New Jersey Pension Payment (NJPP) Case 1: The Endgame

The webcast of the May 6, 2015 oral arguments in the pension payment case is online and there was a lot more that came out beyond ‘bait and switch‘ and ‘aspirational’ that the media latched onto.  In the next few blogs we will look at some points of interest brought up over those three hours beginning with the obvious question if the state prevails:

If New Jersey is free to put in whatever they choose into the state pension plan then why would future governors and legislatures simply put in nothing (as several prior governors and legislators chose to do)?

Then for the plans that the state is responsible for (TPAF, PFRS state, PERS state, State Police, and JRS) with only the employees’ own contributions coming in and about five times that amount going out there will inevitably come a time when the money will run out.  Let’s say in 2021 when annual payouts to state retirees are at $10 billion and all you have coming in is $2 billion in employee contributions.  Can the state continue to rely on the Appropriation Clause argument and refuse to make up that $8 billion shortfall as they had being for all those past years?  If so where will the money come from?

That is pretty much the question that Judge Barry Albin was trying to get answered and, at the end of the video, Assistant Attorney General Jean Reilly puts forth a couple of options.

20 responses to this post.

  1. Posted by Tough Love on May 10, 2015 at 9:08 pm

    NJ taxpayers should contribute toward their Public Sector workers’ pensions & benefits an amount (expressed as a % of pay) that is EQUAL to what the average NJ taxpayer gets in employer-sponsored pensions & benefits from their employers.

    An educated guess is that that level of contributions would be sufficient to fund 1/3-1/2 the pensions and 10% of the retiree healthcare benefits now promised these workers.

    Yes, that ‘s a BIG hit, but NOT because that level of Taxpayer contributions would be unfair (being EQUAL to what they get), but due to the grossly excessive structure of current Public Sector pension/benefit “promises”….. all “negotiated” under collusion, with the Unions BUYING the favorable votes of NJ’s Elected Officials with campaign contributions and election support.

    EQUAL, but NOT better …. on the Taxpayers’ dime.


    • Posted by Anonymous on May 10, 2015 at 10:21 pm

      Let see what happens when TL employer contributes equally percentage wise to what the state contributed . Lmao, her pension will go down the toilet! She is ridiculous and she must know it.


      • Posted by Tough Love on May 10, 2015 at 10:56 pm

        I didn’t say “contributed”, I said “should contribute”.

        NJ’s ONLY saving grace (for it’s Taxpayers) is that so far, the taxpayers (at the STATE … but not LOCAL) level haven’t really “contributed” that much.

        But supposedly the taxpayers are still “responsible” for the huge unfunded costs of the grossly excessive Public Sector pension & benefit “promises. That’s where I advocate for the Taxpayers contributing NO MORE than what they get (towards THEIR pensions & benefits) from their employers.

        You;re not “special” and deserving of a better deal …. on our dime.


        • Posted by Anonymous on May 11, 2015 at 4:32 am

          Too.late for that but nice try
          After you dont pay your credit bills for 20 years use the same excuse as to why you should not pay any interest, afteralll why should you pay any more than the people who have paid their bill on time and in full. Because you are special. What convoluted logic. Or tell them, although your facts are severely flawed that you more make up for your lack of responsibility with sound grammar and a nice vocabulary! Hilarious!


          • Posted by Tough Love on May 11, 2015 at 12:01 pm

            Oh I’d support the Taxpayers making up for any taxpayer-contribution underpayments, but ONLY up to the level that supports a pension EQUAL to those typically granted Private Sector Taxpayers,

            That’s “fair”.

            You see, I really mean it when I say EQUAL …. but not better.

            And to be really fair, I suppose any such IOUs should be offset by the decades of past Public Sector retiree healthcare payments FAR FAR in excess of what Taxpayers received in those years …. (with interest, as you pointed out).

  2. Posted by Anonymous on May 10, 2015 at 9:13 pm

    She didn’t appear to be the brightest bulb on the tree. Are you referring to the options she mentioned as Pension Obligation Bonds and/or Federal bailout? Seems to me she would have to come up with something more original than that. This is what our tax dollars are paying for? Lord help us all.


    • She’s just playing the cards dealt and unless the game is rigged she is going to lose.

      She is however a lawyer who gets her information from pension people so what is interesting is that POBs and a federal bailout are on their table.


      • Posted by Tough Love on May 10, 2015 at 9:48 pm

        With a Republican Congress, a Federal bailout has a near zero chance of happening …… and IF it did, a “freeze” of FUTURE-Service pension accruals (to stop digging the hole deeper) would certainly be a condition.

