Sweeney: Christie panel raises false alarm on pension plan
TRENTON - New Jersey Senate President Stephen Sweeney on Monday blasted a report commissioned by Gov. Christie that asserted the senator's plan to mandate pension contributions through a constitutional amendment would soon force a tax hike on a broad swath of Garden State residents.
TRENTON - New Jersey Senate President Stephen Sweeney on Monday blasted a report commissioned by Gov. Christie that asserted the senator's plan to mandate pension contributions through a constitutional amendment would soon force a tax hike on a broad swath of Garden State residents.
Sweeney (D., Gloucester), speaking with reporters a day before Christie is to deliver his budget address to the Legislature for the fiscal year that begins July 1, said the report's conclusion relied on bogus numbers and incorrect assumptions about the senator's spending plans.
Christie, a Republican, opposes the constitutional amendment and is likely to cite his panel's report as evidence of the proposal's harmful implications for taxpayers.
Constitutional amendments do not go to the governor's desk; they must be approved by the Legislature and ultimately voters.
The report, released on Thursday, said that to fund the pension system for public employees under the proposed amendment, the state would need to increase taxes on millionaires and raise an additional $2.8 billion in taxes annually on lower-earning residents by 2022.
Sweeney trained part of his fire on a fellow Democrat.
"I'm extremely disappointed in Tom Byrne," Sweeney said, referring to a leading member of the commission who is also a state Democratic Party chair.
Byrne, who is chairman of the State Investment Council, responded that the commission had engaged "top actuaries and budget experts in reaching its projections; they are not influenced by any political agenda. "We are simply trying to preserve people's existing pension benefits without unacceptable risks to state finances," he said in an email.
"Overly optimistic assumptions over the years have contributed to the pension mess, and binding the state constitutionally to assumptions that do not work out would present huge risks on both tax and spending policies that future legislatures should have full flexibility to address."
The commission argues that modest revenue growth alone wouldn't cover the Democrats' proposed pension contributions because of restrictions on how certain revenues may be spent.
For example, income-tax revenues are dedicated to property-tax relief.
However, Sweeney's staff noted that funding for health benefits and teachers' pensions qualifies as property tax relief.
Sweeney also said the report was wrong in concluding that he wanted to increase non-pension and health-benefit spending by a total of $5 billion by 2022.
If the amendment were to pass in November, the state would be required to contribute $2.4 billion to pensions starting in fiscal year 2018. That figure would increase over time but eventually drop as the state covers its liabilities.
The pension system has unfunded liabilities of $40 billion, according to the state Treasury Department.
In addition, Sweeney said, the budget should include $1.8 billion for the pension system, in line with Christie's scheduled increase in funding for the coming fiscal year. Christie budgeted $1.3 billion for the pension system for the current fiscal year.
Sweeney also said he wants more money for schools and transportation, as well as to phase out the estate and retirement-income taxes.
He said he hopes to introduce legislation on Tuesday to take over Atlantic City's finances, adding that he needs to reach an accord with Christie and Assembly Speaker Vincent Prieto (D., Hudson).
Sweeney, a likely candidate for the Democratic gubernatorial nomination in 2017, also reflected on how the Legislature might work with Christie going forward. Christie dropped out of the presidential race last week, but Sweeney noted the governor could run again and might not want to enact policies that could anger conservatives.
"The governor's got 23 months left in his term," Sweeney said. "He can do a lot of good in 23 months, if he wants to. I read all these articles, and all these political experts saying, 'Well, why would Sweeney work with him?' "
He added: "Why wouldn't I? I've worked with him for years. When you're trying to find solutions for taxpayers, instead of partisan politics, that's nothing to be ashamed of. I'm hoping that he comes back willing to deal with the big issues that we have."
856-779-3846 @AndrewSeidman