Pension crisis! Tear gas over Trenton…

Editors note: The following column by Dan Jacobson was originally published in the June 16, 2011 edition of the triCityNews.  It was written before the recent agreement of pension and health care reform struck by Governor Christie, Senate President Sweeney and Assembly Speaker Oliver.

By Dan Jacobson

Any day now, you’ll see our Republican Governor and Democratic legislative leaders announce a deal to “reform” our state pension system.

Don’t believe it. This is a problem requiring 20 years of fiscal discipline. These people can’t see beyond the next election in 20 weeks.

Our state government is $121 billion short of what’s needed to pay projected pension and retiree health benefits. How bad is it? This year’s proposed state budget is only $29.4 billion.

In other words, we’re bankrupt.

Remember the rioting in Greece last year? You bet there could be tear gas over Trenton if this isn’t fixed. And I’m not optimistic.

Last week, I announced I’m running for the state Assembly as an Independent. So let me piss off everyone by outlining what needs to be done. And it’s ugly. No way around it.

First, this problem must be ripped away from the politicians. I’d propose a state constitutional amendment – requiring voter approval – to establish an independent Board of Trustees to administer the pension and retirement health benefits system.

Each year, these independent Trustees would recalculate the total projected shortfall the state faces. No fudging the numbers by politicians. And the Board of Trustees would develop and oversee a long-term plan to restore the system – and thus the state’s finances – to solvency.

In addition, the Board would determine the annual contribution to the system – and it would have to be paid by the state. The elected officials have underfunded it for 15 years. With a constitutional amendment, that would end. No more cheating. We’d pay what’s needed to fix the problem.

And the Board of Trustees would be empowered to do what the politicians can’t: Set up a plan of benefit cuts and tax increases to fix the system by spreading the pain as widely as possible. And the wider it’s spread, the less it hurts everyone individually. Everyone has got to take a hit. We’re all in this mess together.

By the way, those benefit cuts would affect current and future retires already in the system. There’s no other way to do it. Elected officials only talk about changing the benefits for new employees. That’s not enough. So I envision everyone equally screaming – taxpayers, retirees, future retirees – when the Trustees propose a plan to fix this mess. Ironically, that way you know it’s fair.

But this is not a dictatorship. The rescue plan from the Board of Trustees would be submitted for voter approval.

If voters reject it, the Pension Trustees would simply take what’s needed every year from the state Treasury to ensure the system’s solvency. In that scenario, the three-ring circus in the State House – the Governor, the Assembly and the Senate – would figure out how to pay that annual bill. Of course, that will be a mess. But the bill would be paid. No more underfunding the system. No more postponing Judgment Day. I’d rather face it on our terms.

There you have it. That’s the basic outlines of my proposal. Here’s some more details:

The Board of Pension Trustees would be non-political like Judges. They’d be appointed by the Governor with the consent of the state Senate. None would have business or financial connection to unions for at least a decade, if not more. They’d have long and staggered terms as Trustees to minimize political interference.

And in putting together a rescue plan, their directive in the constitutional amendment would be quite specific: To implement a mix of both benefit cuts and tax increases – and it would specifically require both – to spread the burden as equitably as possible across all the citizens of this state.

Sure, that would require subjective judgments. There’s no mathematical formula to achieve this. But at least a rescue plan by the Trustees would be made in good faith by non-political appointees – not politicians seeking reelection. And voters would have the final say.

In other words, we’d face this problem like adults. We’d empower an independent group of people to tell us the truth. And propose a solution for us to consider. We’d then make the final call in a statewide vote.

Sure sounds better than tear gas canisters fired at protestors when a bankrupt state can’t pay its bills – and people become more outraged than anything we’ve ever seen in New Jersey.

But maybe all is not lost. Take the sentiment of retired state worker Vincent Lobascio, 85. He’s ready to sacrifice some of his benefits. Let’s hope most other citizens share his views – or we’re done.

“I’m willing to make my contribution, and I’m a retired guy,” the World War II combat veteran told the Asbury Park Press in a story about the pension crisis. “But don’t kill me.”

I’m with Mr. Lobascio. This 49 year-old taxpayer would pay more to solve this mess – just don’t kill me either. We’re all adults. We all know something must be done. Just spread that burden around as widely as possible. In the end, the solution is likely reasonable.

But politicians can’t do that because they’re competing for the support of blocs of voters – whether liberal union members or anti-tax conservatives. It’s all about getting elected. In fact, both those voter blocs I just mentioned will be outraged at this column.

Oh well. So I’ll get to remain a private citizen. Wow, what a tragedy.

So when you see our Republican Governor and Democratic legislative leaders announce some deal to address this problem, remember this: It’s all about the election in five months when the Senate and Assembly are up for grabs. It’s not a permanent deal. It can always be reversed or changed later. And you bet that will happen when the economy starts to do better and no one is paying attention.

Sure, they’ll make some progress with their deal – just enough to con you to think something is getting done. But not on a scale that really solves this problem. There’s not enough political upside and way too much political downside. The state has never faced a challenge this big. Plus, I don’t believe any figures or estimates these clowns throw around. They’re all biased toward getting reelected.

But a constitutional amendment empowering an independent Board of Trustees goes a long way toward eliminating political mischief.

And in my proposal, we’d even get to vote on any rescue plans from the Trustees. If they want to modify a rescue plan later, we’d all vote on that too. If any plan is rejected, the state would still fully fund the retirement system every year and stop the cheating.  Imagine how different everything would be if that was done for the past 15 years.

Hey, such a constitutional amendment sounds reasonable to me. That means it doesn’t have a chance in Trenton.

So in the most unlikely event I get elected to the Assembly – only one Independent has done so in 50 years – at least there’d be one person down there speaking the truth about the most dangerous problem this state has ever faced.

(The 11^th District where I’m running includes: Asbury Park, Long Branch, Red Bank, Ocean Township, Neptune, Neptune City, Interlaken, Deal, Allenhurst, Loch Arbour, West Long Branch, Eatontown, Shrewsbury Borough, Shrewsbury Township, Tinton Falls, Colts Neck, Freehold Township and Freehold Borough.)

Posted: June 17th, 2011 | Author: Art Gallagher | Filed under: Dan Jacobson, NJ Media, NJ State Legislature, Pensions, Public Employee Unions | Tags: 11th Legislative District, Dan Jacobson, Pension and Benefit Reform | 3 Comments »

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