Is New Jersey on the path to Detroit’s bankruptcy fate? According to New Jersey Governor Chris Christie, if things don’t change with the state’s pension system, that’s exactly where the Garden State is headed. On July 23, the governor kicked off his “No Pain, No Gain” summer tour to spread the word about the need for pension reform in the state.
“We have to pare back benefits. In the end, there will be a reduction in benefits. There’s no other way to do it. Whatever I propose will be roundly criticized. It will not be easy, it will be hard and it will hurt,” Christie said in front of protesting firefighters and police officers at Long Beach Island.
New Jersey’s pension system is expected to go over $54 billion in unfunded liabilities by the 2018 fiscal year, and the governor claims that it’s unsustainable over the long run. Steps were taken in 2010 to curtail the problem, but they have proven inefficient. Public workers and taxpayers have been asked to contribute more, Christie cut two pension payments to a combined total of $1.38 billion, down from $3.8 billion.
In early June, the governor assured a radio audience that the state could continue to meet its current obligations, but will run into trouble down the road if more action isn’t taken. There are over 700,000 active enrollees and retirees who the state have long-term pension and healthcare obligations to.
New Jersey and Detroit are hardly the only areas in the country, though they seem to be at the forefront of the national crisis. There are dozens of states across the country, including Illinois, Kentucky, Kansas, New Hampshire and Connecticut are all underfunded by over at least 40 percent for their pension plans, according to information gathered by Pew Charitable Trusts.
Detroit is currently in the final stages of a Chapter 9 bankruptcy filing, with its bankruptcy trial scheduled for August 14.
Contact the Law Office of Joel R. Spivack today to discuss your finances and bankruptcy options. He has been helping New Jersey and Pennsylvania residents get back on track financially for over 25 years.