TRENTON, N.J. — New Jersey Gov. Chris Christie used his budget address Tuesday to take a final stab at saving government worker pensions, proposing to dedicate revenues from lottery ticket sales to the distressed fund.
Christie suggested the state transfer the lottery to public pensions to provide a dedicated source of revenue and dramatically reduce the amount actuaries say the state owes.
Christie said pledging the lottery as an asset to the pension fund would have "the same effect as a cash infusion," slashing $13 billion from the pension fund's $66.2 billion in unfunded liabilities.
"This would also significantly reduce the amount we have to pay into the system every year out of the general fund," he said. "If implemented correctly, this action would not only increase the value and stability of our pension funds immediately, but it would also please bond investors and credit rating agencies."
The governor's proposal lacked key details Tuesday, but was met with curiosity from lawmakers who said it was worth considering.
"We need to get more details on it," Assembly Speaker Vincent Prieto (D-Hudson) said. "I'm going to be blunt: I see a little bit of smoke and mirrors to try to lower a payment. I would have to see the details of any plan before I would say this is OK to do."
The lottery, which is expected to bring in $965 million this year, helps fund higher education programs, psychiatric hospitals, centers for people with developmental disabilities and homes for disabled soldiers.
Under the state Constitution, lottery proceeds must be spent on state institutions and state aid for education. The state pays a number of costs on behalf of local school districts that can be categorized as aid, including the employer share of the Teachers' Pension and Annuity Fund.
It's unclear where that leaves the programs currently funded by the lottery, though the governor's office said they will be covered by the state budget. But without the dedicated funding source from the lottery, these programs may have to jockey for dollars in a budget that has little ability to absorb hundreds of millions of dollars in additional spending.
"It is worth a discussion," Senate President Stephen Sweeney (D-Gloucester) said. "But I know our residents, our constituents will have concern about how we handle the other side of ledger."
Tom Healey, the chairman of the governor's special pension and health benefits commission, said that panel considered drawing on lottery revenues early in its work, but decided it was technically and legally complicated.
The lottery's value as an asset is its ability to generate about a billion dollars a year, Healey said. Actuaries determining how much the state owes the pension funds each year will assume the $1 billion in cash flow from the lottery, much like it assumes certain returns on investments.
"It's a great start. But it's just a start," he said. "My absolute hope would be that the people who expect to be the next governor would get behind this."
Christie's previous efforts to right the pension system haven't delivered. He didn't keep his promises to increase contributions in a once-ballyhooed bipartisan public pension overhaul, and the recommendations of the pension and benefits commission never got off the ground.
Christie replaced the promise to ramp up contributions by one-seventh of what's recommended by actuaries every year with one that increases by one-tenth. Christie's proposed budget for the fiscal year that begins in July includes a $2.5 billion payment — half of the actuarial recommended contribution.
The state contributed $1.3 billion in the fiscal year that ended in June. And it is scheduled to pay in $1.86 billion during the current fiscal year.
Hetty Rosenstein, state director of the Communications Workers of America, which has fought for pension funding, said there are too many questions to form an opinion.
"A stable funding source into the pensions is not a bad thing. And if there is a way that you can take this as an asset so that it lowers the unfunded liability, I don't know that's a bad thing. I just don't know," she said. "We are asking our actuaries to evaluate it."
"Under the state Constitution, lottery proceeds must be spent on state institutions and state aid for education. The state pays a number of costs on behalf of local school districts that can be categorized as aid, including the employer share of the Teachers' Pension and Annuity Fund."
"It's unclear where that leaves the programs currently funded by the lottery, though the governor's office said they will be covered by the state budget. But without the dedicated funding source from the lottery, these programs may have to jockey for dollars in a budget that has little ability to absorb hundreds of millions of dollars in additional spending."
Does this mean that the state of N.J. will divert ALL lottery funds from higher education, psychiatric hospitals, centers for people with developmental disabilities and homes for disabled soldiers, to state pension funds ???
Funding to these needs would be seriously reduced if it depended on the state budget.
Don't the people of N.J. get a vote on this matter, since it is a part of the State Constitution ???
I would expect that there would be a serious uprising in the state of N.J. against this idea.
Perhaps state pensions could receive a portion of lottery funding, but not ALL funding.
Sounds Like: Rob from Peter to Pay Paul!
Chris's proposal would never fly out here. That's like cutting out a piece of cloth in a garment to cover another hole in same the fabric. What's that old saying " when you in a hole you stop digging."
It's a great idea but I totally understand where you're coming from because I actually live in the area but obviously Philadelphia so I know exactly what you're bringing up and Corruption
Yep, those pensions, hurt many States and Cities.
Ponzi not working the way they intended.
Make New Jersey Great Again!
I have an idea get rid of all politicians and judges perks and put that money in the funds needed. I would rather see the money go to a good cause.Plus you could take all people in prison that came into this country illegally and send that back where the came from, save on food/housing/medical/court cases.
3/2/17
How interesting to hear that lottery money considered to fund public pensions in New Jersey.
NJ budget up to $34Billion?
Unfunded Pension liabilities $66.2Billion?
What higher education programs were funded with lottery monies?
Makes one rethink any annuity payment option as a bad bet when playing those Big jackpots with annuity choices.
Yeah, but in this case the patch would cover their a$$!
No, this is how politicians explain their taking money from one account to cover another and then never putting that money back or stop taking from that account. Then down the road now have 2 then 3 then 4 accounts all in trouble. then that politician retires with huge retirement plan with all kinds of perks and leaves mess for next clown. Now the people depending on those accounts are left holding bag of nothing. The Money taken from ordinary people pay check/taxes is used to pay certain bills by towns/cities/states, when this money is used for anything else and not replaced or continue taking from that account makes for unbalance and longer it goes on bigger the problem becomes. people learn this at very early age. Yet Government continues to do it and get away with it, then passes it off to taxpayers.
Hope Bozo Bevin here doesn't hear about this asinine proposal. They're having similar problems here, too similar in fact.
How are things in Framingham. That's where I was born and grew up in Holliston.
Very simple. Stop voting. Don't vote for any of these politicians. But unfortunately people and the sheep will listen on.
It's just like that gas tax. THere were people that voted for it and guess where that money is going to go. Just another scam for politicians to do to screw the people even more.
Ditto for Michigan.