A plan to ramp up New Jersey payments by a tenth every year should get the public employee pension system on a sustainable path, according to a Christie administration official.
A $1.8 billion payment is included in the budget proposed for the fiscal year that begins in July.
And acting treasurer Ford Scudder told lawmakers Tuesday he is cautiously optimistic that employee health benefit costs can be cut by $250 million to enable that pension contribution.
“I think that there are a number of items on which people are in general agreement, that there are reforms available that would cut costs without decreasing the quality of care,” he said. “There’s still, without question, work to do to get those over the finish line to actually have them approved.”
If the benefit costs are not reduced, Scudder said, it’s likely that service cuts or tax increases will be needed to make the additional incremental pension payments. Those extra contributions could reach $600 million annually over a decade.
“If we are able to make those payments, by the end of that 10-year period, we will start being on an upwards trajectory towards bringing the unfunded liability back to zero over time,” he said.”We will have stabilized the underfunding in the pension system and will be back the path to a sustainable system.”