CF12: The Missed Step

Half the sorrows of the world, I suppose, are caused by making false assumptions.

H. L. Mencken; Selected Prejudices, page 78

The Christie-Freeze roadmap to pension reform in New Jersey breaks down to three steps with the first two both necessary and possible:

  1. Get rid of the defined benefit concept with the state picking up the $200 billion shortfall which they will get from….
  2. Moving the cost of teacher pensions and health benefits back to the localities who will pick up the $200 billion needed from…..
  3. Saving on the cost of health benefits for their employees.

Yes defined benefit plans need to go away for public sector employees since politicians and their enablers will always underfund them.  Likewise localities should be picking up all costs for their school districts rather than negotiating benefits that oblige income-tax payers.

But believing that local governments will generate their $200 billion to kick off this process by a combination of higher employee contributions and instituting wellness programs is nuts.  There is a better way.

Assembly Bill A4164, introduced on February 5, 2015, calls for requiring the “Local Unit Alignment, Reorganization, and Consolidation Commission” to recommend a process for the dissolution of county government.

There’s your $200 billion savings to make the Christie-Freeze plan work but what is obvious to the rest of us is not so obvious to politicians looking out for themselves.  For example, Linda Stender may one day vote on A4164 which would almost certainly eliminate her other job.  She is not alone as county government in most of New Jersey is the engine of a gravy train stoked with low-show jobs, no-bid contracts, and make-work projects that are bleeding taxpayers dry but fueling the spoils system.

Mencken sums it up nicely later (page 83) in that essay from which the quote above was taken:

What is any political campaign save a concerted effort to turn out a set of politicians who are admittedly bad and put in a set who are thought to be better?  The former assumption, I believe, is always sound: the latter is just as certainly false.  For if experience teaches us anything at all it teaches us this: that a good politician, under democracy, is quite as unthinkable as an honest burglar.  His very existence, indeed, is a standing subversion of the public good in every rational sense. He is not one who serves the common weal; he is simply one who preys upon the commonwealth. It is to the interest of all the rest of us to hold down his powers to an irreducible minimum, and to reduce his compensation to nothing; it is to his interest to augment his powers at all hazards, and to make his compensation all the traffic will bear.

 

The Christie–Freeze plan can work but eliminating county government is an essential first step to generate the tax savings, even if most politicians don’t want to see it that way.

21 responses to this post.

  1. Posted by Tough Love on March 15, 2015 at 9:18 pm

    I agree.

    Reply

  2. Posted by skip3house on March 15, 2015 at 9:51 pm

    ….Likewise localities should be picking up all costs for their school districts rather than negotiating benefits that oblige income-tax payers……

    Please clear this up Regards

    Reply

    • When you are not paying for what you get there is a tendency to overpay for it which is what I see school districts doing with benefit costs that the state is completely responsible for and, as with other areas of this administration, not overseeing.

      Reply

      • Posted by skip3house on March 16, 2015 at 9:57 am

        Thank you. Was concerned of course with rich to poor(non-Abbott) Overseeing, along with State-wide School Income Tax, still viable options to present cruel regressive property tax, then.

        Reply

  3. Posted by JustClickHere on March 16, 2015 at 10:49 am

    Hi Mr. Bury…. I see the state trying to to freeze the pension plan and starting a “new” plan funded via localities as not very viable and a ploy to allow the system to go bankrupt. Specifically, states can’t declare bankruptcy but towns and cities CAN declare bankruptcy. As you probably know a Constitutional Amendment via referendum this Fall “guaranteeing” payment to the pension plan is meaningless if a town/city declares bankruptcy because this would now be adjudicated in Federal Court not State court. Thus Federal law trumps State law (even State Constitutions in specific matters such as these )So I have 2 questions:

    1) Do you agree with my first assumption?
    2) If yes, what happens when the 1st town or city declares bankruptcy. Are only the employees (fire, police and teachers) of that town affected or every (fire, police and teacher) in the whole state

    thanks for your blog

    Reply

    • Posted by Tough Love on March 16, 2015 at 12:02 pm

      The “TAXPAYERS” in Local NJ towns are nuts if they don’t protest their towns taking over the liability for teacher pensions & retiree healthcare costs….. even IF Local politicians become amenable to sch a change.

      I agree with John that any savings from retiree (and active) healthcare costs will never “offset” the added pension costs, and with such a shift, “LOCAL” politicians may now have access to (and a say in the administration, investment, etc. of) a new giant pot of money. As we have seen time and again …. especially when money is involved ….. , politicians simply CANNOT be trusted to act in the best interests of all Taxpayers.

      Reply

    • Bankruptcies don’t seem to be effecting the benefits of California retirees. It’s only a matter of whether the towns continue making the full payments to CALSTRS or CALPERS which is what might happen in New Jersey. Towns and school districts in NJ who get massive bills for pensions and benefits that they can’t pay could try going bankrupt to lower the amount they have to pay into the funds but since these plans are being massively underfunded anyway there is no mechanism for cutting benefits outside of the arbitrary swipes being taken (i.e. eliminating COLAs).

