Lesniak’s Pension Non-Answers

Another State of Affairs program with another gubernatorial candidate and again it is the pension question up front:
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Presumably a reference to more Pension Obligation Bonds which would certainly not have solved anything but rather made one aspect of the equation (the state’s deposits) slightly more predictable which was the heart of the 2011 reforms (trading away COLAs for some ‘guarantee’ of funding) and maintains in the minds of these politicians:

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“It can be renegotiated….if the state makes the payments to have the pension secure.”

And there it stops. No definition of what those payments are since for 40 years State Senator Lesniak and his cronies have not been told what the real cost of these pensions are. They don’t put together a $150 billion (still understated) shortfall with having to:

  1. Pay off $150 billion, while
  2. Upping current contributions so these systemic deficits do not continue to develop.

No answers but plenty of pandering.

25 responses to this post.

  1. Posted by skip3house on March 26, 2017 at 12:23 pm

    None of candidates for NJ Gov have solutions based on resources available, just more political promises Time for tough decisions as being made for us by Police and Fire !

    Reply

  2. Posted by Anonymous on March 26, 2017 at 1:00 pm

    The state will never ever do their part and a story

    Reply

  3. Posted by JessJase on March 26, 2017 at 1:42 pm

    It isn’t fiscally possible to solve the pension problem as any sane person that is paying attention can attest to, but the likable candidates make promises without substance because they know most voters have no clue or interest in grasping the enormity of the unfunded liability situation in NJ. Politicians have always placed their bets on maintaining a dumbed down populous and keeping the “feel good social” issues in the forefront. Come on now, if there are still people out there believing the nation will ever pay down the $20 trillion debt (which does not even include unfunded liabilities) then it isn’t that difficult to convince a majority of the 5th smallest state in the nation that NJ’s pension issues will be worked out by the candidate’s plan du jour, just to get the candidate past the finish line. The pension issue is never going to be paid unless you run every non-government working taxpayer with a home, out of the state and take everything they own before they leave. The state will never do their part because the politicians have bought their votes for so many years, at a price that is impossible for the taxpayers to pay now or ever.

    Reply

    • Posted by Anonymous on March 26, 2017 at 4:16 pm

      The State may never do their part b/c they’re not (based on our astute NJSC) legally obligated to do so. However, the State has legally mandated the Local employers to do so. Their in lies the rub.

      Reply

  4. Posted by Anonymous on March 26, 2017 at 4:35 pm

    Hey John,

    How many municipalities beside, I think, Essex County independently sponsor their own pension plan(s)? Also, how might a local government bankruptcy unfold when they belong to the pension plans administered by the State. For example, let’s say AC files how readily available are their residual employer/employee contributions plus earnings to determine how long retiree’s benefits can continue to be paid?

    Thanks!

    Reply

    • I don’t think anyone knows. There are no reporting requirements for either by the state or federal gov’t. No ERISA or funding rules so, for example, Union County also sponsors a plan for employees not in PERS:
      http://www.countywatchers.com/?p=15410

      Nothing stopping anyone else in NJ from doing the same.

      AS of now the cost of NJ pensions is still grossly understated so localities are not feeling the real pain. In California where CALPERS is demanding closer to an honest cost it is cutting benefits for those who can’t pay:
      https://www.californiacitynews.org/2016/11/calpers-votes-cut-retiree-benefits-town-default.html

      Reply

      • Posted by Anonymous on March 26, 2017 at 7:34 pm

        Interesting, thank you!

        Do Local employer’s in NJ have a similar ‘legal out’ of State administered pensions? Also, your thoughts on State mandated Local employer contributions (however understated and with contribution holidays over the years) considering the NJSC has ruled the State is not obligated to make their contributions.

        Reply

        • First off, localities and the state both have the benefit of having actuaries who are far more interested in getting low contribution amounts. All those gimmicks give government payers a break to start with.

          After that you do have contributions holidays for localities with Corzine giving some a choice to not pay half the contribution amount one year and have the difference paid in over future years. There were some turn downs on that one though, among counties, Union, Hudson, and Passaic did sign on for it.

          Shorting the pension is a staple of ‘tax relief’ whenever enough localities scream loudly enough and nobody is there to stop the state from granting it.

          Reply

          • Posted by Anonymous on March 26, 2017 at 7:57 pm

            I got that but let’s play devil’s advocate from a Local employer’s perspective. Do Local governments have debt statute clauses similar to the State’s? If so, could an argument be made by a Local employer to their applicable pension board and probably ultimately to the NJSC they are not obligated to pay their pension contribution share? Assuming, of course, their ARC plus other long term obligations exceeds their, if applicable, debt limitations?

