N. Jersey pension plan would require $2.8 bln new taxes -study
(Adds details of report, poll results, background of proposal, pension information)
By Hilary Russ
Feb 11 (Reuters) - New Jersey would need at least $2.8 billion of new taxes by 2022 to make the state's full share of contributions into its public pension system under a proposed constitutional amendment, according to a report by a gubernatorial panel.
The potential tax hit in an already high-tax state could be even greater, because the estimate is based on conservative assumptions including annual revenue growth of just 3.34 percent, according to New Jersey's pension and health benefit study group, appointed by Governor Chris Christie. The study was released on Thursday.
The $2.8 billion estimate could also be too low because it assumes the implementation of a millionaire's tax, which Christie has repeatedly vetoed. It also assumes that pension assets will meet their 7.9 percent investment targets.
Returns have tumbled, however, with public pension funds nationwide earning a median 0.36 percent over one year, the Wilshire Trust Universe Comparison Service reported last week.
Christie created the commission in August 2014 to recommend ways the state could reduce ballooning pension and benefit costs.
Multiple administrations have shortchanged the public employees' retirement system, contributing to its poor financial status - it is just 44 percent funded and has unfunded liabilities of $83 billion, according to new governmental accounting standards.
Democratic lawmakers, who lead both houses of state legislature, are urging the state to make full payments annually into the system.
They have pushed for a November ballot measure to put the question before voters. If approved, it would make full state contributions, paid on a quarterly basis, a constitutional requirement.
The potential for higher taxes could doom the funding measure, a January poll by Fairleigh Dickinson University found. The results showed 59 percent of adults support the measure, but almost half would change their minds if more taxes are proposed.
The full state contribution for 2017 is nearly $4.6 billion, the report said, citing legislative research. Pensions are also funded by employee contributions and investment returns on assets.
Christie and others have railed against the constitutional amendment, saying pension funding would jump the line and get paid before nearly everything else, forcing cuts to education, public safety and other essential services.
A spokesman for Senate Democrats could not immediately be reached for comment.
Thursday's report also reiterated the commission's recommendation that the state cut health benefit costs in half, then put the estimated $2.2 billion of savings into the pension system instead.
(Reporting by Hilary Russ in New York; Editing by Daniel Bases and Matthew Lewis)
