The New Jersey legislature approved a bill Monday that would mandate a boost to the state's underfunded pension system.
The legislation passed the state Senate 35-0 and the Assembly 72-0. It would require quarterly pension payments rather than a lump sum at the end of the fiscal year.
Gov. Chris Christie has vetoed similar proposals twice before.
It revives elements of a proposed constitutional amendment New Jersey Senate President Steve Sweeney, D-Gloucester, unsuccessfully sought to place on this November's ballot. Sweeney has said the quarterly pension payment plan would put New Jersey on pace to make full actuarially required pension payments by 2022 and cut the state's unfunded liability by a projected $4.9 billion over 30 years.
"Quarterly pension payments will help to restore the fiscal solvency of the nation's worst-funded pension system," said Sweeney in a statement. "This year alone, making quarterly pension payments would have generated more than $100 million in additional investment income. In future years, when the state is making its full pension contribution, this law will generate $200 million a year in additional investment income."
Christie has previously opposed quarterly pension payments saying it would cost taxpayers $3 billion, but Sweeney said he expects the Republican governor to sign the new legislation into law. Christie press secretary Brian Murray said Monday the governor needs to review the bill before commenting.
Underfunded pensions have played a large role in New Jersey sinking to the second lowest credit ratings among states, with 10 downgrades since Christie took office in 2010. S&P Global Ratings dropped New Jersey one notch to A-minus on Nov. 14 citing increased pension burdens. The state is rated A2 by Moody's Investors Service, A by Fitch Ratings and A by Kroll Bond Rating Agency.
New Jersey entered 2016 with $40 billion in pension liabilities, according to Moody's. A 2015 National Association of State Retirement Administrators study showed that New Jersey underfunded its pension system more than any other U.S. state from 2001 to 2013 at a 38% average for its annual actuarially required contribution.