New Jersey Gov. Chris Christie called for additional cuts to the state's pension benefits to prevent them from crowding out other government goals.
Christie asked for the cuts as part of his speech delivered Tuesday on his proposed plan for fiscal year 2015.
The budget will propose spending $2.25 billion on pensions this year, which Christie says is the largest payment for pensions ever, as part of a $34.4 billion budget.
New Jersey faces expanding pension, health care and debt service costs that threaten to "overrun our budget," the Republican Christie said.
"With our long-term obligations only set to increase in the coming years, the problem isn't going away by itself," Christie said. "We must do what we were sent to do by the people - lead and act decisively once again."
Christie was unclear if he was calling for reduced health care and debt service costs, as well as reduced pension costs.
In 2011, Christie and the legislature took steps to roll back pension benefits, including suspending cost-of-living increases for retirees and requiring increased employee contributions. In addition, New Jersey government committed to ramping up its contributions to the pension system over seven years. To contribute 100% of the actuarialy required amount to its pension plan, the state would have to contribute in the ballpark of $3.6 billion a year.
New Jersey taxpayers still owe $52 billion to fully fund the pension system, according to Christie.
New Jersey is rated AA-minus by Fitch Ratings and Standard & Poor's and Aa3 by Moody's Investors Service. Moody's has a negative outlook on the state.
In his speech Christie noted the critical role that unfunded retiree health benefits and unfunded retiree pensions played in pushing Detroit into bankruptcy.
At the end of his speech Christie said he would focus the remainder of his term on reducing the state's pension costs. His term runs for nearly four more years.
After Christie's speech, Democratic legislators gathered to respond.
When the legislators and the government approved the pension reform plan in 2011, they knew following it would become increasingly difficult, New Jersey State Senate President Stephen Sweeney said. "If we stay the course the pension system will be fine."
To make full-funding of the pension system affordable, New Jersey's economy needs to grow, Sweeney said. In New York State the economy now has more jobs than it did before the Great Recession. By comparison, New Jersey has only recovered 45% of the jobs, he said.
New Jersey House Speaker Vincent Prieto said to deal with the growing pension costs, the government should look at adding revenue as well as cutting spending.