        And POBs ala Gov. Whitman would be just more kicking of the can down the road …. AND a disaster for taxpayers (simply trading unaffordable pension contributions for unaffordable annual interest/principal payments).


  3. With NJ’s credit downgrades, at what % would anyone be willing to lend for POB knowing that NJ is one of the worst? Wouldn’t this option simply increase the debt and eventually get to the point literally of NJ not being able to pay? Federal bailout? I think the Feds have enough problems with SS, Medicare, etc to figure out how to fund all of that without cutting benefits. Besides public workers, welfare recipients, illegals, limited job opportunities in NJ for young people, decling home values, stagnant wages. etc, who is left to tax to pay for all of this?


  4. Posted by Javagold on May 11, 2015 at 3:48 pm

    It’s all going to collapse. No need to argue or fix anything. Sit back. Relax. And watch the fireworks.


    • Posted by Tough Love on May 11, 2015 at 4:11 pm

      Yes, it IS going to collapse, but the Taxpayers must stay vigilante to minimize flack going their way (financially).

      While the primary “blame” lies with decades of elected officials who voted for these grossly excessive pensions & benefits in exchange for Public Sector Union campaign contributions and election support, the FINANCIAL BENEFICIARIES of that Union/politician “collusion” are the Public Sector workers/retirees who were “promised” FAR FAR more than was necessary, reasonable, just, fair, or affordable. So THAT is were the Taxpayers must look to right this wrong.

      The coming “corrections” must simply acknowledge that what is being “taken away” should never have been granted in the first place, and the workers/retirees are being put back into the situation that they certainly WOULD HAVE BEEN in the absence of that Union/Politician collusion.

      Greed HAS consequences.


      • Posted by Michael S Polish on May 11, 2015 at 5:07 pm

        The thing that neither of you understand is that long before collapse comes tax increase. That is a certain. Christie is finished in this state and the republican pigs have zero chance of winning any state wide race going forward. I do get a chuckle out of TL and Java though. Equal,less than equal. Those that provided security for civilization always had it better than the general population. Why you ask ? Because we provide something. In all honesty most private sector positions are not needed. When the recession hit all the do nothing positions in our society were eliminated. No need to waste money on trinkets. Most of those jobs will never come back nor should they. The private sector can’t survive without safety. You should never expect equal to the person who protects the weak.


        • Posted by Tough Love on May 11, 2015 at 5:20 pm

          Quoting ……… “In all honesty most private sector positions are not needed.”

          And where might I ask would the revenue come from to pay “Public Sector workers ? I suggest you take few classes in bsic economics/finance.

          And ………. I’ll get a “chuckle” when (not if) your vastly unjust pension & benefits are materially reduced.


          • Posted by Michael S Polish on May 11, 2015 at 6:07 pm

            There was always money through out history for the payment of security. If not the territory was conquered and enslaved. That’s life 101 not economics 101. As for my pension you will take it in the a$$ before I do in the form of tax hike. Enjoy.

          • Posted by Tough Love on May 11, 2015 at 7:24 pm

            Michael S Polish,

            There ps sufficient money available to pay adequately and reasonably for security (primarily Police & Fire service) but NOT enough to unnecessarily over-compensate …… as our self-interested, vote-selling, contribution-soliciting, taxpayer-betraying Elected Officials have chosen to do in return for Public Sector Union campaign contributions and election support.

            Quoting …………….. “As for my pension you will take it in the a$$ before I do in the form of tax hike. ”


            No, what you will certainly be seeing is a MAJOR reduction in retiree healthcare subsidy, and if still working, a reduction in future service pension accruals. And depending on the depth of NJ’s financial problems (as they shake out over the next few years) quite possibly a reduction in PAST service accruals as well.

            Greed HAS consequences.

        • Posted by BH on May 11, 2015 at 5:24 pm

          Here! Here!!!!


          • Posted by BH on May 11, 2015 at 5:25 pm

            Hear!! Hear!!!

          • Posted by Tough Love on May 11, 2015 at 5:58 pm

            Lucky you caught that ….. or truthnolie and/or S. Moderation Douglas surely would have brought that up, being eminently important to the discussion.

          • Posted by truthnolie on May 12, 2015 at 9:13 pm

            Can’t really expect you to care about proper grammar, language or stating exactly what is to be recorded to the written word……you know, just like your bloated megalomaniac hero, who now wants his own dreamed up law (reduced to exact wording requiring mandatory contributions, etc., etc.) deemed unconstitutional.

  5. Posted by Anonymous on May 11, 2015 at 8:07 pm

    twitter #fundnjpension


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