Call it Chris Christie’s lament.
In the course of his budget address last week, New Jersey’s chief exec zeroed in on the $2.25 billion payment he proposes to make toward state pensions. It is a system that years of neglect by his predecessors — Republican as well as Democrat — left woefully unfunded.
To put the pension payment in perspective, Christie noted it “is nearly the equivalent of the total payments made in the 10 years before we arrived by five different governors.” That’s not all. The governor went on to note that 94 percent of his new spending goes to pensions, public-worker health benefits and debt service.
Christie’s argument is that this is unsustainable. It’s unsustainable mostly because of pensions and benefits for public workers that are wildly out of whack with what workers in the private sector receive. And the old answer — just raise taxes — no longer works in a state that is already one of the highest taxed in the nation.
“If we don’t get this monkey off our backs of pensions, health benefits and debt services,” he told a town hall meeting Wednesday, “we will never be able to grow as a state.” And he promised to take unspecified “extreme measures” if union-friendly Democrats don’t cooperate.
As Steve Malanga notes in City Journal, Christie has done a good job of holding spending in check since taking office, but costs are exploding. Meanwhile, Democrats are looking to revive a soak-the-rich surcharge that would boost the state’s top tax rate to 60 percent higher than it was in 2002. And the governor is bound by a 2010 agreement to keep making ever-larger payments into the pension system until it is fully funded — meaning Christie is paying for the irresponsibility of his predecessors.
That the governor has done this without raising taxes is to his credit. But he can’t escape Jersey’s problem: It’s a state whose unfunded pension liabilities remain huge and is ranked nearly last in terms of business friendliness. Not exactly the kind of place people want to move to or invest in.
Christie’s point is that Jersey’s pensions for its government workers is now crowding out the state’s ability to provide the services its citizens need.
And a look at the huge unfunded pension liabilities elsewhere suggests he’s not going to be the only governor singing this sad song.