6-3-14 Millionaire's Tax re: Pension Payment Issue
Politickernj - Sarlo on millionaires tax: "I want to be realistic"..."...We could talk about it, we could do it, and [Christie] could veto it. All that does is put everything on hold."
Sarlo's [Senate Budget Committee Chairman]remarks came weeks after State Senate President Steve Sweeney (D-3) proposed the revival of the idea...
"I'm still committed to a negotiated budget. There will be no government shutdown...We're four weeks away [from the fiscal year's end]. We're going to have to allow that first pension payment not to be made. The real negotiation is going to become how do we reconcile it the next fiscal year. Right now, I'm advocating making the full $2.2 billion payment next year..." Star Ledger - Christie's pension plan could trigger another downgrade, S&P warns "The governor's decision to delay pension funding ... has significant negative implications for the state's liability profile."… ‘…To balance the budget, Christie said he intends to cut two payments meant to shore up the financial health of New Jersey's strapped pension fund for public workers — from a combined $3.8 billion to $1.38 billion…’
Politickernj - Sarlo on millionaires tax: "I want to be realistic"
By Mark Bonamo | June 2nd, 2014 - 8:12pm
LITTLE FERRY - New Jersey Gov. Chris Christie and U.S. Secretary for Housing and Urban Development (HUD) Shaun Donovan came to Little Ferry on Monday to jointly announce the awarding of $380 million to fund rebuilding projects in Hoboken and the Meadowlands, which were among the New Jersey communities that were devastated by Hurricane Sandy’s record surge in 2012. Minutes later, state Sen. Paul Sarlo (D-36) spoke out about another idea surging in the minds of some Democrats to deal with a financial hole that could devastate New Jersey in another way: the state's approximately $1 billion budget hole this fiscal year.
"I know Democrats want to hear you talk about a millionaires tax. I want to be realistic. I want to be practical," said Sarlo, the chairman of the Senate Budget and Appropriations Committee, in comments to the press after Christie and Donovan both made remarks. "We could talk about it, we could do it, and [Christie] could veto it. All that does is put everything on hold."
Sarlo's remarks came weeks after State Senate President Steve Sweeney (D-3) proposed the revival of the idea of a millionaires tax for the state's wealthiest residents as a way to close to New Jersey's burgeoning fiscal gap. Sweeney's suggestion was amplified following Christie's announcement last month that to deal with the budget crisis, he wants to reduce a $1.6 billion pension payment the state was scheduled to make before June 30 to $696 million by executive order and slash a $2.25 billion payment that was set for next year to $681 million, a move that the governor will seek approval for from the Democratic-controlled Legislature. Christie did not immediately offer any other alternatives to shore up the state's fiscal shortfall.
"I'm still committed to a negotiated budget. There will be no government shutdown. But we need to come up with a realistic pension payment for next year," Sarlo said. "We have not discussed budget negotiations yet, and clearly I believe that in the current fiscal year, there is not much that we can do from a negotiation standpoint. We're four weeks away [from the fiscal year's end]. We're going to have to allow that first pension payment not to be made. The real negotiation is going to become how do we reconcile it the next fiscal year. Right now, I'm advocating making the full $2.2 billion payment next year."
Despite the still-troubling fiscal scenario looming over New Jersey, Sarlo, who is also the mayor of Wood-Ridge, a Meadowlands-area municipality, felt that Monday's announcement of the injections of hundreds of millions of federal aid dollars into the region was "a great thing."
"I've been talking about building a more resilient infrastructure to protect us from local flooding and high tidal surges for 13 years, forget Sandy," Sarlo, an New Jersey Institute of Technology-trained engineer, said. "There will be no in-depth budget discussions today. As a civil engineer, I'm thrilled that I finally got my berm in the Meadowlands. I love to see get dirt get piled up."
