After becoming a national household name with his role in Hurricane Sandy – even earning a shout-out from Jon Bon Jovi at the 12-12-12 fundraising concert – it seems that New Jersey Gov. Chris Christie's potential downfall might be his role in handling the state's retirement system.
According to the New York Times, the state's financial problems are at a crisis level. And while things are not quite as bad as they are in Illinois, critics suggest that Christie may still be in trouble when it comes to trying to sort out the state's pension system.
The bipartisan State Budget Crisis Task Force recently reported that Christie's recent pension overhaul – which saw a significant cutback in retirement benefits – slowed the state's pension issues but did not solve the issues. The task force is led by former Federal Reserve chairman Paul A. Volcker and former New York lieutenant governor Richard Ravitch, and is looking at retirement issues in six states.
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Like Illinois, years of bickering and unfulfilled promises by both parties led to significant underfunding to the state system, and the task force says it will be extremely difficult to repay those obligations, with other financial priorities – especially in post-Sandy times.
In 2012, New Jersey did manage to contribute a billion dollars to the pension system, but those costs will rise to approximately $5.5 billion by 2018 – a figure equal to almost half of what the state currently spends on education.
"The growth in pension requirements, plus the ever-increasing cost for current and retiree health benefits will crowd out other budgetary needs," suggested the task force's report.
A Christie spokesperson says that the governor took the necessary action, after years of inaction.
"By failing to make tough choices, it's no surprise that challenges remain to get New Jersey firmly onto the path of fiscal responsibility," said Michael Drewniak. "Had the governor not led and accomplished these reforms, the challenges before us would be insurmountable."
Christie made headlines in 2011 by embarking on a tough-talk campaign which raised the retirement age for new employees to 65, upped employee contributions to their retirement funds and also cut automatic cost-of-living increases.
Employee unions have sued and are taking their appeal of the cuts to the New Jersey supreme court.
The reforms did produce tangible results, with the state employee retirement fund deficit shrinking by about 30 percent to $26 billion, but critics say Christie needs to take further steps.
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