II. KNOW THE NUMBERS.
According to the 2/19/2015 report of Mark Lagerkvist for New Jersey Watchdog, New Jersey state government is now $183 billion in debt. This is nearly six times higher than the state government yearly operating budget of $32 billion. See http://watchdog.org/200984/nj-state-debt/
That figure includes roughly $135 billion in unfunded pension promises made to current and retired state, local, and public school employees. More than 2,000 retired public employees are getting pensions of more than $100,000 per year, and that number increases every month. There is no connection between how much public employees pay into the system and how much they receive when they retire.
For example, Robert Codey, the brother of former State Senate President Richard Codey retired nine years ago at age 55 with a state pension of $98,000 per year. That is more than twice as much as he earned each year when he worked his regular state job. However, three years before he retired, he “juiced” up his pension by getting extra sweetheart government jobs in Cape May and Morris County. As a result, he already collected far more than he ever paid into the system.
Under our State Constitution every dollar of pension payments which is over and above what was set aside while that retiree was working is a debt or obligation that was never approved by voters as required by the state Constitution.
Another $17 billion was borrowed by the New Jersey Transportation Trust Fund Authority during the past 30 years. Although the debt is funded by the gasoline tax, much of this money was spent on expensive failures like the Camden to Trenton railroad and local bikepaths and decorative brick sidewalks in upscale shopping areas that had nothing to do with highways or bridges. None of this debt was approved by voters either.
New Jersey’s $183 billion state government debt comes to roughly $45,750 for each of the state’s 4 million households. However, New Jersey taxpayers are only legally obligated to pay 2% of that debt. That is because voters approved of only about $3.5 billion of that debt pursuant to our State Constitution.
The entire $183 billion cannot be paid back without massive new taxes that would crush the economy. Although average household income was a very high $70,000 in 2014, that income has been declining steadily during the past eight years. As household income declined, New Jersey taxes have increased.
The Tax Foundation (http://taxfoundation.org/state-tax-climate/new-jersey) reported that in 2011, the average household in New Jersey paid more than $13,000 or roughly 20% of that income for state and local taxes. Since then, real estate taxes have gone up substantially. New Jersey households already pay the third highest state and local taxes in the country.
It is difficult to imagine how these same families can afford to pay their $45,750 share of the state debt and pension obligations on top of the taxes they already pay.
The only sensible solution is to repudiate—refuse to pay—any state government debt not approved by voters.
That means the share of state debt to be paid by each household would be less than $1,000 rather than $45,750.
The does not mean retired government employees would not get their pensions. There is enough money in the pension funds to pay roughly half of what was promised. If the pension funds are immediately declared insolvent, payments can be restructured so that all pensions are paid out of the pension funds. However, instead of paying each retiree half of what he or she was promised, pension payments can be capped at roughly $50,000 per year, so that most ordinary workers get most or all of what they were promised, while higher level employees. who often manipulated the system to juice up their pensions in the three years before they retired, will get the biggest cuts.