Defining ‘Balanced’ In New Jersey

Another New Jersey budget hearing, another stupid idea:

Under sharp questioning from the Senate Budget Committee, state Treasurer Andrew Sidamon-Eristoff said delaying the pension contribution was one of several grim options that Gov. Chris Christie faces to close the budget shortfall, which ballooned last month after state income tax revenue came in far below the governor’s estimates.

Instead of making the $1.58 billion payment by June 30, as scheduled, Christie might kick it into the first week of July, the treasurer said. It would only be a few days late, but it would be off the books for the current budget year, allowing Christie to close the shortfall without gutting spending on Medicaid, hospitals, schools and other areas.

Of course the $1.58 billion payment is far below what is needed to cover the escalating liabilities but in this fantasy fiscal world where any number will do as long as it is small enough and you follow proper procedures there are a few details to address:

  1. Will there be a one-week interest adjustment on the late payment since the payment due on 6/30/14 was adjusted for interest from the 7/1/12 valuation it was based on?
  2. 7/1/13 – 6/30/14 may be balanced but where does this payment fit into the 7/1/14-6/30/15 budget which already includes a $2.25 billion pension payment?
  3. Senate President Stephen Sweeney threatened to “shut down government if Chris Christie reneges on pension payment” yet he kept quiet as that payment was reduced by $94 million through actuarial gimmickry and now will be severely reduced, if not for the 7/1/13-6/30/14 year then certainly for the 7/1/14-6/30/15 year.  At this point what should be shut is his mouth as he has become an enabler of Chrisitie’s delusion of fiscal competence

.

7 responses to this post.

  1. Posted by JM on May 9, 2014 at 12:23 pm

    I do not pretend to know the financial workings of the state but if the state is actually sitting on 1.58 billion where is it and who is getting the interest from this money, it should be the pension system. Also why should the state hold onto this money, it makes it ripe for the taking, I am sure Christie can’t stand seeing all that money earmarked for the pension.

    The state should be forced to make their payments to the pension quarterly like the towns, counties etc due.

    Also am I to assume this 1.58 billion is for the state PFRS PERS etc as the locals have been paying into their plans. As have state and local employees.

    Reply

    • The state isn’t ‘sitting on’ any money. That’s the problem. They are supposed to have it (they budgeted for it) but it’s not there so they will skip the payment.

      That mini-contribution is also supposed to cover the Teachers pensions too.

      Reply

  2. Posted by Anonymous on May 9, 2014 at 2:11 pm

    John, what would happen if they made the entire payment due? Instead of the fraction they make? Would that actually help the situation? Instead they go deeper and deeper every year.

    Reply

    • That ‘full’ payment is itself based on dodgy actuarial assumptions that also increase the unfunded liabilities annually.

      Had the state been making all their ARCs then it might be another 10-20 years before asset values drop to levels that don’t even cover 50% of benefits accrued for current retirees – which is where we are at now.

      Reply

  3. Posted by Javagold on May 9, 2014 at 5:42 pm

    But what about The Jersey Comeback ??

    Reply

  4. […] published in the Star Ledger to be my last.  It wasn’t as today a letter I edited based on a blog I put up on Friday appeared in the paper.  At least most of it appeared in the […]

    Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: