New Jersey’s Fiscal Cliff

Late yesterday the New Jersey Department of the Treasury issued a press release warning that revenue projections for the fiscal year ending June 30, 2014 are falling short by $807 million “largely due to an underestimate of the impact of the imposition of higher federal taxes at the end of calendar year 2012” and to make up the shortfall:

“The State will take any and all actions necessary to offset the reductions in anticipated revenues, including the identification of additional lapses and savings opportunities, as well as the exercise of the full range and scope of executive authority, including, but not limited to, reserving and/or impounding budgeted appropriations,” said State Treasurer Andrew Sidamon-Eristoff.

Mark J. Magyar of NJSpotlight interprets for us:

Sidamon-Eristoff will comb state accounts for additional cuts, but it will be hard to find big savings in what’s left of the state’s operating budget, and this year’s homestead rebates, municipal aid, and most school aid has already been paid out.

The only large budgeted appropriation that has yet to be spent is the $1.582 billion payment to the pension system that the state is expected to make in the last week of June — a payment that was already cut retroactively by $93.7 million from the originally budgeted $1.676 billion as part of Sidamon-Eristoff’s earlier budget cuts.

The simplest solution for the Christie administration would be to create a “one-shot” budget saving by canceling a portion of the pension payment or more likely pushing part of the $1.582 billion payment — as much as is needed to fill the $800 million gap after Sidamon-Eristoff uses up other available savings — out of the current fiscal year that ends June 30 and into the following fiscal year.

For the 7/1/10 – 6/30/11 fiscal year the total state contribution of $3.06 billion was ‘skipped‘ (i.e. stolen) with a finger pointed at the fiscal mismanagement of the prior administration.  The pension payment due in June will be cut, possibly eliminated, with the only questions being whether the actuaries are to be involved this time and who will be blamed.  My guess is  public employees and prior gubernatorial terms (though not immediately prior).

12 responses to this post.

  1. Posted by Anonymous on April 29, 2014 at 12:26 pm

    All of the pension payments made during the Christie admiinstration were made by entirely by the public employees and retirees, not one more cent came from tax payers paying more than they had been paying which was zero.. I am sure of this because the money was obtained from the elimination of COLA payments. And even though more money was saved by eliminating COLA than what was contributed, that excess money not be used to toward the pension system..

    Reply

  2. Posted by Maceo on April 29, 2014 at 12:31 pm

    When they used the last reforms to lower the actuarial debt instead of putting it into the system they lost all credibility in saying they are trying to save the system. His biggest donors want to end pensions and have pleaded with him to hit the fast forward button. Initiate autodestruct sequence. Mission accomplished.

    Reply

    • Posted by MJ on April 29, 2014 at 7:42 pm

      You are missing the point that the salaries, benefits and pensions are so overly generous and out of touch with economic reality that there is no reasonable way to possibly sustain them. The budget will mostly go to those costs crowding out other services such as education, infra structure, social services, prisons, research funding, etc. etc.

      Reply

    • Posted by Tough Love on April 29, 2014 at 8:33 pm

      Earth to Maceo …. these grossly excessive Public Sector pensions are not “saveable”. We’re well past that tipping point.

      The question really is ….once the plan assets run out (meaning pay-go) in a few years, will the Taxpayers put up with the HUGE tax increases necessary to pay these pension in full ?

      I not only doubt it, but I’m 90% certain that they will never even be asked to do so by our elected officials. Why ? Because the MOST important thing to an elected official is to be re-elected, and without doubt our elected officials will realize that (with Private Sector Taxpayers still far outnumbering the public Sector workers and their families) they will be voted out of office unless they change sides and support Private Sector Taxpayers efforts to materially (by 50+%) reduce the future service pension accruals of all CURRENT workers.

      Reply

      • Posted by dentss dunnigan on April 30, 2014 at 4:36 pm

        Hell ,even 25% of the states retirees don’t vote in New Jersey the’ve moved out already .I’m sure our politicians realize there voting base is shrinking

        Reply

  3. Posted by Javagold on April 29, 2014 at 2:48 pm

    The fat dope always over estimates his budget revenue.

    Reply

  4. Posted by MJ on April 29, 2014 at 4:37 pm

    Yawn 😴

    Reply

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