Star Ledger - Christie's pension plan could trigger another downgrade, S&P warns "The governor's decision to delay pension funding ... has significant negative implications for the state's liability profile."… ‘…To balance the budget, Christie said he intends to cut two payments meant to shore up the financial health of New Jersey's strapped pension fund for public workers — from a combined $3.8 billion to $1.38 billion…’By Salvador Rizzo/The Star-Ledger Email the author | Follow on Twitter on June 02, 2014 at 4:48 PM, updated June 03, 2014 at 7:52 AM TRENTON — Gov. Chris Christie's plan to cut funding for public-worker pensions means New Jersey's debt could be downgraded again sometime in the next three months, a Wall Street credit-rating agency said today in a note to investors.Standard & Poor's warned that New Jersey's credit rating could take another hit in the next 60 to 90 days depending on the budget plan that Christie and the Democratic-controlled Legislature end up passing for the the new fiscal year, which begins July 1.The Garden State has been beset by slow economic growth and a slew of rising costs in the wake of the Great Recession, a problem that grew worse this year after disappointing tax collections for the key month of April.Standard & Poor's cut New Jersey's credit rating by one notch in April, to A+, one of the lowest ratings in the country. That was before Christie's administration announced a big miss in its revenue forecast for the current and incoming fiscal years. The two-year budget gap is now estimated at $2.7 billion.To balance the budget, Christie said he intends to cut two payments meant to shore up the financial health of New Jersey's strapped pension fund for public workers — from a combined $3.8 billion to $1.38 billion.The plan is an about-face for the Republican governor, who had signed laws in 2010 and 2011 promising higher payments each year to fix the pension mess once and for all. Christie said last month that he couldn't keep that commitment in the face of mounting budget pressure."We believe the state's decision to reverse course on its pension reform is the result of a revenue forecast that is not aligned with current economic conditions in the state, rapidly growing fixed costs, and limited flexibility with which to address any significant deviations from the forecast," S&P analysts wrote today, placing New Jersey on "CreditWatch with negative implications.""In our view, the governor's decision to delay pension funding, while providing the necessary tools for cash management and budget control, has significant negative implications for the state's liability profile."The state's pension liability was $47 billion as of the latest report, Standard & Poor's said. The agency also said New Jersey is neglecting to address long-term, "structural" issues with its budget aside from the pension problem."By using bullish assumptions about revenue growth and one-time measures to close budget gaps, the state defers making long-term structural changes to better align revenues and expenditures, pushing budgetary pressures to future years' budgets and increasing its exposure to an eventual economic downturn," the analysts wrote.Christie is asking Democrats in the state Legislature to approve part of his pension plan. Democratic leaders including Senate President Stephen Sweeney and Assembly Speaker Vincent Prieto have criticized the governor's plan, and Sweeney has threatened to shut down the state government if Christie fails to make the pension payments he had pledged.Democrats are calling for an increase on the income tax paid by the state's millionaires as a way to bring in more tax money. Christie has vowed to veto the millionaires tax, which he has done three times already. S&P said "the lack of consensus on addressing the fiscal 2015 budget gap could be a source of credit pressure in the near term."Two of the largest state public-worker unions, the New Jersey Education Association and the Communications Workers of America, have said they plan to sue in state court to try to block Christie's move.Any lawsuits, government shutdowns, or other developments in the budget arena could all affect the state's credit rating, S&P said. It noted, however, that the state still benefits from a "diverse economic base" and "high wealth and incomes."A spokesman for the state Treasury Department, Joseph Perone, said the warning from S&P "reinforces the governor’s continued call for the Legislature to join him in enacting meaningful pension and health benefit reforms." Christie has been working on a new plan to tackle the pension system's woes over the long term, but has not released any details yet.Perone added that if Christie did not cut the pension payments, hospitals and schools could have taken the hit instead."To be clear, the governor acted to bring the budget into balance, while continuing to pay the active employee pension costs that are accruing on our watch and protecting investments like schools, hospitals, and our colleges and universities."Each time New Jersey is downgraded, investors are more likely to increase the state’s borrowing costs for major projects such as school construction or bridge repairs. Only California and Illinois have lower ratings from the major Wall Street rating houses.
