蜜桃影视

Newly minted Gov. Phil Murphy of New Jersey, who takes his oath of office in Trenton on Tuesday, has begun his political career with immense promise.

The former financier, diplomat, and first-time candidate outmaneuvered several prominent opponents to bring the traditionally blue state back under unified Democratic control for the first time since 2009. Now he鈥檚 pursuing that reads like a liberal wish list after nearly a decade of Republican rule, including a $15 minimum wage, tougher regulations on guns, and 鈥� perhaps most audacious 鈥� a dramatic increase in school funding. With Democratic majorities in both chambers of the state legislature, he鈥檚 in a strong position to realize some of those priorities.

And yet the celebration may soon come to an end.

That鈥檚 because even as Murphy鈥檚 administration takes shape, New Jersey is confronting a titanic struggle to bring its finances back to something resembling normalcy. Residents have carped about for years. The state鈥檚 credit rating during the past eight years. And its pension system for public employees, directed mostly toward hundreds of thousands of retired teachers, ranks with Illinois鈥檚 and Kentucky鈥檚 as . Cleaning out those Augean stables while moving the ball forward on his campaign promises will demand every ounce of the goodwill and credibility Murphy has hoarded for years.

Each of the past seven people who held Murphy鈥檚 job dealt with these challenges 鈥� though never one as immense as the current situation. All of them failed in ways large and small to disentangle New Jersey鈥檚 tortured finances. Whether Murphy is able to succeed where they fell short, or simply never tried, will determine his legacy in public life. Local observers view his prospects with a mixture of hope and realism.

鈥淲hat Murphy has to do is unify the lobbyists, the legislature, teachers, homeowners 鈥� everyone 鈥� and say, 鈥榃hat we鈥檙e doing isn鈥檛 working, we have to fix it, and we鈥檙e all going to hurt a little bit,鈥� 鈥� said Laura Waters, a local school board member and the author of on education policy and finance. 鈥淚 know that鈥檚 nothing he鈥檇 say during a campaign. But it鈥檚 true, and if we don鈥檛 face up to that, our fiscal condition will continue to deteriorate.鈥�

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How we got here

In 2014, then-Gov. Chris Christie impaneled a bipartisan commission to study New Jersey鈥檚 pension funding crisis, then roughly 18 years old. As a welcoming gift to his replacement, the group released in December with harrowing projections about the system鈥檚 fiscal health. In spite of increased payments toward the pension fund over Christie鈥檚 final year in office, the state鈥檚 unfunded liability now sits at roughly $90 billion.

The commission attributes $79 billion alone to the Teachers鈥� Pension and Annuity Fund, which is only 22.3 percent funded. Teachers鈥� pensions are guarded jealously by their unions, most famously the NEA-affiliated New Jersey Education Association. Those pensions, and NJEA鈥檚 political interventions to protect them, are likely the biggest hurdles Murphy faces in restoring the state to long-term solvency.

The status quo is the product of labor successes and political failures.

Previous governors have so uniformly sidestepped the issue over the last two decades that apportioning has become a . Republican Christine Todd Whitman first lowered the state鈥檚 contributions to its pension fund in the 1990s ; her Democratic successors Jim McGreevey and Richard Codey skipped payments altogether for a few years. As the problem grew, Democrat Jon Corzine 鈥� like Murphy, a former high-ranking executive at Goldman Sachs 鈥� began making some of the in the history of the pension fund.

But he also pushed for to New Jersey鈥檚 education financing, called the School Funding Reform Act, that left the state on the hook for billions in new financial obligations. The SFRA was signed into law in January 2008; coincidentally, , just before the onset of the Great Recession. Consequently, the new law .

Chris Christie defeated Corzine in his bid for re-election in 2009 and with the public employees unions at the beginning of his term. He promised to fully fund the state鈥檚 pension fund in exchange for higher contributions from members and a later retirement age. When the sluggish recovery from the recession resulted in lower-than-expected tax receipts, though, .

For its own part, the NJEA has proved a determined adversary of any lawmaker who has attempted to pare back its members鈥� benefits. It sued Christie in 2015 after he walked back his commitment on state contributions, then backed a constitutional amendment to guarantee full state funding of the pension system. When Democratic Senate president Steve Sweeney , it formed a bizarre alliance with his Republican opponent in last fall鈥檚 election, donating millions to the vocal Trump supporter in an effort to exact vengeance.

