New Jersey’s new lottery pension law is being considered a step in the right direction by Moody’s Investors Service, but it’s still not a large enough step to resolve the state’s issues with meeting its obligations to workers.
Moody’s the agency said the move is “slightly positive” for the state’s credit profile because it “all but removes the prospect of a complete pension contribution holiday going forward.” However, Moody’s points out that it will not change a whole lot for the system as the lottery floor only covers one-quarter of the state pension annual required contribution (ARC).
The lottery law—signed over the Fourth of July weekend as part of an agreement to end a brief government shutdown—transfers the revenue from the popular number-based games into the state pensions, helping decrease the risk of state officials skipping out on future pension payments.
Although the report has no impact on the state’s credit rating, Moody’s said that the law “reflects the state’s continued commitment to supporting its pension funds within the realities of its budget constraints.”
The state plans to pay $2.5 billion in the current 2018 fiscal year, then increase annually until 2023.
The chart reflecting the state’s 2018 funding plan and Moody’s report can be viewed below.
Tags: Chris Christie, lottery, Moody's, New Jersey, Pension