If an actuarial report issued today is accurate, the state is in far worse financial shape than anyone appears willing to acknowledge.
The annual actuarial report on the Public Employees Retirement System, the state’s second largest retirement program, shows the total amount of pension benefits for which no money has been salted away soared from $4.5 billion to $7.2 billion as of last June 30.
Filling the gap will cost taxpayers dearly.
According to the report, the state’s contribution in the budget Gov. Jon Corzine is scheduled to unveil tomorrow should be $459 million, compared with the $192 million the current state budget included for the fund.
Local governments, who are paying a total of $218 million into the fund this year, should pay $491 million in their upcoming budgets, the report shows.
The dire news should lend momentum and a sense of moral urgency to the tax reform debate, but is more likely to enflame the current anger directed at public employees over what is seen as extravagant benefits.
There is no doubt that state employees receive top-notch health and retirement plans, along with very generous vacation policies. In the current climate and given the current fiscal mess, it only seems right that employees contribute to the solution with changes in future benefits.
The pension obligation that has been racked up int eh past, however, should not be part of the discussion. It is part of a promise made to state and local employees in past contracts, a moral obligation if you will, and it is incumbent upon every elected official in the state to find a way to ensure that these payments are made.
That’s why tax reform is so crucial. We need to restructure both state and local government to reduce costs and find a better, fairer way to pay for it and one that will be recurring and protected from the kind of politically expedient decisions made by the Whitman and McGreevey administrations to balance their budgets without raising taxes.
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Hank Kalet 