A bill introduced April 15 by the state Senate’s top Democrat would use state and municipal property like toll roads, public utilities and real estate to pay for the state’s worker pension system.
“Forward-looking pension systems are increasingly looking to invest in revenue-generating infrastructure to diversify their portfolios in the face of high stock market volatility and minimal return on cash and bond funds due to historically low interest rates,” Senate President Stephen Sweeney, D-3rd District, said in an April 15 statement.
Sweeney highlighted “water systems, reservoirs, real estate and parking lots” owned by state and municipal governments, which under the bill could go toward generating revenue for the pension system.
Those properties would be managed by a state-run Retirement Infrastructure Collateralized Holdings Fund, a sort of public corporation that would find ways to bring in more funds for the pension system, and would be owned by the state pension fund.
“It gives municipalities that don’t want to consider privatization of a key asset … the option of a public-to-public transfer to an infrastructure trust fund,” the Senate president said.
Those public assets could still be sold off to private businesses, though local governments could specify that they don’t want the RICH Fund to do that.
Gov. Phil Murphy’s office would not comment on the proposal, while a spokesperson for the top Assembly lawmaker, Assembly Speaker Craig Coughlin, D-19th District, said the lower chamber would “thoroughly and comprehensively review the legislation.”
The proposal is a key facet of the so-called “Path to Progress” proposal from 2018 that Sweeney has been cheerleading since its unveiling. It represents a major bid to pay down the roughly $100 billion in unfunded pension debt while lowering the retirement costs the state might have to shell out for new workers.
That debt has been the main source of a combined 11 credit downgrades between 2010 and 2017 when then-Gov. Chris Christie, a Republican, was in office. And the major pension liabilities in part contributed to two credit downgrades the state endured in 2020 under the term of Gov. Phil Murphy, a Democrat. Rating agencies cited the unpaid pension bill as fueling the state’s economic uncertainty amid the COVID-19 recession.
Murphy’s record-high $44.8 billion budget, which covers expenses between July 1 and June 30, 2022, calls for fully funding the public worker pension fund for the first time since 1996, with $6.4 billion going into the pension fund.
His office has been frosty about many proposals from Sweeney, such as one that would move newer workers away from a pension plan and onto some combination of a pension and a 401k-style retirement plan.
But Murphy and Sweeney have come to the table over politically thorny issues of this sort – they agreed to major changes last year to the school employee and teacher’s health plans. Proponents contend that the deal could save $1 billion for teachers, state and local governments over the next few years. The deal was championed by the state’s largest teacher’s union, the New Jersey Education Association, which has been allied to Murphy and a foe of the Senate President.