Bonding for Pension Payments and Calling Out Whiners

Governor Phil Murphy was asked what he will do with the $10 billion New Jersey will be borrowing:
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Making payments into the public employee retirement system is on the list:
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Full answer and a question for those whiners who object to borrowing $10 billion:

Emergency Borrowing Bill Introduced in NJ Senate

A bill allowing the state of New Jersey to borrow up to $9.9 billion will be law come Friday but today was the first view the general public got of S2697.

Among the highlights:

NJ Emergency-Borrowing Safeguard

A4175 will sail through the legislative process this week allowing the New Jersey democratic party to borrow whenever they want for however much they want for whatever reason they throw out there without voter approval. It won’t all be in this bill which caps borrowing at $9.9 billion but, if more tax money is needed in a year (or month) from now, more will be borrowed.

A draft of the law obtained (though not shared) by NJ Spotlight noted, among other tweaks, a ‘major change’ that is supposed to protect New Jersey taxpayers against democrats turning the power to borrow into a blank check.

Begging to Borrow

A bill to have New Jersey foist $5 billion in debt on future taxpayers to keep various gravy trains fueled was passed by the Assembly on June 4 and today Governor Phil Murphy pushed to get the State Senate on board:
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Reporter questions today on this new borrowing follow:

Counting on Biden Bailout

An opinion piece in The Hill starts off:

As federal policymakers consider future legislation to address the economic challenges created by COVID-19, they should take the shortest route possible to get aid to those who need it. Where possible, the assistance should go directly to affected individuals and businesses, rather than through the states. If it’s not feasible for the aid to be sent to recipients directly, states should be held accountable for ensuring that those in need are actually getting it.

and ends:

Federal policymakers have already spent trillions on economic relief to mitigate the negative impacts of COVID-19 shutdowns. And they’re likely to spend even more. States have clamored for more assistance in future relief packages, but we believe that many of these requests may result in inefficiencies that ultimately cause aid to miss its mark. That’s why Congress and the Trump administration should take the shortest route possible to getting help to those who need it.

I agree. Most of the the PPP loan my company got went into the business for continuing salaries (of which governments still get a cut) with Bank of America likely to have gotten a relatively small fee. Had that $40,000 gone through the state government dispense filter Bury and Associates, Inc would have been lucky to see $10,000 of it which New Jersey Governor Phil Murphy is well aware of, based on how he is budgeting:

Bonds for NJ Pensions

Will balancing New Jersey’s budget with bonds leave a negative impact for years? Former NJ budget director and comptroller Richard F. Keevey thinks so, in part because:

Selling bonds for operating purposes must be avoided — not only because it has been deemed unconstitutional by the New Jersey Supreme Court — but much more importantly, because it is very bad public policy. By definition, the amount is a one-time revenue source. What does the state do the following year? This would create a double negative impact, since any federal aid will likely be one-time.

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If I were looking at the budget I would recommend the following….Defer most of the proposed pension contributions.

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The wild card is the pension fund. At the end of this virus-induced-disaster, pension funds will be in worse condition than before the pandemic and may be in their worse condition ever. However, to borrow is even worse. It is far better to defer pension payments, then slowly put the funding back on track. Just as important, seriously consider leveraging and/or securitizing several state-owned assets and transferring the assets to the pension fund.

Though, if you check out EMMA, the borrowing to make pension payments has already started:

Future of NJ State Pension Contributions

Back on May 14, 2020:
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On page 110 of A3 we have:

7.    Section 87 of P.L.2019, c.150, the annual appropriations act for Fiscal Year 2019, is amended to read as follows:

87. Payments to the various State defined pension systems from amounts appropriated herein shall be made on a quarterly basis on the following schedule: at least 25 percent by September 30, 2019 at least 50 percent by December 31, 2019 at least 75 percent by March 31, 2020 and at least 100 percent by June 30, 2020 and shall be reduced by any increase in the interest on tax and revenue anticipation notes attributable to the need to borrow more for the purpose of making such quarterly installments for transfer to the Interest on Short Term Notes account in the Interdepartmental Accounts.

On page 267 of P.L. 2019 we had:

Deferred or Cut $5.2 Billion of Expenditures

Apparently there is a list:
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The response was to this question about $1.4 million of those cuts:
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Was the $684 million pension contribution included and, if so, was it in the deferral or cut column? Can’t tell from the full response:

Laughing at Property Tax Hikes in NJ

Per njbiz:

The New Jersey Assembly approved Gov. Phil Murphy’s plan to borrow up to $14 billion to plug massive holes in the state budget left by the COVID-19 recession, though the measure now faces an uncertain fate with Senate leadership. Republicans were staunchly opposed to the measure, but it ultimately garnered the support of the Democratic majority, winning by a 51-28 vote at the Assembly’s remotely-held Thursday voting session. There are no committee hearings scheduled on the Senate side. Murphy unveiled the proposal in May, which calls for selling between $5 billion and $9 billion of bonds to the Federal Reserve, and up to $5 billion in general obligation bonds… The legislation, Assembly Bill 4175, also lets the state sell up to $5 billion in general obligation bonds in the public and private markets, which the state has 35 years to repay.

As to who will make the repayments on the bonds, here is the Murphy spin starting with the joyous news of an overwhelming passage:

Who Will Pay for Tax Shortfalls in NJ?

According to A4175 which will be approved by the New Jersey Assembly tomorrow*: taxpayers….though with some pushback.

“Just when you thought you heard everything,” said Assemblyman Gerry Scharfenberger (R-Monmouth), the bill “would allow the state to borrow five billion dollars without voter approval that would add a statewide surcharge to everyone’s property tax bill.”

From the text (page 21):