The 2020 budget unveiled Tuesday by the Murphy administration calls for a record-high $3.2 billion payment to the state’s pension obligation – an amount still only 70 percent of what the state is recommended to pay every year.
Under the budget, the state expects to make close to $4 billion in pension payments next year, with the goal of making full pension contributions by the 2023 fiscal year, which would start July 1, 2022.
New Jersey’s unfunded pension obligation stands at nearly $100 billion and was the source of 11 credit downgrades under the Christie administration.
The ways in which the state tackles New Jersey’s pension obligation could set up a considerable showdown between Gov. Phil Murphy and Senate President Stephen Sweeney, D-3rd District, in the coming months.
Sweeney’s Economic and Fiscal Policy Working Group proposed in August to shift many public workers – those employed by the state for less than five years – from a pension retirement plan to a 401k-style system.
Sweeney has argued that the pension contributions could swallow up most of the budget and leave little room for any of Murphy’s proposals, such as expanded access to community college and Pre-K.
Murphy said he is not on board with the 401k-style retirement proposal for public workers.