Plainfield's City Council may be faced with pressure from the state to defer pension payments once again if a plan advancing in the Legislature goes into force (see the Courier here, and the Ledger here).
The move was made last year, and municipalities were virtually blackmailed into joining in by threats that needed extraordinary aid would be cut or denied altogether to towns that did not go along with the stopgap budgetary maneuver.
While the Council was disturbed at being forced to adopt the measure, since the deferred payments will have to be made later PLUS INTEREST, the Robinson-Briggs administration eagerly embraced the scheme as the way out of a budget mess that it had not addressed in a well-thought-out manner in its initial budget proposal (remember the $1M 'error'?).
Gannett's report includes this enticing little detail: When the repayment kicks in after a year or two, the interest cost to the municipality for the privilege of deferring the pension payments will be 65¢ on every dollar deferred.
Add to this the danger that the scheme could continue to weaken the pension plans holdings, eventually putting them in peril, and it is not hard to conclude that this is a BAD IDEA.
Is it possible our legislators have drunk Wall Street's IBG/YBG* Kool-Aid?
*IBG/YBG: "I'll be gone, you'll be gone", the philosophy of Wall Street dealmakers who sold high-risk financial products during the bubble, first noted in Jonathan Knee's 'The Accidental Investment Banker' (see a review here, more about the book here).
- Courier: "Dem lawmakers promote plan to defer pension payments again"
- Ledger: "Bill would allow delaying payments to pension system"
-- Dan Damon [follow]