Christie Proposes Lottery Revenues for Pensions

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New Jersey Gov. Chris Christie wants to bet that the state's lottery can rescue its underfunded pension system.

In his final budget address Tuesday, the governor said he wants to use lottery revenue to bolster the state's public pensions.

Without going into detail, Christie said his plan would increase the state's pension funded ratio from 49% to 64% and reduce unfunded liabilities by about $13 billion.

The New Jersey Lottery reported gross revenue of $3.29 billion in fiscal 2016, returning $987 million to the state government after expenses and prize payouts.

"If implemented correctly, this action would not only increase the value and stability of our pension funds immediately, but it would also please bond investors and credit ratings agencies giving confidence to New Jersey's public employees," Christie said while outlining his $35.5 billion 2018 budget proposal. "I look forward to sitting with all the stakeholders right away to discuss the specifics of implementing this plan, which would give even greater solvency and stability to our pension system."

Christie is in the last year of his second and final term as governor.

Underfunded pensions have played a large role in 10 New Jersey rating downgrades since Christie took office in January 2010. The Garden State entered 2016 with $40 billion in pension liabilities, according to Moody's Investors Service. Christie has aggressively pushed for pension reforms the last seven years as governor that have led to court battles with labor unions.

"We have done more for the solvency and the stability of the pension system than any governor in history despite all the empty rhetoric to the contrary and there is more to come," said Christie prompting cheers from some lawmakers in the crowd. "Without further reforms the state can simply not afford to meet its obligations."

Christie said Tuesday his 2018 budget includes what he called a record $2.5 billion pension contribution, a $647 million increase from the previous year, but only half of what is actuarially required.

New Jersey's pension contributions combined from 1995 to 2010 were only $3.4 billion, according to Christie. He also noted that New Jersey Treasurer Ford Scudder decided Monday to cut the state's assumed rate of return on pension assets to 7.65% from 7.9% in another effort to address the state's pension health.

"While the need for real and sustainable long-term reform cannot be understated, addressing the continued compounding of the pension crisis requires a substantial increase in state contributions," said Christie. "By reducing the assumed rate of return we are stopping the gimmickry."

Christie signed legislation passed by the state senate and assembly last December to begin making pension payments on a quarterly basis rather than annually. The new policy puts New Jersey on track to make full actuarially required pension payments by 2022 and will cut the state's unfunded liability by a projected $4.9 billion over 30 years.

The proposed 2018 budget dedicates 82% of revenues to pensions, health benefits and debt service, according to Christie. He said only 2% of the fiscal plan is comprised of one-shot revenues compared to 13.2% in 2009.

Christie also touted infrastructure spending in his final year after he and lawmakers agreed late last year to replenish the state's Transportation Trust Fund for eight years at $2 billion annually through a 23 cent-per-gallon gas tax hike.

The governor proposed a $400 million supplemental appropriation for the current fiscal year that expires June 30 to address bridge deficiencies and road repairs in all 21 counties. He also wants to utilize the funding for expediting technology advances and other infrastructure improvements to New Jersey Transit.

"We will spend these funds and make these investments quickly over the next 100 days," said Christie. "This $400 million dollars will allow the New Jersey Department of Transportation to deliver the largest construction program in 100 days in New Jersey history."

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