New Jersey Gov. Chris Christie's new proposal to dedicate lottery revenues to bolster the state's struggling pension system has been met with skepticism by some lawmakers.
The Republican governor argued during his Feb. 28 budget address that utilizing New Jersey Lottery revenue would boost the state's pension funded ratio to 64% from 49% and reduce unfunded liabilities by about $13 billion.
State Sen. Richard Codey, D-Livingston, called the proposal "irresponsible" since it would result in lost aid to education as well as institutions that service developmentally disabled residents, veterans and senior citizens.
"You can shift the money from one pot to the other, but you still have to provide the necessary resources for both," said Codey, who was acting governor from late 2004 to early 2006 and New Jersey senate president from 2004 to 2009. "Absent a new revenue stream, it's too much of gamble and it's the pockets of New Jersey taxpayers that will suffer."
The New Jersey Lottery reported returning $987 million to the state government after expenses and prize payouts in the 2016 fiscal year. Assembly Speaker Vincent Prieto, D-Secaucus, also voiced concerns about Christie's pension plan in a March 1 speech saying diverting lottery revenues from its dedicated items could face constitutional challenges.
"I see it a little bit as smoke and mirrors," said Prieto. "I would have to see the details of any plan before I would say this is something that would be OK to do."
State Sen. Joe Pennacchio, R-Pine Brook, stated in response to Christie's budget address that a limited expansion of gambling to the state's horse racetracks he has previously proposed could provide even more revenue for pensions. Under a bill introduced by Pennacchio last year that would establish a constitutional amendment allowing so called "racinos" adding casino games to the horse tracks, 60% of revenue from these facilities would be earmarked to the pension system.
"Allowing racinos in New Jersey would give us a chance to generate hundreds of millions of dollars more annually to support our underfunded pension systems, without raising taxes or diverting funds from any other programs or services," said Pennacchio in a statement. "This new 'found money' would make a huge impact on the long term viability of the state pension fund."
New Jersey entered 2016 with $40 billion in pension liabilities, according to Moody's Investors Service. Underfunded pensions have led to 10 credit downgrades since Christie took office in January 2010 including a one-notch drop by S&P Global Ratings in November to A-minus. The Garden State's general obligation bonds are rated
A2 by Moody's, A by Fitch Ratings and A by Kroll Bond Rating Agency.
