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I was reading this and did the math and raising taxes is the only way NJ can dig out of its current mess. As contractually state workers would still get their pensions if they are laid off.
I read this in the second paragraph. I guess the state treasurer forgot to send in the payments for about 50 years.
New Jersey has promised $66.7 billion in medical benefits to future and current retirees, but has not set aside a single penny to pay for it, according to the study, which looked at 2009 financial data from all states.
And it's the workers fault that the state missed the payments for it's entire history.
When Tom Kean was governor the State Health Care account for retirees was found to be over funded by $100 million. He used those funds to balance the State budget. That was my initial experience in the ways both republicans and democrats used phony accounting.
But where were the unions all those years when the payments weren't being made? Why didn't they speak up? Why didn't they redo their contracts? Why didn't they take control of their own finances and say forget your pension plan that you're not funding anyway, we'll take our own contributions and set up 401K-type plans instead that we can control? They knew the payments weren't being made but they didn't say much in exchange for big raises at some points, because they knew they could just complain later on down the road when the underfunding would come to light.
As far as taxing enough to fill the gap, it's not politically viable. Any politician that tries to do it will be promptly voted out of office.
Ann- that is not true. The unions went to court to have the contributions made. The State hired actuaries that said the pensions were funded adequately for the next 40 years. The court ruled that the pensions are guaranteed however the legislature and governor can determine how to fund them on a year to year basis.
I was reading this and did the math and raising taxes is the only way NJ can dig out of its current mess. As contractually state workers would still get their pensions if they are laid off.
So it is your assertion that taxes in NJ are too low?
Ann- that is not true. The unions went to court to have the contributions made. The State hired actuaries that said the pensions were funded adequately for the next 40 years. The court ruled that the pensions are guaranteed however the legislature and governor can determine how to fund them on a year to year basis.
I disagree. They were taking pay raise after pay raise during those years, but looking the other way on the pension funding.
Regardless, what happened in the past is irrelevant now. Taxes will never be raised enough to fund the liabilities now because it's not politically viable.
Current retirees will continue to lap it up on the backs of the current union workers who are still contributing, but the pols will just slowly keep chipping away at the future pensions and benefits.
If I was a young teacher or other public worker, I would get the heck out and try to get a job in the private sector and keep my own money as best I could. It will never be the way it was again.
Current retirees will continue to lap it up on the backs of the current union workers who are still contributing, but the pols will just slowly keep chipping away at the future pensions and benefits.
The "leave the system the way it is for current workers/retirees, change for new/young ones" is absolute poison. You continue to overcompensate people who aren't going anywhere, so you're still wasting a tremendous amount of money. Meanwhile, among the people who are far more mobile, they are going to be getting sub-private-sector wages, but without the old public benefits, creating a huge pressure for people capable of fleeing to private sector work to do so.
You might say "who cares," but, if you've ever worked at a company whose workforce has been shaped by years of below-average-job-specific wages, you'd understand the impact that has on organizations. Efficiency wages don't attract the best and the brightest (really they just motivate thus who luck into the job to work harder so not to lose it), but, underpayment really does attract/retain the laziest and dullest.
edit: it's hard to say what will happen with the hole the current system has, even despite implements the above terrible policy. Cutting benefits is illegal, but, raising taxes high enough to cover them would cost every resident about $50,000. Not worker - resident. So 50k for every child, adult, retiree, etc. in the whole state. No politician will, or should, survive long enough to implement taxes high enough long enough to raise that. So it's going to be a nasty and unpredictable collision between the legally nonviable (cutting benefits to current workers) and the politically nonviable (raising taxes high enough to cover).
I disagree. They were taking pay raise after pay raise during those years,- Ann - how many years do you think State workers had zero % increases in their contracts since 1992? No one was looking the other way on pension funding- the workers even agreed to raise their own contributions about 70%.
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