New Jersey's Pension Apocalypse Is Looming

If Chris Christie lands a spot in a Donald Trump White House, New Jersey residents won’t be sorry to see their governor go. Christie leaves his state in worse shape than when he found it 6 1/2 years ago.

Christie and the legislature have to finish up the state budget this week (the fiscal year starts July 1). If you take a look at Jersey’s latest $34.8 billion budget proposal, you understand why Christie spent the past year as far away from Trenton as possible.

New Jersey’s in crisis — not your run-of-the-mill budget crisis where you cut spending here and raise taxes there, but a slow-motion death spiral. And this is during the eighth year of a national economic expansion, when the state should be doing well.

Consider: The state’s pension fund has only socked away 37.5 percent of the money it needs to pay its current and future retirees. This ratio is “among the worst in the country,” said Standard & Poor’s in March. That’s down from 42.5 percent the previous year, and “will continue to weaken,” the analysts said.

New Jersey owes $144 billion in unfunded pension and health benefits — more than four times the state budget.

Understand: New Jersey is one mild economic downturn from not being able to make payments to retirees, whether it wants to or not.

A recession could bring New Jersey to within three or four years of having no money in its pension fund — and still having to pay out the equivalent of half of its state budget every year in benefits.

Yet the state can’t even make a $2 billion payment into the pension fund this year — less than half of what it should be paying. Could it pay $16 billion annually, when its pension fund is really broke?

Christie made modest reforms to the state’s pension funds half a decade ago.

But then he rendered those reforms useless — by standing by as New Jersey’s roads, bridges and transit fell deeper into decay.

Christie canceled a Hudson train tunnel, remember. That leaves the federal government to figure out how to get commuters across the river when the existing tunnel, which needs to shut down for repairs, becomes too dangerous to use.

He stood by, too, as the state’s fund to pay for road and bridge repairs became insolvent. Every year, it takes in $1.2 billion from gas taxes — and spends $1.1 billion to keep up with its $16.4 billion in debt.

Now, state lawmakers want to raise the gas tax — and Christie is skeptical.

“I don’t buy into the hysteria over the fact that, you know, infrastructure is crumbling, you know. It’s not nearly as bad as people want to try to make it out to be,” he said last week.

No, Governor — it is.

Christie wants “tax fairness” — that is, tax cuts in return for the gas-tax hike. But nothing will be fair in New Jersey for a long time to come. With its unpayable obligations, Jersey’s high taxes and hysterically bad infrastructure are here to stay.

And that’s a big reason why the state can’t grow.

Jersey didn’t recover the 6.9 percent of the private jobs it lost during the 2008 recession until last October — a year-and-a-half later than the country as a whole. Today, the state has about as many jobs as it did back in 2007 — when the country has nearly 5 percent more jobs.

And New Jersey started losing its highest-paying jobs — in finance — back in 2005, before the crash. Today, it’s still missing 11.9 percent of those jobs.

If you’re making good money, and you’ve got a choice between living in high-tax New York or high-tax New Jersey, that choice is easy. Why try to guess which day you won’t be able to get to work — because that Hudson tunnel is finally too dangerous to stay open?

Next year, New Jersey will elect a new governor. Voters should beware, or be warier than they have been in the state’s last few gubernatorial elections: Desperate states, like desperate people, are easy prey.

This piece originally appeared in the New York Post

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Nicole Gelinas is a senior fellow at the Manhattan Institute and contributing editor at City Journal. Follow her on Twitter here.

This piece originally appeared in New York Post