state-defendants_-reply-in-support-of-motion-for-summary.pdf

    That is simply unbelievable.

    In one, document PERA writes “the contract right has never existed.” In the other they write that the COLA benefit is a contractual obligation protected under the Colorado and US constitutions.

    When PERA writes that they need “actuarial necessity” to take the COLA benefit, they are not denying that it is a contractual obligation, in fact, it is an admission of the contractual nature of the COLA benefit.

    For further information regarding Colorado PERA’s attempt to take fully-vested pension benefits from retirees visit saveperacola.com or Friend Save Pera Cola on Facebook.

    Reply

    • Posted by Tough Love on July 11, 2012 at 6:42 pm

      I thought you put this dog to sleep.

      Reply

      • Posted by Al Moncrief on July 12, 2012 at 12:07 am

        Hey TL, I expect that we’ll hear from the court of appeals in the next few months. How are you? Have you come over to embrace prospective reforms exclusively yet? Al

        Reply

        • Posted by Tough Love on July 12, 2012 at 12:55 am

          AL, I have always embraced prospective reforms. While I know you disagree, I also support the end of COLAs because it’s the easiest (to attack) of the many excesses and extraordinarily generous provisions common to ALL Public Sector pensions. E.g., We can’t change the very early full retirement ages for those already retired, and reducing the formula-factor after retirement seems impossible.

          FYI, I am not aware of even one large (or small) Corporate Plan that provides for automatic annual COLA increases. With Public Sector workers making no less in cash pay than their Private Sector counterparts, there is simply no justification for pensions that are multiples greater in value at retirement than those afforded Private sector workers ….. and 80-90% paid for, NOT by the workers, but with Taxpayer contributions and the investment earnings thereon. The Post retirement COLA increases contribute materially to that excess and must be eliminated.

          Reply

          • Posted by Al Moncrief on July 12, 2012 at 2:11 pm

            TL, I know that you simply want to alleviate the US pension burden, but your suggestion to cut fully-vested retirement COLA benefits would breach contracts. Remember, state governments cannot declare bankruptcy under federal law. It sounds like you want this group, public pension retirees, to have no protection under the Contract Clause. Are there others in the US that you believe should be excluded from constitutional protection? or, is it just public pension retirees?

          • Posted by Tough Love on July 12, 2012 at 4:05 pm

            Al, Breach contracts … yes. But with those contracts “negotiated” between elected official and Unions CLEARLY trading campaign contributions and election support in exchange for favorable votes on these excessive pensions, reneging on the excessive portion of those fraudulent “promises” is a justifiable Taxpayer action.

  8. Posted by TREEeditor2 on July 11, 2012 at 4:13 pm

    to take some literary license from that famous quote: You can’t handle the truth, we can’t fathom the truth, Christie and all polticians don’t want to admit to the truth.

    and so it goes until it becomes too late or is that their plan all along. They and their friends already made their money off us years ago.

    Reply

  9. To quote Austin Powers ‘He Aint’ Heavy and He Sure Isn’t My Brother Baby’….

    Reply

  10. Posted by MJ on July 11, 2012 at 8:08 pm

    San Benardino, CA and Scranton, PA are too more that joined the ranks of bankrupt filings. Seems like they are falling like dominoes. It doesn’t matter what was “promised” as there is no way to pay for it. Sorry, publics but you will have to accept that change is coming and plan accordingly. Not sure if bankruptcy is the answer but it certainly does solve a huge piece of the problem–overly generous salaries, pensions and health benefits and way way too many public workers who are not productive.

    Reply

    • Posted by Tough Love on July 11, 2012 at 9:07 pm

      Once a bankrupt city pursues and succeeds at ending (or materially decreasing the pension accrual rate … by 50+%) the DB Plans for CURRENT workers, the flood gates will open, as solving this mess will at least be possible. Without ending or materially reducing future service pension accrual for CURRENT employees, VERY little can be accomplished and these cities will be back in bankruptcy Court in a few years.

      CalpERS is threatening to fight such changes …. and the first step a city should take is a bankruptcy court injunction that CalPERS has no standing to sue and dictate terms properly left to the Court. The Court should bar CalPERS interference.

      Reply

      • Posted by Al Moncrief on July 12, 2012 at 12:09 am

        Hey TL, the latest Monahan paper in the Iowa law review would give you alot of ammunition for reducing future accruals. Al

        Reply

        • Posted by Tough Love on July 12, 2012 at 12:42 am

          Thanks …I’m aware of her position papers.

          FYI, California’s Non-partisan “Little Hoover Commission” also supports pension accrual rate reductions for FUTURE service of CURRENT workers.

          Anyone with a modicum of math abilities knows that this is necessary, and for those with less grey matter, think of it this way ….. “the first in getting out of a big hole is to STOP DIGGING”

          Reply

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