Has Chris Christie “fixed” the problem?
Joan Gralla of Reuters reports that Governor Chris Christie will be signing the pension and health-benefit reform law today. This is an important step for the health of New Jersey’s pension plans, and Governor Christie should be lauded for his accomplishment.
The state’s 2010 Debt Report (page 15) said that they have $87.5 billion in unfunded liabilities as of June 30, 2009 and that the rate of increase has gone up substantially in recent years:
$30.7 billion for the seven major state pension funds
$56.7 billion in unfunded post retirement health benefits
Unfortunately Governor Christie has skipped payments of $5.5 billion over the last two years and compounded these unfunded liabilities. One of these skipped payments was used to claim a “balanced budget.” Your household budget is not really “balanced” if you skip your car loan payment for a year.
Now the Wall Street Journal is reporting that New Jersey must take an emergency $2 billion loan from JP Morgan because they haven’t properly projected their future revenues. The terms of borrowing will surely be higher than if they borrowed through the municipal bond market. It’s really like going to a payday lender.
Skipping payments and using payday lenders are not good signs of fiscal prudence. Maybe New Jersey is not making such big strides after all.