Gov. Phil Murphy’s planned $4.9 billion pension payment isn’t up for debate.
“If the pension payment in the budget is $4.9 billion, then the minimum amount that I’m prepared to make in the final deal is $4.9 billion, period,” Murphy said during Wednesday’s COVID-19 briefing. “There’s no negotiating room.”
In the revised budget address he delivered at Rutgers University Tuesday, Murphy promised to fund 80% of the state’s pension obligations. That $4.9 billion payment represents an increase of roughly $1.1 billion from payments made in the fiscal year 2020 and about a $1.7 billion increase from payments made to the pension fund in 2019.
Actuarial reports released in May put the state $72 billion short of its full pension liabilities.
It’s not clear whether Democratic leaders in the legislature are looking to slim down this year’s pension payment — Senate President Steve Sweeney in February offered support for a millionaires tax in exchange for an additional $1 billion to the pension debt on top of the 80% payment Murphy planned to make then.
With the state’s economy still struggling amid a pandemic, Sweeney and Assembly Speaker Craig Coughlin may seek to cut spending, and the pension has historically taken the brunt of such cost cutting efforts, though there’s not yet been anything to suggest the two lawmakers will seek to reduce the $4.9 billion payment.
The same can’t be said of at least one of the state’s Republicans.
In an interview with New Jersey Globe editor David Wildstein on Tuesday, Republican Gubernatorial candidate Jack Ciattarelli suggested the state skip all or part of its pension payment to make up for revenues lost to the pandemic.
“I’m not saying this for a political reason, but Jack Ciattarelli. I mean, hello?” Murphy said. “At every single level, that’s incredibly dumb. That’s exactly what got us into the mess that we’re in today that I got elected to fix.”
Ciattarelli has opposed a measure passed, signed into law and upheld by the New Jersey Supreme Court that allows the state to bond up to $10 billion to make up for COVID-19-fueled revenue shortfalls.
In his revised budget address, Murphy proposed borrowing $4 billion, with some of the money going into the state’s fully-depleted surplus.
Ciattarelli joined a Republican State Committee suit against the borrowing bill, but the court sided with the state in that matter, and in the aftermath of Murphy’s address, the candidate has shifted his attention to the pension payment.
“Hey @GovMurphy, appreciate the shoutout. I must say, you’re starting to sound defensive about borrowing so much $$ to balance the state budget, which includes a $5 billion pension payment that even budget experts say can be deferred,” Ciattarelli said. “Taxpayers and businesses need relief. @GovMurphy: Stop representing only the 1% — the 1% of New Jerseyans that work for state government.”
Governors of both parties have shown varying degrees of reluctance to put money into the pension fund over recent decades — the liability ballooned by more than $22 billion during Gov. Chris Christie’s last year in office — though Murphy has increased the size of the state’s pension contribution each year since taking office in 2018.
“this is classic old way of doing things in this town that got us into the mess that we’re in that I got elected to fix,” he said. “I can’t even believe people are raising it. ‘The house is on fire. How did it start? Let’s go back to figuring out what we did to start the fire and do it again.’ It makes literally no sense.”