New Jersey Gov. Chris Christie has conditionally vetoed legislation that would have granted the state’s police and firefighter unions control over their $26 billion pension fund's investments.
The Republican governor stated in his veto message Monday that signing the legislation to allow a board of trustees to make investment decisions for the Police and Firemen's Retirement System instead of the State Investment Council would provide “a blank check” to unions and put taxpayers at risk if the fund headed south. The bipartisan proposal that overwhelmingly passed the state Senate and Assembly would have spun off management from the state’s struggling $71 billion pension fund, without changing their liabilities.
“I refuse to repeat the mistakes of prior governors and Legislatures who enacted pension legislation without ensuring appropriate safeguards for taxpayers nor securing significant concessions from labor,” said Christie. “I refuse to hand PFRS a blank check, while handing the taxpayers the deposit slip.”
Christie sent the bill back to lawmakers to see if they will make revisions such as capping sick time payouts. The governor also urges the pension fund’s board be comprised with an equal number of representatives from unions and the state government.
“The legislation he vetoed represented the best practices of well-funded and professionally managed police and fire pension systems from throughout the United States,” leaders of the Firefighters' Mutual Benevolent Association, Policemen's Benevolent Association and Fraternal Order of Police said in a joint statement Monday. “Its primary purpose was to remove the New Jersey Police and Firemen’s Retirement System from the political interference and blatant mismanagement of the State that has underfunded it for nearly 20 years. “
The New Jersey PRFS was roughly 70% funded in June of 2016 with $11.2 billion in unfunded liabilities, according to bill sponsors. The system had 40,789 active members and 46,625 retirees of beneficiaries last year.
New Jersey had the worst pension funding percentage in the nation for the 2015 fiscal year at only 37%, according to Pew Charitable Trusts’ pension debt report released last month. The Garden State has incurred 10 credit downgrades under Gov. Christie since 2010 with underfunded pensions playing a large role in the state’s fiscal woes.