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Assembly Approves Pension and Health Care Reform Bill

Vote dragged into the evening following a day of protests in Trenton.

After a day filled with rallies and protests outside the statehouse in Trenton, the Assembly has backed legislation that will increase contributions by public employees to their health care and pension costs, now sending the bills to Gov. Chris Christie to be signed into law.

The Assembly voted Thursday evening, three days after the state Senate’s

Gov. Christie is expected to sign the legislation into law Monday.

“Together, we’re showing New Jersey is serious about providing long-term fiscal stability for our children and grandchildren. We are putting the people first and daring to touch the third rail of politics in order to bring reform to an unsustainable system," Christie said. “I want to thank Sen. President Sweeney and Speaker Oliver for putting aside politics, committing themselves to reform and remaining unwilling to settle for anything less than the real, viable solutions New Jerseyans have been demanding.”

The bill, A-4133, will require teachers, school employees and state and local government workers to pay an additional 1 percent of their salaries toward their pensions as of July 1, and an additional 1 percent phased in over the next seven years for a total of 7.5 percent.

Police and firefighters will pay an additional 1.5 percent of their salaries toward their pensions for a total of 10 percent, as of July 1.  The bill moves the retirement age for new teachers and non-uniformed employees from 60-years-old to 65. To be eligible for early retirement, the employees now have to work 30 years instead of 25.

New Jersey Policemen's Benevolent Association President Anthony Wieners released a statement criticizing legislators who supported the reform bills.

"Today is a day that history will remember as the day the vilification of police and firefighters was complete," he said.  "No matter what public speeches politicians give at ceremonies and parades, this week their commitment was shown in how they voted. To the few politicians who stood up for the brave men and women who protect our communities everyday – thank you.

"Unfortunately there were too few of you to make a difference. Today’s passage marks a milestone where Trenton politicians have undercut the basic fundamental principles of collective bargaining. The collective bargaining process that brought numerous concessions by many local PBA units to local governments over the past two years was wiped out with today's passage."

The bill also requires the state to make its annual payment into the pension system or unions could sue to force the state to make its payments. Gov. Christie withheld a $3 billion payment from the pension fund last year, which is underfunded by approximately $54 billion.

Automatic cost-of-living adjustment (COLA) for retired police, firefighters, teachers, state and local government employees in New Jersey's six pension systems was eliminated by the legislation until the state’s pension funds are at least 80 percent funded. Based on state estimates, that could take as long as 30 years.

"Legislators do not seem to understand the impact this legislation will have on retired school employees,” said New Jersey Education Association President Barbara Keshishian via press release.  “Without a cost-of-living adjustment, the purchasing power of their pensions will erode to levels that will cause them terrible hardship at the most vulnerable time of their lives.”

Several thousand public workers protested outside the State House on Thursday, according to press reports.

Gov. Christie said on Monday that the legislation will save New Jersey taxpayers "hundreds of billions of dollars." About 60 percent of the projected $122 billion total pension savings comes from the elimination of COLA, however the measure may not hold up in court.

NJSpotlight reported that both the non-partisan Office of Legislative Services (OLS) and the state Attorney General’s Office previously issued strongly worded opinions during the summer of 2006, which warned the bipartisan Joint Legislative Committee on Public Employee Benefits Reform that the state legislature had established a clear record of legislative intent that previously approved pension benefits should not be reduced.

"Our membership will still suffer under the highest property taxes in the nation and still pay the highest pension costs in the nation," Wieners said. "I am mad as hell at how we have been treated, and I promise you our battle will move from the Statehouse to the courthouse."

The bill will have a more significant impact on the cost of health benefits, as it requires all public employees and certain public retirees to contribute toward the cost of health care benefits coverage based upon a percentage of the cost of coverage. Public employees could see current health costs at least doubled, or tripled in some cases.

Public employees currently paying 1.5 percent of their healthcare premium cost will pay 3 percent for those earning under $25,000, and up to 35 percent of their healthcare premiums for those making up to $100,000, on a sliding scale that is based on employee compensation.  The rates will gradually increase based on an employee’s compensation, at intervals of $5,000. 

The increase to health costs will not affect current retirees, and active employees with at least 20 years of service will pay the increased contributions while still active, but will not be affected upon their retirement.

The bill currently contains two options for public workers, one where public employees can buy health insurance that covers out-of-state treatment, or a cheaper option that restricts employees to New Jersey hospitals, unless their case can only be handled by an out-of-state doctor.

The overall impact of the increased pension and health care contributions is estimated to range from $1,142 for a public employee making $25,000 per year, to $6,058 for an employee earning $65,000, according to the Communications Workers of America (CWA).

Jim LaRegina June 24, 2011 at 02:13 PM
Divided, we fall.
Andrew June 24, 2011 at 06:37 PM
To say that the law constitutes a "vilification of police and firefighters" shows how out of touch some of the union leaders are. The New Jersey Policemen's Benevolent Association should be ashamed of it's President for this display. I'm good friends with a Westfield policeman. My friend would never support anything that "vilified" firefighters or police officers, but he saw this bill as a necessary measure to put the state on firm fiscal ground. NJ police deserve better representatives than Mr. Wieners.
southside tranzplant June 27, 2011 at 03:03 PM
Increasing taxes is not the answer. State Income Tax: 1.4%-8.97% State Sales Tax: 7% Estate Tax/Inheritance Tax: Yes/Yes Its nickname may be the Garden State, but New Jersey is no Eden for retirees. The Tax Foundation says New Jersey's combined state and local tax burden is the highest in the nation, thanks in part to sky-high property taxes. But there are a few bright spots: New Jersey does not tax Social Security benefits and military pensions. It also allows residents 62 or older with incomes of $100,000 or less to exclude up to $15,000 ($20,000 for married couples filing jointly) of retirement income, including pensions, annuities and IRA withdrawals. Groceries, medicine and clothing are exempt from the 7% statewide sales tax. The state imposes an inheritance tax on the transfer of real and personal property worth $500 or more, but bequests to family members are exempt. Even with the bright spots, it's an expensive place to live for retirees.
Jim LaRegina June 27, 2011 at 09:37 PM
Read it and stop repeating misinformation: http://blog.nj.com/perspective/2011/06/busting_the_myth_the_real_numb.html From the above-linked June 26, 2011, STAR-LEDGER article: - "New Jersey ranks eighth among all states when state and local tax revenues are compared as a percentage of taxpayer’s personal income'" - "Simply comparing total revenue collected from taxes in each state would produce a wholly inaccurate comparison because poorer, less-populated states would always appear to tax less. Measuring as a percentage of personal income, or on a per capita basis, provides necessary context and a more accurate comparison among states." - "[The] Tax Foundation . . . cherry-pick[s] data [to justify] political philosophy. So the next time you hear someone say New Jersey is the most overtaxed state in the nation, look past the rhetoric and consider the real numbers behind the statement." See, guys? I told you so.

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