New Jersey’s long-term debt surges $18 billion in one year
TRENTON — New Jersey’s long-term debt grew by 12 percent last year, roughly $18 billion, due to what it owes for pensions and health benefits for retirees, according to the annual Treasury Department debt report made public Friday.
The tab was nearly $172 billion – equal to around $19,200 if divided equally among the state’s nearly 9 million residents. That per capita share grew by more than $2,000 in fiscal 2016.
The amount owed for borrowing was actually down 1 percent to $42.7 billion, as of last June. But New Jersey’s long-term obligations not tied to bonds are now recorded at almost $129 billion – surging $18.6 billion, due both to higher costs and a poor year for pension investment performance.
The pension liability is calculated as $93 billion, up $14.3 billion in a year.
The amount owed for retirees’ health benefits is projected at more than $32 billion, up $4.3 billion from a year ago and triple the size of what was projected in 2010.
“It makes the unequivocal case that we need further reforms,” said Assemblyman Declan O’Scanlon, R-Monmouth, a member of the state Commission on Capital Budgeting and Planning, which received the report.
“We can start with health benefits,” O’Scanlon said. “There’s a lot we can do there to ameliorate any impact on public workers and still get dramatic savings for taxpayers, which also includes public workers.”
Gov. Chris Christie has asked for additional health-benefits changes in his proposed 2018 budget.
Unions have generally refused to negotiate with him after his administration stopping making the pension contributions required under a 2011 reform. The state is stepping up payments, but doing it more slowly than intended.
O’Scanlon said the Legislature’s Democratic majority shouldn’t stall waiting for a new governor. Christie’s term ends in January.
“There is no question that anybody thinking we can kick the can down the road and get to a new governor, and a new governor is going to come up with some miraculous gold treasure chest buried in the bowels of the Statehouse is fooling themselves,” O’Scanlon said.
“We just make the job more difficult and the pain more acute when we finally do fix it,” he said. “That’s for public workers and taxpayers both. It’s really, really irresponsible.”
The only other time in the last 15 years that New Jersey’s bonded debt declined was in 2007, when it dropped by $105 million.
The state’s total obligation had risen $10 billion between 2014 and 2015.
Comparisons to years before that aren’t easily made because the accounting method for calculating what’s owed to the pensions changed in 2014, adding close to $59 billion to the bottom line.
The pension liability isn’t the number the state uses to decide how much to contribute – or rather, should contribute – to its pension funds.
The “unfunded actuarial accrued liability” for the state-administered pension funds is $49 billion. To help repay that, plus make the current payment, the state should put in a little over $5 billion in the upcoming fiscal year. Instead it plans to put in $2.5 billion.
The numbers look even more daunting if alternate accounting and actuarial methods are used.
The debt report discloses those in supplemental information at the back of the publication, because they’re not required in official financial disclosures and don’t impact state budget decisions.
Those analyses peg the liabilities as high as $136 billion for pensions and $68 billion for health benefits.