Undoubtedly wary of stirring a hornet鈥檚 nest, Murphy wouldn鈥檛 commit to pursuing renegotiations of health or retirement benefits while he was campaigning, instead insisting that it was principally the state鈥檚 obligation to make full contributions to the pension funds. In , he suggested using his financial expertise to claw back the managerial fees extracted by the funds鈥� Wall Street stewards.

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鈥淯nfortunately, I鈥檓 not optimistic about Murphy. Maybe he鈥檒l govern differently from what he said. But Corzine doesn鈥檛 provide a good example. Well, no governor has, really.鈥�

鈥�Mike Lilley, NJ bond trader and American Enterprise Institute author

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The new governor is perhaps uniquely familiar with the budgetary complexities. In 2005, as the chairman of an earlier pension commission enlisted by then-Gov. Richard Codey (now one of his strongest allies in the state Senate), he issued a study 鈥� ultimately unheeded 鈥� that called for massive reform.

鈥淭he problems that exist now are the same problems that existed then, only they were less extreme, less dire,鈥� says Mike Lilley, a New Jersey bond trader and the author of several critical reports on NJEA for the conservative American Enterprise Institute. 鈥淪o Murphy knows damn well what the problems are, yet he made these absurd promises about what he鈥檚 going to do.鈥�

Whatever the political needs of Candidate Murphy in 2017, Gov. Murphy must contend with some intractable realities in 2018 to have any chance of setting the state on better financial footing. Lilley doesn鈥檛 hold out a great deal of hope.

鈥淐orzine was a Wall Street guy, head of Goldman, and he was supposed to be smart about all this stuff, but he didn鈥檛 do a damn thing,鈥� he said. 鈥淯nfortunately, I鈥檓 not optimistic about Murphy. Maybe he鈥檒l govern differently from what he said. But Corzine doesn鈥檛 provide a good example.鈥�

鈥淲ell, no governor has, really.鈥�

Pot of gold

Murphy has set an ambitious course for his first hundred days in office. His foremost goal is to generate more revenue through two steps: legalizing and taxing marijuana, and increasing the income tax on the top-earning 1 percent of New Jerseyans. Together, he estimates that the initiatives will direct an additional $1.3 billion to the state each year. Senate leaders have pledged to work with him on both proposals.

He may face a difficult road, however. On marijuana legalization, he鈥檒l have to overcome the objections of some lawmakers in his own party before making New Jersey just the eighth state to allow recreational use of cannabis. Assuming a bill passes, the state will have to set up a complex regulatory apparatus to reap the financial benefits of the drug market, which could take years. Even then, some states have seen revenues after permitting medical weed.

Matters get even more complicated when it comes to new levies. Democrats have yearned for a 鈥渕illionaires鈥� tax鈥� since the end of Corzine鈥檚 tenure and actually passed five separate bills establishing one (Christie vetoed each attempt). Under normal circumstances, they would likely provide one for Murphy鈥檚 signature within weeks.

The Republican tax cut passed in Washington casts significant doubt on that prospect. The new limitations on the deduction for state and local taxes will impose unique burdens on New Jersey residents, who pay an average real estate bill of . In that kind of environment, any new tax will be . If the state鈥檚 wealthiest taxpayers flee across state lines, it would put the state鈥檚 future in even greater financial jeopardy.

At the same time the tax bill was moving toward passage, the lame duck governor added a new wrinkle: In a move as a final shot on his way out of Trenton, Christie lowered the expected rate of return on the pension fund鈥檚 investments . While that sounds like a minor accounting move, the revision raised the pension bill by $800 million next year.

The fiscal threat over the next decade is now so great that Murphy and his Democratic allies will likely be forced to take some corrective steps. If current trends persist, ratings agencies have warned that the state鈥檚 pension system , possibly dragging down the state economy with it.

鈥淚n the end, I think they have to [reach a deal with NJEA],鈥� said Waters. 鈥淭his is people鈥檚 lives. This is people鈥檚 retirement. There have got to be some concessions made.鈥�

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