TRENTON - New Jersey lawmakers on Monday unanimously passed legislation that would require the state to contribute money to the troubled public-worker pension system quarterly, rather than in one lump sum at the end of the fiscal year.
The legislative move came a week after Standard & Poor's, the Wall Street ratings agency, downgraded New Jersey's general obligation bond rating to A-minus from A, citing pension underfunding as a driving factor.
S&P's revision marked the 10th time New Jersey's bond rating had been downgraded by ratings agencies since Gov. Christie took office in 2010, a record for a Garden State governor.
The bill now heads to the Republican governor's desk.
The state's $73 billion pension fund for about 770,000 active and retired public workers is among the most underfunded in the nation, meaning it lacks the assets to cover future obligations.
"We were working on this before the downgrade, but you can't ignore the problem and hope it goes away," Senate President Stephen Sweeney (D., Gloucester) told reporters.
Lawmakers hope that by spreading the contributions over the course of the year, the pension fund will accrue additional investment income.
Christie in recent years has slashed the state's contribution to the fund in order to close budget shortfalls, adding to the pension debt. Quarterly payments might encourage more responsible budgeting, lawmakers say.
To be sure, nothing in the bill would bind Christie or his successor to making quarterly contributions. For example, the 2011 pension and health benefit overhaul required the state to pay more, but Christie violated those terms, citing revenue shortfalls.
The state Supreme Court ruled in his favor, saying public workers did not have a contractual right to greater pension funding.
Hetty Rosenstein, state director for the Communications Workers of America, said that the union supports quarterly pension payments, but that a constitutional amendment was needed to secure funding. Lawmakers considered an amendment this year, but decided against it.
"Unless the full amount due to the plan is appropriated, quarterly payments are meaningless," Rosenstein said.
Before Monday's vote, the Democratic-controlled Legislature had passed similar legislation, but Christie vetoed it. Republican lawmakers say the new version would give the treasurer more flexibility in determining when to make the contributions and better protect taxpayers.
The Treasury Department would likely have to borrow money in the first half of the year, but it would be reimbursed by the pension system. The legislation would take effect starting the next fiscal year on July 1.