By Michael Aron
Chief Political Correspondent
The state treasurer testified about his departmental budget this morning. Democrats took the opportunity to ask him about two fairly high-profile Trenton issues — the State House renovation project and dedicating lottery revenues to the pension system.
Gov. Chris Christie announced the State House renovation last November. Price tag? Three hundred million dollars.
His plan is to lease the State House to the Economic Development Authority, which would provide financing and lease the building back to the state. That puzzles some Democrats.
“It seems odd when we speak about leasing our State House, this magnificent capitol,” said Assemblyman John Burzichelli.
The treasurer said lease-leaseback is a standard arrangement, and besides, the building needs it.
“It’s been over 60 years since the executive portion of the State House had a comprehensive renovation. There are literally windows potentially falling out of the buildings, cornices, urns, chimneys that we have to secure so they don’t fall on passersby. No comprehensive fire suppression throughout the building,” said New Jersey Treasurer Ford Scudder.
“This is a very worthy cause, it’s the second oldest continuously operating State House in the nation. It is of great significance. Lincoln stopped here, but why this finance vehicle?” Burzichelli said.
“We found this to be the most appropriate and least expensive way to go this time,” Scudder said.
“We’ll be borrowing $300 million that will in fact cost us, according to the treasurer — $20 million a year over 25 years, so we’re going to be spending $500 million for $300 million worth of renovations,” said Assemblyman Gary Schaer.
“The alternative is to say, well, let’s not do it. OK, so what happens? Well, we’ve seen literally windows falling out of the buildings,” said Assemblyman Declan O’Scanlon.
In his budget message, Christie proposed a novel idea — dedicating lottery revenue to the underfunded pension system.
Currently, lottery revenues are dedicated to education and state institutions. But re-purposing them could strengthen the pensions and lower the annual state contribution significantly.
“That would reduce the unfunded liability of the pension system dramatically, help place it on more solid ground. It would have a corresponding decrease in the annual required pension payment,” Scudder said.
At stake is nearly $1 billion — $970 million to be exact.
“This is not a new source of revenue. This simply an accounting measure, albeit maybe not a bad idea, but there is no new revenue occurring here,” Burzichelli said.
“Net-net, while the revenues to the general fund decline, so does the pension payment that’s required to be paid from the general fund, so the general fund is approximately even,” Scudder said.
“It seems like a bit of a shell game almost. We want to make sure it’s not. It is freeing up a billion dollars, according to the governor, but where’s the money coming from if the lottery is now a part of the pension?” Schaer asked.
“We have an obligation to our public workers that I thought my friends on the other side of the aisle shared. By devoting an asset to the pension system, you dramatically increase the funding level right away,” O’Scanlon said.
The lottery proposal is part of the budget. Democrats can block it by leaving it out of the budget bill or they can include it. The financing of the State House renovation project appears to be a done deal unless the next governor rips it up.