In 2011, NJ Governor Christie championed new Pension Reform designed to fix the State's massively underfunded Pension system. Fast forward to 2015 and Governor Christie vetoed the 1.57 billion pension contribution required under his 2011 reform. Apparently tax collections fell short of projections and he needed the money to plug the budget gap. 

New Jersey's Pension programs are currently underfunded by more than 40 billion dollars. Governor Christie's  solution is to skip the payment and "kick the can" down the road for the next Governor to address....and round and round we go until one day when there are not enough State revenues to pay for all of the accumulated pension and entitlement liabilities. 

Detroit, Stockton, San Bernardino are all Cities where revenues fell short of expenses. In each case a bankruptcy Judge determined the priority of the liabilities and in each case Pension claims were treated better than bond holder claims. In Detroit, for example, the bankruptcy judge paid 95 cents on the dollar to pension holders and 74 cents to GO Bond holders. 

To be fair, NJ is a State and cannot file for bankruptcy, but the point remains the same. At some point the shoe will drop. NJ bondholders should be very careful.