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Monday, November 24, 2008

Fix state pensions

It is easy to see why lawmakers might be concerned over the fact that New Jersey’s pension fund has lost $23 billion this year, but they don’t appear to be doing anything really substantive about it.

The pension fund is now at $57.8 billion - less than half of what is owed to eligible public employees - after the markets went into a tailspin this year, but lawmakers don’t seem to understand that. They are convening talks on why the massive decrease occurred, instead of convening talks on how to begin weaning state employees off of this sucking wound of a pension system.

That’s what they really ought to be doing, because this system is killing off the rest of the state.

This problem goes beyond all the state tax revenue that goes into the pension sinkhole each year, instead of state services. In addition to those billions, this year alone New Jersey’s municipalities owe $1 billion in funds for the pension system. That figure will have to be levied through local taxes, in a place that already has some of the highest property taxes in the nation.

Gov. Jon S. Corzine may have proposed allowing towns to put off paying out half of that figure to a later date, but all that represents is a delay of the property tax hikes that will inevitably follow municipal payments into the pension fund.

This downturn and what it has done to the pension system is a wake up call to state officials. Instead of convening talks to discuss how the pension fund got here, which is quite obvious, they need to seriously consider reforming this system before it completely consumes New Jersey’s economic well being.

A good start would be looking into a more traditional 401(k) program for new hires. State worker unions will cry foul, so it will be up to the rest of the state’s residents to make it quite clear that a lack of reform will result in a lack of votes when it is election time in 2009.

It is time for lawmakers to begin putting the interests of all of the state’s residents ahead of the interests of state employees and their unions. That starts with actual reform of this maligned system, instead of holding discussions on how we got here.

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