Governor Vetoes Legislation Requiring Quarterly Pension Payment, also Guts $300 Million Pre-payment into Pension Fund
The Governor vetoed legislation, S-3100/A-4605 (Gordon, Greenstein/Wimberly, Lagana, Singleton, Mazzeo), which would have required the State to make quarterly pension contributions on August 1, November 1, February 1 and May of each year, on the same day he vetoed a pension ‘pre-payment of $300 million into the State-administered public employee defined benefit retirement systems.
Indicating the legislation, ‘represents an improper and unwarranted intrusion upon the longstanding executive prerogative to determine the appropriate timing of State payments in order to match properly the timing of large annual expenditures with the timing of the actual receipt of State revenues,’ the legislation would now require a 2/3 override by the Senate to enact the legislation.
Christie also stated that, “Enacting new laws to compel specific payments on specific dates does nothing at all to repair or reform the fundamentally unsustainable pension and health benefits systems currently in place.’’
Also denied final passage was legislation, S-3107/A-4606 (Sweeney, Greenstein/Prieto, Singleton), which would have compelled a supplemental State appropriations totaling $300,000,000 for prepayment of portion of FY 2016 employer contributions to State-administered public employee defined benefit retirement systems. The amount was dubbed a ‘down payment’ within the bill statement toward the $3.1 billion to the retirement systems, or 5/7 of the full actuarially determined annual required contribution under P.L.2010, c.1. The revenue to fund the legislation was based on higher than expected revenue collections from the last budget cycle.
Christie called the $300 million payment a fiscal “sleight of hand” that should have been included in the budget, stating that ‘trick accounting is not a substitute for basic math.” “In short, the Legislature is attempting to appropriate a sum of money that doesn’t exist, for a fiscal year that has already closed,” Christie stated.
“Instead of accounting gimmickry, the legislative majority should embrace reality and join with my Administration in a realistic discussion of necessary reforms to the pension and health benefits systems.” Christie’s bill statement added.
Legislative leadership was quick to respond with Assembly Speaker Prieto and Senate President Steve Sweeney issuing statements within minutes of notice that the legislation had been vetoed.
“Gov. Christie’s failure to make the required pension payment has put the state deeper in the fiscal trouble, led to state credit rating downgrades and hurt New Jersey’s economy.” Prieto stated. “The intent of this bill was to get that funding invested in the pension system as soon as possible. Doing so would have allowed for the earning of investment returns on the appropriated amount, but with this veto by Gov. Christie, all we have is yet another missed opportunity.’
“This was the wrong decision. A prepayment would be the smart and prudent move to provide more fiscal stability and generate savings.” Sweeney said. “It wouldn’t compensate for the governor’s failure to make the full, legally-required payment, but it would have been a step in the right direction.”
“Every dollar we put in now saves three dollars in the future. Making this payment upfront would generate millions in additional investment income at the same time it helps to reduce debt and protect against another downgrade in the state’s credit rating.” Sweeney added.
The legislation would require 2/3 of the Senate to approve the legislation for it to now become effective.