New Jersey’s out-of-control, way-too-behind-to-ever-catch-up pension payments have been holding down the state for a generation.
Regardless of how you feel about the enormous cost, not fulfilling the obligation has been crushing the state’s credit rating.
In his annual budget address Tuesday, Gov. Phil Murphy proposed fully funding the state’s pension for the third consecutive year.
And, while the obligation is not close to being made whole, the effort to do so has been noticed.
“In a span of six months last year, New Jersey received three credit-rating upgrades,” Murphy told the joint session of the Legislature. “These were welcome news not just for the state, but for every taxpayer.
“Our taxpayers get this. They know when their credit score goes up, their interest rates go down and more of their money stays in their pockets. That means they can get more at the supermarket, or put more away for a child’s education or for a new car or home.
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“It’s the same thing for the state — except we save money on things like new roads and bridges and new schools. And, when we save money, every single taxpayer saves money.”
Murphy proposed additional actions, too — including setting aside more than $2.3 billion (to either pay down existing debt or keep the state from taking on new debt entirely) and creating a surplus of $10 billion — as protection from a future economic downturn.
“There’s far more we can do to make our state more affordable, and more investments we can make to fulfill the promise of the Next New Jersey,” he said. “But we cannot make these investments unless our fiscal foundation is strong enough to sustain them. This is why this budget is also centered around fiscal responsibility.”
He jokingly said these payments go to a unique business model.
“We’ve embraced a radical philosophy for Trenton: Pay your debts and don’t spend more than you make,” he said.
“Over the past five years, we have strengthened our foundation more than any administration in decades, and this budget will continue to reinforce our fiscal standing.”
Murphy said the budget is designed to support the next round of credit upgrades.
“It is designed to build even greater confidence in our direction and in our ability to honestly meet our obligations,” he said.