Three high-profile Democratic governors are struggling to stabilize their states’ retirement programs due to a falling stock market and may have difficulties paying out benefits in the coming years, according to Politico.
Democratic California Gov. Gavin Newsom, Democratic Illinois Gov. J.B. Pritzker and Democratic New Jersey Gov. Phil Murphy, all of whom are considered potential candidates for the 2024 presidential race, have poured billions of dollars into their states’ pension funds, according to Politico. They may struggle to maintain their public images if they’re forced to raise taxes or make budget cuts to keep pension payments flowing.
The legislation I signed today is yet another bill that advances Illinois’ fiscal progress and saves millions of taxpayer dollars. We are extending the window for state employees, university workers, and educators to take advantage of early access to their pensions through 2026. pic.twitter.com/j5qObrQ9IW
— Governor JB Pritzker (@GovPritzker) May 5, 2022
Retirement fund investment plans can’t accrue as much money in weak markets or during times of slow economic growth, so more of the payouts must rely on tax money, according to Politico. Rising interest rates and declines in the stock market during 2022 created a bad investment environment for retirement funds, and 2023 will likely be worse. (RELATED: There’s A Massive Red Flag That Could Spell Disaster For Americans’ Pension Plans)
Most state and local retirement systems lost money in 2022, including the California Public Employees’ Retirement System, the country’s largest public pension, which lost nearly $30 billion, according to Politico. Some of the blame lies with the three governors’ predecessors, who failed to adequately fund the retirement systems while in office, Politico reported.
“When we arrived on the scene, New Jersey’s pension system had either been ignored or underfunded by administrations on both sides of the aisle for more than 20 years,” Murphy told the outlet, ading that he is “fully committed” to paying the state’s full obligation to its retirement system for the third time in a row in 2023.
“There’s going to be acute fiscal pain and pressure the more you ignore the cost,” Leonard Gilroy, a senior managing director of the Reason Foundation’s Pension Integrity Project, which advises state governments on pension plans, told Politico. “If you’re not paying it down, you’re chasing it.”
Newsom, Pritzker and Murphy did not respond to the Daily Caller News Foundation’s request for comment.
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