Is New Jersey Facing a Looming Unfunded Liability Fiscal Disaster?
A new report finds the Garden State is facing a major financial catastrophe scenario but is doing absolutely nothing to solve the problem.
The conservative American Legislative Exchange Council report examines unfunded liabilities in every state and concludes New Jersey has a major OPEB unfunded liability crisis, second only to California, for benefits that have been promised to retired public workers for things like health insurance, life insurance and Medicare supplements because the money isn’t there to make good on those promises.
“The numbers are scary,” according to Jonathan Williams, the Councils’ chief economist.
He said New Jersey taxpayers are on the hook for $130 billion in unfunded liabilities, not including pension liabilities.
That amounts to $14,000 for every person in the state.
The nation’s unfunded post–employment benefit liability is about $1 trillion, according to the report.
“These are promises that have been made that have not been financed and leave states with a whole lot of questions of where to go next when it comes to paying for paying for these," Williams said.
He said the unfunded liability crisis affects everyone in New Jersey and there’s a real need for both political parties “to get serious about tackling this, whether it’s going to be threatening the financial future of the state, threatening future tax cuts for Republicans or threatening future spending programs for Democrats.”
He noted up until recently these liabilities were not disclosed publicly in financial statements but now the “transparency has caught up with these promises.”
So what’s going to happen? Is there any real way to solve the problem? Williams said New Jersey must begin to pay down this liability debt now, because there’s no provision in the U.S. Constitution for states to declare bankruptcy.
He pointed out what could wind up happening is “an effort by some to ask for a bailout from federal taxpayers, which is not a legitimate solution, and there could be others who will call for some kind of restructuring.”
He stressed right now this “a fairly gloomy area of public policy,” and “everyone has a stake in this to solve it.”
The American Legislative Exchange Council is the largest nonpartisan, voluntary membership organization of state legislators in the United States.