Pension Funding at Risk in New Jersey Budget Crisis

State workers in New Jersey represented by CWA are fighting for full funding of their pension plan as the governor grapples with the economic fallout from years of Republican tax cuts during the 1990s.

Gov. Jon Corzine, elected last fall with strong union support, has so far directed to the pension fund about two-thirds of the $1.8 billion contribution required this year. But the plan's neglect during the tenure of Republican Gov. Christine Whitman has left it with an unfunded liability of $12 billion to $30 billion, according to varying estimates.

"The $1.8 billion represents just the first down payment on what is really needed to insure that state workers' pensions will be there when they retire," District 1 Vice President Chris Shelton said, blaming the billions in liability on "accounting gimmickry and sheer irresponsibility" of past state leaders.

In addition to the pension crisis, the state budget faces a $2.8 billion shortfall in the coming fiscal year. Corzine is calling for raising the state's sales tax by one point, to 7 percent, among other remedies.

Republicans immediately began trashing Corzine's plan, including a nasty newspaper column by former Gov. Whitman on Friday blasting his effort to balance jobs and services with a mild tax increase. "Rather than eliminating wasteful spending and rooting out waste in government, New Jersey families are being forced to bear the burden of balancing the budget," Whitman wrote.

With a Democratic assembly and Senate and Corzine in the governor's office, CWA state workers are hopeful that the leaders they've supported will stand up to Republican outcry.

Bob Master, CWA District 1 legislative and political director, said workers generally feel Corzine is trying to address the long-term budget problems and, in backing a sales tax hike, has shown a willingness to do what's fair and necessary even if it's politically unpopular. But if that changes or doesn't go far enough, he said workers are prepared to do battle to protect their job security, pensions and benefits.

New Jersey's problems aren't unique. Many states are facing budget and pension crises brought on by factors that include tax cuts and a reduction in federal aid to states. In the wake of reduced and eliminated pension plans at private companies from GM to Verizon, public workers fear that their retirement funds will be next.

"Spiraling health costs, budget shortfalls and a looming wave of baby boomer retirements are prompting policymakers to ask whether government should follow private industry's lead," stated an article in the Atlantic City paper examining the New Jersey crisis.