Tom Bracken, the longtime head of the New Jersey Chamber of Commerce, offers the good and the bad in his assessment of the $44.83 billion budget Gov. Phil Murphy proposed Tuesday.
No new taxes: Good.
Money for schools: Great.
Money for infrastructure: Even better.
A $6.4 billion payment to the pension fund: Can we rethink that?
Don’t misunderstand, Bracken feels the state’s pension problem has to be handled — feels it long will be the biggest financial obstacle the state faces. He just doesn’t think this is the year to fully fund the pension for the first time since fiscal year 1996.
Read more from ROI-NJ on the budget:
- Murphy says his $45B budget proposal follows vision of stronger, fairer state
- How Murphy proposes to spend on job training, infrastructure, capital improvements and economic recovery
- Republicans say budget won’t help N.J. — and does come with new taxes
“To me, it’s pretty simple,” he said. “This is a budget where we have an economic crisis staring us in the face. And the best way for this governor, or any governor, to provide funding to be able to pay for all the services the state provides, including pension payments, is to restart our economy as robustly as we can, as fast as we can.
“When Gov. Murphy previewed his budget last week, he said he wanted to supercharge the economy. This doesn’t do that.”
How the state will fund the pension figures to be the burning question on budgets for a generation. Bracken is happy to see Murphy has made more of a commitment. And he acknowledges that the $6.4 billion proposal essentially is the equivalent of how much former Gov. Chris Christie funded the pension the last four years of his administration. Seriously, the last four combined.
Bracken also acknowledges his kick-the-can idea is the same one that got the state into this pension mess. He just doesn’t think this is the year to change course.
“Not making any payments makes it worse,” he said. “But there’s got to be a better number that stops the bleeding, but allows us to do things.”
Ralph Thomas, the CEO of the New Jersey Society of CPAs, doesn’t agree.
“As we all know, New Jersey’s pension system is one of the nation’s worst-funded state retirement plans, and the history of inadequate payments has damaged the state’s rating with the major credit rating agencies,” he said. “With a sizable budget surplus, many tax sources outperforming projections and the prospect of $6 billion in federal stimulus support coming soon, it’s fiscally prudent to make this payment now rather than waiting until fiscal year 2023.”
Assembly Speaker Craig Coughlin (D-Woodbridge) and many others — especially progressive groups — said fully funding the pension is the right thing to do.
“I am also encouraged the budget proposal … fully funds the state’s pension obligations for the first time in 25 years — achieving a 10-year goal one year early, honoring the state’s commitment to our current and past workforce and demonstrating sound fiscal policy,” Coughlin said.
Bracken is looking for a middle ground. He suggests matching last year’s pension funding, approximately $4.8 billion, might be a better way.
“Just think of what you could do with the extra $1.6 billion if you really wanted to supercharge the economy,” he said. “Or even half of that, $800 million.”
How much is that? Bracken compares it to two current numbers.
“The governor’s budget allocates $200 million for small business — just think what could be accomplished with even $800 million more,” he said.
Then he threw out this figure: Since the start of the second phase of the Paycheck Protection Program — which is still ongoing and will provide decidedly less money than the first round — New Jersey already has received $4.4 billion.
“It just shows how much access to capital is needed, which is what we’ve been saying the entire time,” Bracken said. “Murphy is proposing $200 million as a major financing impetus to get the economy back on track. But you have to realize that $200 million is broken up in pieces for certain sectors. So, there’s not a lot of money to satisfy the ongoing working capital need. And, if you read what they say, it doesn’t even kick in until July. Companies can’t survive until July without money.”
Bracken has long spoken up for more funding for the business community. That is, after all, his job. And when he sees the numbers — and sees what he thinks the economy needs — he doesn’t see a $6.4 billion pension payment.
“A $6.4 billion payment is not going to solve our pension crisis,” he said. “It just won’t. And it’s not even close. But if you put some of that money into our economy, it may actually solve some of our economic problems.”
