The state’s budget gap has prompted Gov. Chris Christie to reduce and delay some pension payments, and he has called for pension reform including a shift to a hybrid pension system. Former Gov. James Florio told NJTV News Managing Editor Mike Schneider that the pension payment issue has gotten bad.
“Well it is bad, it is very bad,” said Florio. “The difficulty now is that people were promised some resolution to the problem by virtue of the seven-year period, continuing, escalating, money is going into the pension system and now for whatever reasons the governor is not able to complete that commitment. The difficulty and the inequity is that the employees have been paying into the pension system all this time.”
According to Florio, the problems with the pension fund began after his term as governor and that now it is catching up with the state. Florio said that he was the last governor to fully fund the pension system.
Had he won a second term as governor, Florio said that he is convinced that the pension problems would have not developed into what they are with the governors that followed.
“I think I would have and hopefully my subsequent governor after that would have continued to make the appropriate payments. We wouldn’t be built into this 15-year deficit which is multi-billions of dollars,” said Florio.
Florio said that the state has built a system that is now not sustainable and the Transportation Trust Fund is now out of money so the state cannot fix its bridges, roads or tunnels.
Some politicians have proposed raising the gas tax in order to get some money for the Transportation Trust Fund. Florio says that it is an alternative, but that the money raised will be used to pay off old bonds.
Florio also said that the state does not have a revenue problem, but a spending problem, and that more money needs to be spent in various areas such as the Transportation Trust Fund and higher education.
According to Florio, spending is different now than when he was in office. He said that it is on the same level in terms of percentages going to different areas, but that there are priorities that are essential for improving the state’s economy.
The state is considering a hybrid pension system with 401Ks, but Florio has some concerns about that.
“I have some serious questions abut 401Ks for the private sector for people,” said Florio. “At some point down the road we’re going to experience a recession at the same time someone wants to retire while their investments are gone and the person is left holding and being high and dry. That’s going to cause some social difficulties. So expanding the 401K area is not preferable as long as I’m concerned.”