The June 30, 2022 actuarial reports for the New Jersey Retirement System are now all out and there are a few numbers therein that can be taken seriously (none involving liabilities or even the market value of assets considering all those self-valued alternative investments). The main purpose of these official actuarial reports is to determine the ‘required’ contributions which practically all parties have a vested interest in understating so we get a bunch of fanciful numbers where possible. However, these numbers you can’t pretty up:
New Jersey would make it harder for public employees who commit crimes to collect their pensions under a bill legislators are fast-tracking through the state Assembly.
The proposed reforms to the state’s pension law were recommended without discussion Thursday, Sept. 29, by the Assembly Judiciary Committee, just one week after they were introduced. That allows the measure to move to the Assembly floor for a vote expected on Monday.
The legislation would tighten the criteria under which pension boards decide whether former government workers convicted of on-the-job misconduct should lose some or all of their pensions. It would also expand the list of offenses that automatically disqualify public employees from receiving those benefits.
That change would take more pension decisions out of the hands of the state’s retirement boards, which are often reluctant to strip officials of their full pensions, under a process in which they weigh offenders’ misconduct against the good they did throughout their careers. The proposal would also revamp how boards consider those factors, making it easier for them to refuse to grant benefits.
To become law, the bill would have to pass the Assembly and Senate and be signed by Gov. Phil Murphy. So far, no Senate version has been introduced, and its potential fate in the upper chamber remains unclear.
A war of words between New York and New Jersey legislators over red light cameras could prove costly to commuters who could be slapped with hefty fees to travel between New York City and the Garden State.
If passed by New York State’s senate and assembly, that charge would be on top of the $16 cash toll to cross the Hudson into Manhattan, and could be added to proposed congestion pricing fees for driving south of 60th Street, that might take effect in 2024.
“There is no correlation to safety benefits. Every unbiased assessment showed no benefit,” he said. “It’s a demonstrable fact that automated enforcement and red light camera systems don’t improve safety.”
The Supreme Court’s unwillingness to intervene in a fight among states over taxing income from remote work may spark a jurisdictional revenue war. In August, the Court refused to take up a lawsuit by New Hampshire against Massachusetts’ practice of levying income taxes on Granite State residents employed by Bay State companies but working from home during the Covid lockdowns. Now New Jersey officials, who filed an amicus brief in the case because the state’s telecommuting residents are similarly taxed by New York, have proposed a law that would let the state tax telecommuters, including possibly tens of thousands of Empire State residents now working from home but employed by Garden State companies. The in-your-face legislation also provides incentives for Jersey residents to challenge New York’s law in tax court—one of the only venues left to residents after the Supreme Court decision. Given that several hundred thousand New Yorkers once commuted to other states to work and may now be staying home to telecommute, Albany risks losing revenues.
Beginning in March 2020, Covid restrictions brought a sharp rise in telecommuting, or working remotely from home. Studies have suggested that, during the pandemic’s initial phases, up to 36 percent of all private-sector employees, or about 43 million people, worked at home at least one day a week, and 15 percent, or about 18 million, telecommuted full-time. Census data before the pandemic found that as many as 6 million workers regularly cross state lines to go to their jobs. So it’s likely that several million current telecommuters have jobs with firms in another state. In New Hampshire, about 15 percent of residents with jobs—some 84,000 workers—commuted to Massachusetts pre-pandemic.
Bills that would have ended the last state-level bans on adults pumping their own gas in Oregon and New Jersey both flamed out this year. A new study purports to show how much the failure of reform is costing drivers.
In March, the Oregon Legislature adjourned without passing a bill allowing gas stations all over the Beaver State to make some of their pumps self-service. Self-service pumps are currently only allowed in smaller rural counties.
Over in New Jersey, another bill similarly allowing gas stations to have some self-service pumps stalled after legislative leaders came out against it in March, reports NJ.com.
By not wanting to take on the political and regulatory costs of reform, politicians from both states are forcing the costs of higher gas prices onto motorists. That’s according to a new study from Clemson University’s Vitor Melo which finds that bans on self-service gas stations reduce supply and drive up prices.
In 2018, Oregon implemented a slight reform of its full-service mandate by allowing gas stations in counties of 40,000 or fewer people to have self-service pumps. Melo’s study used daily gas prices for all gas stations in the state reported to the website Gas Buddy between 2016 and 2019 to tease out what impact the repeal of self-service had on gas prices.
After controlling for counties’ levels of unemployment, poverty, and median income, Melo finds that allowing self-service saw gas prices drop in the affected counties by 4.4 cents per gallon. The price decline nets out to $90 a year for a household with three drivers.
