The devil is in the details is the cliche best used to think about the New Jersey State Legislature’s move to place a constitutional amendment to fix the pension problem — by making guaranteed payments — on the November election ballot
The devil has been part of the problem for quite some time — a bipartisan short changing of the pension fund since 2000. Now the debt translates into a demonic $85.2 billion in liabilities with $41.4 billion in assets, leaving a shortfall of $43.8 billion.
No need to go say that the things are going to hell and the taxpayers are going to end up paying for it one way or another.
And there is no need to go over the familiar ground of the current governor’s bipartisan pension-law deal gone bad and the subsequent union lawsuits saying the law that was signed in good faith by the unions to help address the inherited budget problem had gone sour.
Then there was the New Jersey State Supreme Court 2015 ruling against the unions, which had argued that the State of New Jersey should actually follow the law that it created to fund the pension systems.
What is worth noting is the high court argued that the New Jersey State Constitution could not force the law that the administration and legislature created. Hence an amendment that allows the state to legally enforce its own mandates (never mind how convoluted this is).
In other words, change the constitution and fix the problem.
As New Jersey State Senate President — and presumptive Democratic governor candidate — Steve Sweeney says of the proposal he introduced, “I support the pension amendment for one reason. It’s the only way to fix it.”
But here is the devilish question: What exactly will be put on the ballot?
In 2015 the Christie Administration created a bipartisan panel to review the pension system. It came up with a variety of recommendations that could keep the system solvent yet offer some relief to the taxpayers by changing plans and close loop-holes that allow double — or even triple — dipping into the system.
While the recommendations have not been addressed, some of them have brought up over the past few months.
An April 30 Star Ledger article touches on the situation. “I favor a constitutional amendment to force us to make pension payments,” said State Assemblyman Declan O’Scanlon (R-Monmouth). “It’s just I don’t favor this one, and I don’t favor doing it without making sure we do it in conjunction with reforms that are absolutely essential, unless we want to face insolvency within a few years in New Jersey.”
When Sweeney said that reforms could come later, O’Scanlon disagreed. “If you’re going to try to get those reforms done after you’ve done the constitutional amendment guaranteeing the payments, I know several unions … will declare victory and will pound members of the Legislature into not coming back to the table to demand reforms. It simply will not happen unless you do the two things together.”
One change that may be tough getting the legislature to consider is double dipping — when a public employee retires, take a pension (somewhat sizable), and then takes another public job that allows him or her to collect both pension and salary.
NJ Watchdog and Spotlight New Jersey reporter Mark Lagerkvist has been following double-dipping for years and noted in 2013 “Double-dipping by New Jersey public officials continues to thrive for one big reason: Too many legislators either directly profit or quietly condone a costly practice that drains untold millions from state pension funds.”
As proof he listed “18 state lawmakers who receive retirement checks totaling $782,000 a year in addition to their legislative salaries. The roster includes leaders of each party in both the Senate and Assembly.”
“It’s legal and often seen as business as usual,” Lagerkvist wrote.
Then there is the administration itself. “Gov. Chris Christie has welcomed double-dippers into the ranks of his administration. A New Jersey Watchdog investigation last year found 19 state retirees were rehired under Christie,” Lagerkvist wrote three years ago.
One of the few legislators to openly oppose double-dipping, he wrote, is State Senator Jennifer Beck (R-Red Bank) who saw it this way, “It’s not appropriate. The pension system is intended to support you at a time you are no longer working. So when you are an active employee, you should not be able to tap into both.”
In a recent NJ Spotlight article Lagerkvist returned to double-dipping and unintentionally echoed O’Scanlon’s claims.
“In an effort to halt double-dipping,” writes Lagerkvist, “Beck and a few other lawmakers have been proposing legislation since 2011. The latest is S-515, a measure that would suspend pension payments to retired officials who return to public jobs paying more than $15,000 a year.
“None of Beck’s reform bills have reached the Senate floor for debate or votes, a process controlled by leadership in the majority party.”
Lagerkvist’s puts it all in focus when he notes if the constitutional amendment is approved, “pensions for public workers would be given priority over all other general budget appropriations, including public safety, education, healthcare and other crucial services.”
And with problems with the current system and potential post-amendment pension reforms potentially being delayed — like the delayed pensions payments that caused the problems in the first place — what exactly will the taxpayers be agreeing to pay for?
“No matter what party you belong to, you might want to find a way to lower the cost of the pension liability,” said Beck. Without the details, there just may be the devil to pay — again.