      Reply

  4. Posted by Jitters on March 16, 2015 at 12:35 pm

    The 2% cap was supposed to reel in local spending. Who is reeling in state spending? Certainly not the governor with 23-44% raises for the largest staff any NJ governor has ever had. Austerity starts at home. His word is worthless. He could not stick to his own program for three years. What makes anyone think his cost neutral promise means anything? He’s not fooling anyone on this forum. Hopefully people realize it is just another shell game where the local taxpayer loses.

    Reply

    • Posted by Tough Love on March 16, 2015 at 12:51 pm

      FYI ….. pension and healthcare costs (as well as debt service) are NOT counted in (and thereby NOT subject to) the 2% cap.

      I do not believe his Pension Commission’s “cost neutral” comments (i.e., healthcare savings “offsetting” incremental pension costs) for a moment. That is why Localities should NOT take on the added teacher pension costs w/o a written/legal iron-clad guarantee that … on an annual basis …. any shortfall in that “savings” … immediately becomes a STATE liability, with zero obligation or liability for the Locality.

      And you can bet that the STATE will NEVER write-in such a guarantee, as they likely KNOW that their “cost neutral” proposal a pipe-dream.

      Reply

  5. Posted by dentss dunnigan on March 16, 2015 at 1:26 pm

    If towns were given the proper return of their income tax monies to fund schools this could be a viable soultiton .but we all know the democrats and the courts will never let that happen

    Reply

  6. Posted by javagold on March 16, 2015 at 5:04 pm

    Keep up the bread and circus act. Soon the tent will be torn down. And the pension ponzi will collapse.

    Reply

    • Posted by Tough Love on March 16, 2015 at 5:50 pm

      Do you recall that song …. “When The Walls Came Tumbling Down”, by Def Leppard from their 1980 debut album “On Through The Night” ? That’s the future on NJ’s Public Sector DB pensions & retire healthcare promises.

      And given the pension’s & retire healthcare benefit’s EXTRAORDINARY (and unnecessary & unaffordable) RICHNESS, and the obnoxious GREED of all the “stakeholders” in obstructing pension/benefit reform, that (“When The Walls Came Tumbling Down”) all but guaranteed end will be so rightfully deserved.

      Reply

  7. Posted by Anonymous on March 16, 2015 at 6:44 pm

    Anyone see the latest ..Chris Christie Officials Sent Pension Money To Subsidiary of Donor’s Foreign Firm…http://www.ibtimes.com/chris-christie-officials-sent-pension-money-subsidiary-donors-foreign-firm-1847744

    Reply

    • Posted by Tough Love on March 16, 2015 at 7:49 pm

      Prudential is one of NJ’s largest employers and one of the world’s largest Financial Service companies….. and could CERTAINLY move their headquarters out of NJ with great savings.

      I’m quite sure that they (either directly or via one of their subsidiaries) have been managing a variety of NJ’s assets …. FOREVER.

      Reply

      • Posted by Anonymous on March 16, 2015 at 8:31 pm

        And round and round it goes and the problem remains to suck everything out of towns and much needed services.

        Reply

        • Posted by Tough Love on March 16, 2015 at 8:57 pm

          That “sucking” sound you’re hearing is coming from the money flowing out of the Taxpayers’ pockets to fund the grossly excessive pensions & benefits promised ALL of NJ Public Sector workers by our self-interested, taxpayer-betraying elected officials.

          Reply

  8. Posted by george on March 20, 2015 at 3:25 pm

    The state should lose all power to regulate education. The localities could set schedules and qualifications of personnel. Parents should get a rebate if they home school or use private school.

    Reply

    • Posted by skip3house on March 20, 2015 at 3:32 pm

      Towns not equally wealthy, but all kids should get equal resources, as shown with ‘early start’.
      So, let’s have cruel regressive school property tax replaced by doubling the present NJ Income Tax, then distribute that by student?
      Double is approximate but income tax and school property tax ‘today’ have about equal revenues. Hence, this logic…..

      Reply

      • Posted by dentss dunnigan on March 22, 2015 at 3:35 pm

        Property tax is “only” consumed by 60 to 65 % of education cost ,so doubling would be way too much .county 17% and municipal services consume the rest

        Reply

        • Posted by skip3house on March 22, 2015 at 5:16 pm

          Only the School property tax mentioned in my comment, but your interest is important.
          Gov B Byrne did well by starting the NJ Income Tax to replace costs of schools, but judges and politicians just used it as another revenue source. Let’s take the cruel school property tax away…..

          Reply

  9. […] options are raising the sales tax from 7% to 10% or raising the income tax on everyone 29% – eliminating county government not on the […]

    Reply

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