From traditional borrowing to pension debt to unfunded retiree healthcare costs, new state-by-state rankings put New Jersey among the nation’s most indebted states across a number of different categories.
The overall picture painted by The Pew Charitable Trusts’ new “Fiscal 50” data isn’t pretty, with New Jersey ranking third worst in total debt, and also third worst in both unfunded pension and unfunded retiree-healthcare costs. And those comparisons improve only slightly when other factors are considered, like the generally high personal income of New Jersey residents and the overall value of the state’s pension fund.
The, using complete data from 2013, come out as lawmakers in Trenton are right now deep in the process of evaluating Gov. Chris Christie’s latest . New Jersey’s acting treasurer is scheduled to appear before lawmakers this afternoon to provide an update on tax collections for the current fiscal year, and also to update the revenue forecast for the fiscal year that begins July 1.
Theare also sure to come up as lawmakers and Christie remain embroiled in an ongoing debate over how best to address the state’s biggest fiscal problems in future years, including its sizable pension debt and unfunded retiree-healthcare costs. Christie and lawmakers have tried to work on all three categories covered in the Pew report since 2013, but with mixed results.
Democratic legislative leaders want to put aon the November ballot this year that would ask voters to approve a constitutional amendment to put the pension system back on more solid footing by requiring more robust state contributions. But Christie strongly opposes that effort. He’s backing an altogether that aims to rework state finances by forcing employees and retired public workers to accept less generous healthcare coverage.
And though Christie’s budget proposal for the next fiscal year calls for an increase in overall spending of about $1 billion, nearly every dollar of that proposed spending hike has already been earmarked by the governor for debt payments, pension contributions, and projected increases in employee and retiree healthcare costs.
When it comes to overall borrowing, Pew found that states as a group were a combined $518 billion in debt as of 2013. California led the way with debt totaling $94 billion, followed by New York at $63 billion. New Jersey ranked third, with more than $35 billion in total debt. Though that number has since gone up, the increases haven’t been big enough to surpass either California or New York.
And while total debt accounted for 3.7 percent of the personal income of residents of every state in 2013, that figure equaled 7.2 percent in New Jersey, ranking fourth nationally behind Hawaii, Connecticut and Massachusetts.
New Jersey also placed third behind California and Illinois in Pew’s analysis of unfunded pension costs. In all, states reported $968 billion in unfunded pension costs during the 2013 fiscal year. California’s costs totaled $169 billion, followed by Illinois at $100 billion, and New Jersey with $51 billion, according to Pew’s analysis.
The unfunded pension costs nationwide equaled 6.9 percent of the personal income among all state residents during the 2013 fiscal year, but 10.4 percent in New Jersey, putting the state in 10th place in that comparison.
And the “funded ratio” for New Jersey’s $68 billion pension system -- which is a comparison of what’s owed to how much money the state has set aside for pensions -- was 16th among states at 62.8 percent.
States were also carrying $587 billion in unfunded retiree healthcare costs during the 2013 fiscal year, led by California with $80 billion and New York with $70 billion. New Jersey again placed third with $66.8 billion in unfunded retiree-healthcare costs, according to Pew.
But New Jersey was also one of only eight states where unfunded healthcare costs were the state’s largest obligation, besting total debt and unfunded pension liabilities. For most states, unfunded pension costs ranked as their top obligation, Pew found.
A commission of benefits experts that Christie asked to study the cost of public-employee pensions and healthcare in New Jerseylast year that called for healthcare coverage cuts for both current employees and retired public workers to help the state and local governments save money. The plan laid out by the benefits commission also called for the healthcare savings to be redirected toward paying down the state’s huge unfunded pension liability.
And aby the conservative Manhattan Institute said states like New Jersey should be looking to a future that would see governments no longer providing healthcare at all to their retired workers.
But so far, the Democrats who control New Jersey’s Legislature have been reluctant to embrace any new reforms, citing changes that were already made in a state law passed on a bipartisan basis in 2011. Those changes included requiring employees to cover more of their own pension and healthcare costs.
The 2011 law known as Chapter 78 also required the state to follow a seven-year schedule of ramped-up contributions into the pension system until it was making the full payment calculated by actuaries, something the state hasn’t been able to do for years.
Christie, however, veered off that schedule two years ago while facing a roughly $1 billion budget shortfall, a decision that the state Supreme Court eventuallythat said only voters could approve such financial commitments.
And even as Christie has been following a less aggressive, Democratic legislative leaders are preparing to ask voters in November to give constitutional protection to the more robust contributions, and also to require the state to make the payments on a instead of all at once at the end of each fiscal year.