Unanimous lawmakers send Christie plan for quarterly pension payments
TRENTON — Lawmakers gave quick, unanimous approval Monday to a plan to require the state to make more frequent payments into public workers’ pension funds.
Sponsors pushed the plan through quickly on the belief that Gov. Chris Christie would sign it. The governor vetoed two earlier versions of the concept, but this one was changed to give the state more flexibility over when the payments are made and their size.
Senate President Stephen Sweeney, D-Gloucester, said he’s “very confident” Christie will sign it but acknowledged nothing’s official until he does.
“Last couple times around, we went without sitting with them. I recognize that’s something that doesn’t always work out well, so we sat down with them,” Sweeney said. “We’ve gone over it, and I think it’s a very reasonable bill. And I’m very confident that he will sign it.”
Christie, on "Ask the Governor" on New Jersey 101.5, didn’t commit to signing the bill, saying he hasn’t reviewed it thoroughly, but he indicated he’d be looking for a change from the earlier plans that does appear to have been added.
Christie quipped that the 35-0 vote in the Senate and 72-0 vote in the Assembly doesn’t necessarily guarantee his consent.
“Well, we know that hasn’t always happened,” he said.
Assembly Speaker Vincent Prieto, D-Hudson, said the plan isn’t perfect but takes the pension funds in the right direction. He said lawmakers moved the plan quickly – without even a committee hearing – because they’d gotten a signal that Christie would sign it.
“Why would you do tomorrow what you can do today?” Prieto said. “So obviously I think this is the thing: When you have everybody agreeing to something – as you know, Trenton can move very, very slow or it can move very, very quickly. This is one of those times that moving quickly is better. Once you have it – a bird in hand is better than a hundred flying.”
The plan falls short of the changes unions were seeking. They preferred a constitutional amendment that would have meant the quarterly payments couldn’t be avoided and within five years reached the full payment as recommended by actuaries.
"CWA supports quarterly pension payments. However, unless the full amount due to the plan is appropriated, quarterly payments are meaningless,” said Hetty Rosenstein, New Jersey director for the Communications Workers of America union.
“When it comes to this state's pension, history shows we simply cannot rely on the word of the governor or legislature,” Rosenstein. “For well over two decades, politicians have proven themselves incapable of making full payments. So, without a constitutional amendment requiring payments, New Jersey's working men and women could be getting quarterly payments of nothing.”
Prieto acknowledged that the bill isn’t as ambitious as the amendment would be, in part because quarterly payments would be based on the level agreed to in the annual budget by a governor and lawmakers, not necessarily ramping up to full payments calculated by actuaries as what’s needed.
“Obviously, this is still good public policy, and this is still a good thing for the pension system to get back in a healthy state quicker,” Prieto said.
“Hopefully we’ll see that these promises are kept,” Prieto said. “And I’m very optimistic that we’re heading in the right direction.”
Senate Minority Leader Thomas Kean Jr., R-Union, said the bill passed Monday is far better than a constitutional amendment guaranteeing the payments.
“Very difficult for taxpayers to bear and probably would not have passed,” Kean said. “They probably would have rejected it whether it’s on this ballot or any ballot. I don’t think that the constitutional amendment in that regard would pass.”
Kean said the approach is also better than earlier, vetoed versions of the concept because it gives the state increased flexibility about when within the quarter payments are made. They would have to be made by the end of September, December, March and June.
Tax collections by the state don’t come in equal installments. For instance, sales tax revenues are highest after Christmas shopping. Income taxes surge with the April 15 filing deadline.
For that reason, in order to afford quarterly pension payments, the state would have to increase the short-term borrowing it already does to get through the first part of its fiscal year.
Sweeney says the costs will be more than offset by the increased investment gains made by the pension funds. He said borrowing the money this year would have cost $10 million but added $100 million in extra investment earnings. If a full payment had been made, the gain would have been $200 million.
“There’s a cost to the borrowing, but there’s a greater positive than the negative,” Sweeney said.
The cost of the added borrowing will come from the amount that would have been paid into the pensions. That’s the change Christie said he’ll be looking to ensure is included.
“If that’s what the bill says, then I’m much more inclined to favor it than I would be otherwise. But I want to take a look at it,” Christie said.
“If in fact it’s a bill that nets out those costs so that the taxpayers are not getting hammered for making the quarterly payments, that’s something that I think is much more fair than the previous proposals,” said Christie.