Sorry to everyone that thought we might see some property tax relief in the next few years. Unfortunately, it’s starting to look like a very unlikely scenario. Why? Seems our state pension is more than $25,000,000,000.00 in the hole (Yes, that’s Billion with a ‘B’). And once we hit the big ‘B’, we’re talking about real money.
New Jersey Pensions Need $12.1 Billion to Plug Gap, Report Says
New Jersey should add $12.1 billion to its pension system, raise the minimum retirement age and require public employees and retirees to pay part of their medical expenses to address a shortfall in funds, a report by a governor- appointed task force said.
Raise the minimum retirement age for public employees? It’ll never happen.
Require public retirees to pay anything? It’ll never happen.
Raise additional funds to cover the shortfall? Easy.
New Jersey faces a $5.1 billion budget deficit in the fiscal year that begins July 1, and polls have shown that state voters want relief from what U.S. Census figures show are the highest local property taxes in the nation. State and local lawmakers have deferred contributions to the pensions for the last four years or sold pension bonds to eliminate shortfalls.
…
Lawmakers from both parties share blame for the shortfall, the report said. New Jersey borrowed $2.8 billion in 1998 under Republican Governor Christine Todd Whitman to eliminate a pension gap and prevent a tax increase. Democrats James McGreevey and Codey deferred pension payments and allowed local governments to delay payments or use pension bonds rather than raise taxes to make up for shortfalls.
Let see, if we are faced with a huge budget deficit, what do we do to take care of the problem? Defer it! Let the next poor schmuck take care of it, because we want the public to love us. Let them hate the guy whose got to mop up this mess. So where did the money go anyway?
The pension system lost nearly 20 percent on its investments in 2001 and 2002, the report said. The investments have earned 26 percent over the last three years.
Fantastic track record guys!
…by contributing $12.1 billion now, as long as investment performance over the next few years meets assumptions.
Oh just wonderful, instead of contributing more money and setting realistic performance targets, we’ll just put in the bare minimum and invest it in the highest risk securities hoping for a 50% return in the next few years? Didn’t 2001 and 2002 teach you anything? How about investing that money to bring high-tech jobs back to NJ? Nah, it’ll go right into the hedge funds.
I really hope there aren’t many readers that were hoping for a tax break in the next few years, it won’t happen, not with this nonsense going on. It’s ok though, because all you rich homeowners living high on equity and Hummers can afford it… right?
Caveat Emptor,
Grim
People follow by example. If the government does it, why can’t they?
Also, what’s up with all the government scandals these days? Aren’t they supposed to be setting a good example?
I demand that an external NON-governmental agency does an audit on our state’s annual spending. Yea I know.. fat chance..
-Richie
It should be noted that those C. T. Whitless tax breaks in the ninetie are responsible for the short fall. She raided the fund and under funded it to give tax breaks. The fund would be solvent if it was not for her crazy idealogical taxbreaks. Gee didn’t another person pass ideologically based tax cut? We went from having a federal surplus to this. Look at our deficits now, I don’t see the Laugher curve kicking in anytime soon (HA! HA!). Now it is time to pay the piper.
lets not turn this blog into a political flame war. Both parties are responsible for this fiscal mess, whether its Whitman’s cut taxes and borrow or its the Dems (who after all have controlled most of the state for the last few years).
The bottom line is — while other states are running up surpluses, NJ faces a huge deficit. NJ hasn’t generated that many good jobs (despite all the fine talk about NYC companies moving back offices to Jersey City). NYC jobs are OK, but they don’t really contribute to the NJ tax base. [ I and my wife both work in NYC and pay less than $1000 per year to NJ in personal income taxes, while we pay large amounts to NY]
I don’t see how the legislature can increase property tax rebates with this fiscal problem on the horizon. Most cities are also going to start having problems with pensions soon.
Anecdote: Saw one house in Westfield that had fairly high property taxes. I mentioned this to the selling agent and she said “Yes, but thats good. It shows the assessment is high and you’re getting more for your money” !!!
That’s absolutely hilarious!
-Richie
property appreciation is a double-edged sword. why should people expect to get all of the appreciation from their homes without a tax increase? if your income went up, your taxes would go up too. I see increasingly property taxes as trying to put things back into balance. if it wasn’t so expensive to live in the area, then you could pay public workers less. you can’t have it both ways
Council memebers get nice PERS pensions also. Let’s see we cut those and the Mayor’s out. This would save on the tax side and the pension. Have you ever gone to your town Council Meeting and said your $0.02 about things? It’s like blogging, once you do it you can never imagine how dull life had been before. Now traffic court is a real treat also [plus it is free for all our frugal members]
I heard that NJ was going to sell the turnpike to plug the funding gap?
Also those pension fund returns in 2001 and 2002 were typical of the broad market. They should only be judged in the context of a longer time period, i.e. the preceding decade at least.
Anyway I agree completely that these state (and local) pension deficits are ticking bombs quite analogous to Social Security and Medicare on the national level.
The under-40 crowd just doesn’t recognize the giant middle finger they are getting from the anti-privatization pols and older voters.