The United States has been worrying over pension issues for some time, but at least two states feel like legalizing marijuana may be part of the resolution to their struggle.
Illinois is facing a $1 billion annual increase in retirement payments in Chicago for the next four years. Mayor Rahm Emmanuel feels that the best solution for his city is to funnel marijuana revenue directly into the pension fund. He sees that move as part of a three-pronged attack that includes revenue from a new casino in the area and also a cap to specific benefits that are given out.
However, the reality of legalization for Illinois, while more favourable than in previous years, is still a ways from a reality. The incoming Gov. J.B. Pritzker is in favour of marijuana legalization. However, details and a timeline of such a move are still up in the air.
The current state of pension funding in New Jersey, meanwhile, is hitting dire straits. The state has around 3,000 retirees who get six figures a year in pension benefits. This adds up to $11 billion per year for the 340,000 retirees in the state; that’s not to mention that each year, that total grows by around 10,000 retirees.
Businesses are putting in roughly $6.5 billion each year, leaving a significant amount of the New Jersey pension program accruing as unfunded liability — to the tune of $60 billion currently.
Gov. Phil Murphy feels the discussion cannot be adequately addressed until the state is contributing fully to the fund, which will be a total of $5.5 billion in four years. That amount does not include the profits from the lottery. Those figures are expected to stay steady through the next few decades.
New Jersey has a proposal that is finalized regarding the move, which is expected to see a vote early in 2019. This means the process towards legalization is more solid than in Illinois, and the answer to the pension struggle may be within reach.
For both states, however, the uncertainty will remain until legislation is passed and a realistic timeline can be set that will conclusively resolve the pension deficit.