          • There are limits on statutory debt for counties and municipalities but those are on bonded debt and they are really high. No limit on pensions and there are so few taxpayers (and even elected officials in those localities for that matter) paying attention to the fiscal affairs of their local governments that there is no practical cap on how high taxes will go to pay for pensions.

          • Posted by Anonymous on March 26, 2017 at 8:13 pm

            Ok, thanks again. So no limit the on pension debt, is it specifically excluded from debt limitations or a presumption? Not to go there again but I am, if presumptive how is that any different than State bonded debt versus pension debt. Putting aside the NJSC ruling.

          • Posted by skip3house on March 26, 2017 at 8:51 pm

            Can we skip these procedures on debt rulings, and realize no property tax on residential is the solution, as no one will allow their home to be lost by paying unfunded old political promises? Schools must be funded based on ability to pay!
            And, put the perspective of somehow solving the problem with magical savings of mergers/consolidations. Rutgers study put that to bed a few years ago.
            Only opening now is to use what is available/ funded to fairly distribute pensions based on funding during each year of past service to immediately drop the unfunded balance to zero. Then, start fresh with a defined contribution system showing balances individually on each pay stub, and guard it so political promises to be paid by future generations do not ever happen again…..

  5. Posted by NY on March 26, 2017 at 11:52 pm

    John — i see what you mean about all the candidates evading the issue. I think an interesting post would be what you suggest a candidate should say and do — kind of a Jersey version of Bulworth: https://en.wikipedia.org/wiki/Bulworth

    Reply

    • Posted by Anonymous on March 27, 2017 at 12:46 pm

      @NY aside from letting the pension systems implode/explode (like Trump will do with the ACA, remembering the GOP controls the WH, Senate, and House can’t blame the DNC but they will and do) JC for Gov type reforms and taxes increase(s) with the State contribution funding on par with the Locals. Silver bullet it isn’t but it’s better than what we’re doing which is nothing?

      Reply

  6. Posted by Eric on March 27, 2017 at 6:21 pm

    Anonymous:
    I blame the Dems. for Hillary. Bernie was not allowed to win the democratic nomination. I use that term “democratic” extremely loosely. Had the Dems played fairly, Bernie would have beaten Trump very easily in November. Someone would blame the Russians for a Bernie victory. I am sure the morons would line up on TV.
    Regarding health care, I blame the Dems for passing up the chance on single payer. They had the WH with newly elected Obama, the Senate and the House. Too many like Pelosi received too much $$$ from Big Pharma so single payer, and the public option, were not allowed a vote. No floor discussion was even permitted by the Dems in Congress.
    You have to look at the Dems. and the Repubs. as two heads on one monster.
    The American People be damned for whatever they want!
    Eric
    PS The best solution is to watch Obamacare implode on its own. Leave it alone, and watch it die its own natural death.
    That is worth a celebration!
    Eric

    Reply

    • Any thoughts on which will go first NJ pensions or Obamacare ….but like the man said …pack up your bags and get out of town ….

      Reply

      • Posted by Anonymous on March 27, 2017 at 7:32 pm

        P&FRS when Local employers begin to withdrawal from the State administered plans file for bankruptcy!

        Reply

    • Posted by Anonymous on March 27, 2017 at 7:31 pm

      Eric,

      I agree with the single payer but that would have irked the conservatives even more and then it, probably, would have been repealed and replaced.

      It’s a what if on the Bernie thing but in hindsight he couldn’t have been worse than Hillary. Although, like Trump, he promised a movement outside the status quo I thought he was too far left to win it. Who knows, as you said maybe the Russians.

      ALL politicians and for that matter all people are beholding to someone or something directly or indirectly. To think otherwise your a man without a Country and Island unto himself.

      Reply

  7. Posted by Eric on March 27, 2017 at 9:30 pm

    Anonymous:
    Yes, most people “working” in politics are beholden. If you have money, are not “beholden”, and try to make the “correct” decisions, you will end up like JFK.
    JFK was going to break up the CIA into a thousand pieces. The problem was he told people his plans. Read JFK and the Unspeakable. This is not to be confused with Hillary’s characterization of Trump supporters as the “deplorables.”
    Also read about the withdrawal order signed by Kennedy from the Vietnam War. Think of all of the money that the Military-Industrial Complex never would have spent. LBJ agreed to “play ball”, while Kennedy did not want the loss of life, which resulted in his losing his very own life.
    Regardless if you liked Kennedy, he was not a coward. He also knew the risks involved in doing what was right. He accepted them. He was a leader in my opinion.
    Eric

    Reply

  8. Posted by Eric on March 28, 2017 at 8:50 am

    Anonymous:
    I “pulled the lever” for Barry Goldwater in 1964.
    Eric

    Reply

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