Charles Wowkanech, president of the New Jersey State AFL-CIO, had an op-ed this morning where he offers what he sees as a “realistic path toward meeting N.J.’s pension obligation” with a four-pronged approach that he thinks would raise $1.6 billion annually as follows:
- $600 million from not paying fees for alternative investments
- $87 million from making the pension payment 11 months earlier
- $600 million from higher taxes on people making over $1 million a year
- $300 million in unanticipated revenue
He is dangerously wrong on all counts and, if his suggestions were implemented, the likely result would be:
- $0 since if you don’t pay the investment fees you don’t get the investment. Alternatives have been a scam to inflate the value of trust assets but if those $600 million fees were not paid New Jersey would not be able to claim they have $80 billion in plan assets.
- close to $0 overall since, if New Jersey had an extra $1.3 billion lying around at the beginning of the year, they could be earning money on it outside the plan as easily as inside it.
- $600 million possibly but much of that would be going to Florida and Pennsylvania treasuries.
- ???? – “unanticipated revenue”? Would the pension then also have to cover unanticipated shortfalls as occurred in FY14?
If union leaders are seriously interested in saving the pensions of their members they must all face the truth and not their own prejudiced interpretations of what is possible.