New Jersey: Pensions, Promises, and Fiscal Options
At $10,648 per capita, New Jersey's state public worker pension liability is more than 13 times the median for all states and only slightly greater than that for Illinois, another poor performer in Volcker Alliance and Illinois Institute of Government and Public Affairs studies of state budget processes last year. Using slightly different figures from Moody’s Investors Service for fiscal 2014, the net pension liability translates to about 15.5 percent of New Jersey Gross State Product, a little more than double the national mean but considerably less than the leader, Illinois, at 26.2 percent.
So what do all these numbers mean? First and foremost, balancing budgets for years, if not decades, by pushing current spending commitments to the future eventually will catch up with you. The cost is certainly in the reduced flexibility a state has to manage through fiscal or natural crises.
Volcker Alliance State and Local Program Director William Glasgall discussed these challenges in an address to the Government Finance Officers Association of New Jersey on September 21. Download the text of the address below.