Gov. Chris Christie announced Tuesday that the state will significantly reduce its scheduled pension payments for the current and upcoming fiscal years in order to help close an $807 million revenue shortfall.
Fiscal year 2014’s $1.6 billion pension payment, which is due next month, will now be cut to $696 million and a $2.25 billion payment due in fiscal year 2015 will be reduced to $681 million. The newly proposed payments will only cover the costs of active employees, Christie said.
“We will not make the payments that apply to the sins of the past,” Christie said.
Christie blamed the necessity of the move on past administrations for skipping pension payments “year after year.” The governor noted that the partial payments aim to “not dig the hole any deeper.”
Additional plans for alleviating budget woes will be presented within the next month, Christie added.
Though Christie recently has been calling for pension reform and warning of the burden the payments presented to the state budget, he had still pledged to fulfill them. It was only in April, when he learned of the glaring revenue shortfall that he considered otherwise, he said.
“That’s when everything changed,” Christie said.
Christie also called on Democrats in the Legislature to sit down and discuss future pension and benefit reforms.
“Until we decide to be adults and deal with the problems we know we have, we’re not going to be able to do that,” Christie said.
Tuesday’s announcement comes on the heels of a tumultuous two-month period for New Jersey’s economy. In addition to the revelation of the revenue shortfall, the state’s credit rating has been recently downgraded three times by various agencies.
“I said the Jersey comeback has begun,” Christie said Tuesday, again noting that the state is fiscally in a better position now than when he assumed office. “Not that it finished.”
Senate President Steve Sweeney (D-West Deptford) called the budget proposals “callous and yet another attempted by this administration to point the finger at someone else.”
“This administration has overestimated revenues for years,” Sweeney said. “And while they have asked the middle class and the working poor to suffer, they have rewarded the state’s wealthiest. The people of New Jersey deserve better than that: they deserve real solutions and better choices.”
Assembly Majority Leader Lou Greenwald added that he believes Christie “has officially driven New Jersey into a ditch.”
“Gov. Christie’s reckless policies have left him with no viable solution to his budget crisis,” Greenwald said. “Gov. Christie’s plan will make our fiscal situation even bleaker with more credit downgrades likely and future deficits worsened. Gov. Christie built a house of cards that is now collapsing upon New Jersey’s taxpayers.”
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