“Back in November, I wrote in an op ed that I was rooting for our Governor to succeed. I said then that I would call him out when he mis-stepped but be with him when he did the right thing. This is me keeping my word.”
“I want to commend Governor Murphy and his policy staff for what appears to be their complete reassessment of the deeply flawed original version of bill S-5. To be clear, neither taxpayers nor unions are getting everything they wanted out of this conditional veto. However, a fair assessment of the language of the conditional veto demonstrates that there was a genuine concern for taxpayers, as well as of the goals of union leaders to have more control over their pension funds investment strategy.”
“I have argued long and loud with anyone who would listen regarding the deep flaws of the prior versions of S-5—we could not have exposed taxpayers to the one sided liabilities that the original bill, or even the bill as passed, would have inflicted on them.”
“If all is as it appears, the conditional veto language adds many of the substantial additional taxpayer protections I have advocated. Under this language, the Treasurer would still set the projected rate of return. It sets a considerably higher bar for the enhancement of benefits, such as the reinstatement of the cost of living increases or reduction in employee contributions. These were all imminent threats to every property tax payer in New Jersey and I thank the Governor for listening to those of us who raised these concerns. Nearly every editorial board in New Jersey recognized the grave flaws in the original versions of S-5 and I am glad that the Governor heard our voices and did not capitulate to irresponsible union demands. The devil is in the details of course and the choice of actuaries, and exactly who gets to sign off on projections, can make or break these protections. Additionally, we need to ensure that the employer (ie taxpayer) contribution protection language throughout the document actually does what it purports to do, and isn’t fatally flawed as some have suggested it may be. The regulatory process and choices made by the Governor will be critical. But for now trust must be with the assurances of the administration.”
“The complications and expense of separating out one union fund from all other union funds was at once cumbersome, expensive, and unnecessary. The administration completely resolved those concerns by eliminating much of the redundant bureaucracy that S-5 previously called for, while preserving the mechanisms by which the unions will have reasonable and deserved input over their funds investment strategy.”
“There are some potential issues. Particularly, the Governor’s trustee appointment on the board needs to be chosen wisely otherwise they would give unions absolute power in a supermajority. It would merely take the co-option of one of the Governor’s appointees to dramatically tip the scales of the board against taxpayers. The Governor’s trustee choices need to be unequivocally representative of taxpayers.
“Additionally, it would have been wise for the Governor to reinstate some version of the targeted fund language as a mandate before any modifications in the benefits or contribution rates. To be clear, this would have been the easiest way to guarantee the safety of the taxpayers and safeguard the health of the pension funding. Short of this, the language in the conditional veto is a vast improvement.
“This was a big test. The Murphy administration deserves praise for resisting what I am certain was tremendous pressure from unions, standing up for taxpayers and vastly improving this legislation. Kudos.”