The June 30, 2021 actuarial reports for the New Jersey Retirement System are now all out and there are a few numbers therein that can be taken seriously (none involving liabilities or even the market value of assets considering all those self-valued alternative investments). The main purpose of these official actuarial reports is to determine the ‘required’ contributions which practically all parties have a vested interest in understating so we get a bunch of fanciful numbers where possible. However, these numbers you can’t pretty up:
Tax cuts remain a powerful tool to entice people and firms, and the pandemic has triggered a new tax war. After the lockdowns, states and cities predicted unprecedented revenue drops. Instead, economies bounced back quickly from the pandemic, partly because of widespread adoption of remote work and extensive federal aid from the Trump and Biden administrations — hundreds of billions of dollars in unemployment benefits (which kept individuals spending money), business loans and funding for local governments to fight COVID-19.
The March 2021 Biden stimulus then provided local governments with an unprecedented $350 billion to bolster their budgets. The revenue gusher has produced state budget surpluses where experts had only recently predicted steep deficits.
Nearly a dozen states, mostly Republican-governed, have used the windfall to cut taxes. Idaho reduced its corporate and individual tax rates and shrank its income-tax brackets from seven to five, producing a $163 million tax cut for residents and businesses. The state also sent $220 million in rebates to everyone who filed tax returns in 2019.
Advocates for higher taxes often say that the levies don’t drive away wealthy individuals or businesses. When New Jersey raised taxes on the wealthy in November 2020, Democratic Gov. Phil Murphy said, “When people say folks are going to leave, there’s no research anywhere that suggests that happens.”
Yet New Jersey, with taxes on the wealthy and on businesses long ranking among the nation’s highest, ranked a dismal 42nd in economic growth over the five years preceding the pandemic, according to one study, and it has been an economic laggard for two decades. Voters in this overwhelmingly Democratic state showed their disapproval in giving incumbent Murphy an extremely narrow victory in his November reelection bid. Polls showed that most voters favored the Republican position on cutting taxes over Murphy’s.
A six-year old income tax reform bill accomplished something remarkable in Trenton on Monday: It got Democratic and Republican lawmakers to agree on changing your tax policy.
The state Senate Budget and Appropriations Committee approved a Republican-backed measure, S676, that’s supposed to provide relief to New Jersey workers struggling to make ends meet amid the highest inflation levels in 40 years.
The concept is simple: If inflation goes up, so would New Jersey’s income tax brackets. For many, it would mean not having to pay higher taxes if salaries go up the rate of inflation.
New Jersey uses a graduated income tax, which means residents shell out a larger percentage of earnings to the state as their incomes rise into higher tax brackets. When inflation pushes wages higher, it can often result in a net loss to workers that are pushed into higher brackets.
The Pension Benefit Guaranty Corporation (PBGC) has approved a $100.5 million bail out of the Local 408 International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America Pension Plan. It is the fifth plan approved by the PBGC under the Special Financial Assistance (SFA) program, which was enacted under the American Rescue Plan Act of 2021 (ARP).
The Union, New Jersey-based plan, which covers over 1,000 participants in the transportation industry, was certified to be in critical and declining status in the plan year that began in 2020 and became insolvent last September. The plan was required by law to reduce its participants’ benefits to the PBGC guarantee level, which was approximately 60% below the benefits payable under the terms of the pension.
Struggling pension plans are required under the SFA program to demonstrate eligibility and to calculate the amount of assistance per ARP and PBGC guidelines. Funds provided under the program may be used only to pay plan benefits and administrative expenses, and plans receiving aid are also subject to certain terms, conditions, and reporting requirements.
Andrew Biggs prepared a report for The Garden State Initiative that focused on the impact of more retirees than employees.
Nationally, unfunded state and local government pension liabilities remained roughly stable at about $1 billion from 1975 through 1999, but accelerated rapidly in the following two decades, reaching $4.0 trillion in 2020. The combined unfunded liabilities of New Jersey public plans have increased significantly as well, from $58 billion in 2000 to $186 billion in 2019. (page 4)
In summary, federal government figures demonstrate that New Jersey lawmakers promised benefits to employees that were larger than lawmakers were willing or able to fully fund. The New Jersey pension systems instead relied upon returns on risky investments to make up the gap. But, as New Jersey’s investment experience shows, risky investments pay higher expected returns than safe investments precisely because they are risky, even over long periods of time. This leaves only more conventional solutions available, which are both financially and political difficult. All New Jersey pension stakeholders — including lawmakers, public employees and retirees, and taxpayers — must carefully consider how the costs and benefits of pension reforms will be borne. (page 33)
There’s a new effort underway in Trenton to reopen New Jersey’s pension system to politicians.
State Sen. Joe Cryan (D-Union) introduced legislation Monday that would allow politicians who held pensionable public jobs before they were elected to a public office to re-enroll in the system from which they‘ve been barred for almost 14 years.
The bill, introduced in the midst of the lame duck session, would partially reverse a pension reform law enacted during former Gov. Jon Corzine’s administration. Under that law, officials elected after July 1, 2007, were not enrolled in the Public Employees Retirement System (PERS), but shifted instead to a less-generous retirement plan similar to a 401(k).