Do You Support Trenton's A.C. Takeover? 
Underfunded or Overcompensated?
| February 22, 20101) The state underfunded pensions, or
2) The state hired too many workers with overly-generous benefits packages.
The math just doesn't add up, Save Jerseyans.
So what should Chris Christie do? Continue to borrow money and raise taxes to fund the pensions? That's a financial impossibility -- there's no way to close a $34 billion shortfall. Our credit is shot and New Jersey's residents are already overtaxed and considering relocating to other states. There's no going back.
Governor Christie's only recourse is to completely overhaul the entire system. The proposed changes are fair and necessary. They include placing a $15,000 cap on the remaining sick days employees bank and then cash in at retirement, exclude part-time state employees from the pension system altogether, and mandate a minimum per-employee health plan contribution of 1.5% of their respective salaries. These measures are mild by private sector standards. After all, why should state workers have more perks than the taxpayers who pay their salaries?
As Chris has said time and time again, the pension system was doomed to fail precisely because government wasn't living within its means. Trenton couldn't afford to employ as many people as it did with such ridiculously generous benefits packages. Our situation is not all too unlike the crisis facing the Detroit Auto Industry. In Michigan's largest metro area, massive legacy costs contributed to an unsustainable situation where auto workers bled their companies for $70 per hour. The unions cared more about dental plans than the trickle-down increase in their companies' product prices and the security of their members' jobs.
The inevitable result in Detroit? Layoffs and plant closures. What makes Trenton so special?
State government over-promised, Save Jerseyans. Now it's time to pay the piper before we all drown in red ink.
Its not enough:
1. Eliminate defined benefit plans for all new hires. Defined contribution plans (i.e. 401k) only. At least allow workers to invest into exchange rated and / or mutual funds instead of the crappy variable annuities that public sector workers seem to always get stuck with.
2. For those still in the system.. raise the age where you can receive benefits. We can't have the state paying people in their 40's and 50's benefits.
3. Nuclear option. Take the State into bankruptcy and default on the pension system. Reorganize where people cannot receive multiple pensions, drop all health benefits, and make payouts something reasonable.
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I like the nuclear option. Take the state into bankruptcy. We are way overtaxed. The pols overpromised and the state employees should not have pawned their failure to come to a deal on the future, which is now the present.
As far as the muni investors they made a bet that NJ taxpayers would basically sell themselves into slavery to pay them -- not gonna happen.
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Could you please post the exact changes for teachers. Does it apply to retired teachers, active teachers? If you retire next year will the $15,000 cap on sick days apply to you? Thanks
You have a great blog. Keep up the good work.
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