As reported by NJ.com, State Senate President Stephen Sweeney and labor leaders defended Sweeneys proposal to constitutionally enforce payments into the public pension system against arguments its a gift to special interests that will shackle New Jerseys finances. The scrap between Sweeney and labor leaders versus Senate Minority Leader Tom Kean, Jr. and business lobbyists centered on what would be worse: a mandated pension contribution that would eat up so much money the State couldnt respond to fiscal emergencies or a pension system that continues hurtling toward insolvency.
Sweeney, the Democrat leading the charge on the amendment, told the Senate State Government Committee its in everyones interest to pay the bill now. Should a pension fund run out of money, the State would have to pay retirees pension benefits out of pocket, he said. If we dont do this, by 2026 or 2027, when the pensions go broke, its nine or ten billion dollars. And thats coming out of the budget. Directly out of the budget, Sweeney said. Thats armageddon. Kean said the amendment will inevitably force budget cuts or tax increases. Democrats have previously tried to raise money for pensions through tax increases on corporations and the States wealthiest residents.
Sweeneys proposed amendment would require the State to make increasing payments into the pension system, reaching the full payment recommended by actuaries by 2021. Even modest growth in State revenues, 3.4 percent, can absorb the higher payments, hes said. The amendment is Democrats response to a State Supreme Court ruling that said Governor Chris Christie didnt have to make payments into the pension system that were outlined in a landmark reform law he signed five years ago. The amendment would require bigger payments be phased in, but at a slower pace than what the law had promised. It would also force the governor to make those payments into the system quarterly, rather than at the end of the year. The proposed amendment would need to be approved by the voters before becoming a part of the State Constitution.