Senator Steve Oroho(R-Sussex, Warren, Morris) believes the recent measures to pledge lottery proceeds to the state’s pension contribution and to make quarterly pension payments are already starting to pay off.
Sen. Steven Oroho highlighted two recent measures that are already helping New Jersey’s economic viability. (Pixabay)
“The state is already seeing the benefits of the bipartisan Lottery Enterprise Contribution Act (LECA), which was enacted only 3 months ago,” Senator Oroho said. “We immediately enhanced the solvency of the state’s Retirements System, and now, New Jersey is benefiting from lower borrowing costs.”
New Jersey State Treasurer Ford M. Scudder announced this week that the state has already saved $32 million on debt service costs on its latest bond issue thanks to the lottery-bolstered contribution to the pension system. Over the next five years, he estimated the state could save about a billion dollars in debt service costs.
LECA was enacted in July and immediately reduced the pension system’s unfunded pension liability by dedicating a significant new revenue–generating asset. Under the act, the state pledges sales from the lottery as an asset to the pension fund, reducing New Jersey’s liabilities by more than $13 billion.
In addition to the proceeds from the lottery, Oroho said the state’s switch to making payments to the pension on a quarterly basis instead of yearly has helped put New Jersey in a better fiscal position. He was a prime sponsor of legislation that enacted the change in late 2016. The switch offers the state more opportunities to maximize its investment returns without asking more from tax payers.
With these two provisions, Oroho believes the state could be looking at a much brighter future.
“LECA provides the state’s Retirement System with a steady stream of funding for 30 years and is now viewed by institutional and retail investors as ‘credit positive’” Senator Oroho said. “This has already saved the state $32 million in borrowing costs and has the potential to save billions in future borrowing costs. LECA is working as promised.”
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