The Christie hiatus: New Jersey's governor hasn't won lasting reforms

The outlook is even worse when you consider the way the state’s bills will grow. The pension-payback plan forces New Jersey to increase its contributions by about $500 million every year until 2018. It’s difficult to see how a state that has only about $34 billion in revenues and has never put more than $1.5 billion into its pension system in any given year will find more than three times that amount in just a few years. Christie has now begun arguing that the only alternative is to go back and look for even bigger savings. In late February he proposed a new plan that involves freezing the current, expensive pension system and instituting a new, 401(k)-style plan for government workers, similar to what many workers in the private sector now have. Under this plan, known as a cash-balance system, the state would make annual contributions to worker retirement accounts, and workers would receive a lump-sum payment at retirement rather than a monthly pension check based on some percentage of their final salary, which is what the current system provides. But the state’s taxpayers would not be responsible for making up any shortfalls that resulted from declines in the stock market. Christie has also proposed requiring workers to contribute more toward their health benefits and using the resulting cost savings to help pay off the current pension system’s debts. These proposals represent the kind of reforms he should have argued for back in 2011. The political obstacle is that, because Christie declared victory on pensions several years ago, he now owns the state’s pension problems. Democrats have put him on the defensive and proposed $1.6 billion in new taxes.

As Christie has scrambled to pay off the state’s debts and balance its books, he has employed questionable budget tactics himself, including sweeping monies dedicated to specific purposes — such as funds from a national mortgage-fraud settlement and road tolls that should be used for highway maintenance — into the general budget. He has also “reduced” spending in some cases simply by pushing expenditures from one fiscal year into the next, which is not a true long-term reduction. He employed these gimmicks in the early years of his tenure, after years of state spending far in excess of actual revenue, because it would have been impossible for anyone to quickly solve the enormous structural imbalances in New Jersey’s budget. “You can’t deal with it all at once,” respected Rutgers economics professor Joseph Seneca told the New York Times. “It’s going to take some time to get back, but I think the important first steps have occurred very effectively.” But rather than giving up the gimmicks he employed at first, Christie has persisted in his budget manipulations.