Christie's plan raises retirement age, reworks formula to make pensions less lucrative, requires workers to pay more for health care
| Governor Christie proposes pension and health benefit reform |
TRENTON — Gov. Chris Christie Tuesday outlined a series of cuts to public workers’ pension and benefits he said are needed to keep the massive retirement system solvent, while unions said the plan was unfair and even illegal.
Christie’s bid to fix what one municipal official called a "ticking time bomb" would raise the retirement age, rework the formula to make pensions less lucrative and require workers to pay more for health care, among other changes. The reforms, which would also roll back an across-the-board 9 percent increase granted in 2001, would affect more than 780,000 current employees and retired workers in the pension systems — including judges, teachers, state workers and firefighters.
Christie also proposed requiring workers to pay 30 percent of their health care premiums and increase copays. He said this would prompt workers to pay more attention to the underlying costs and and save the system money. Public workers either currently put a percentage of their salary toward health care cost or will soon, based on a law passed in March.
At a town hall-style meeting in Camden County, Christie Tuesday said the state has to make its pension plans "more solvent and more honest," and argued the changes are necessary to protect pensions for workers before the system collapses.
"I’m saving their pension, that’s what I’m doing to the mid-career public employee," Christie said. "There may be some public employees right now who don’t like me because I’m prescribing tough medicine. But when the pension system gets well in a decade, I’m going to be their favorite governor. I’ll wait to get the thank-you notes then."
Stock-market losses, a growing public workforce and billions of skipped payments by the state have led to an estimated shortfall of $46 billion, which represents the difference between how much New Jersey has pledged to its public workers for retirement payments and how much it has saved in investments. The gap in health care costs is $67 billion.
Though Christie did not provide immediate savings estimates, he said the changes would reduce the gap for health care and pensions to $23 billion in 30 years. Without the changes, he said that would rise to $181 billion.
Senate President Steve Sweeney (D-Gloucester) has said he will not allow any reforms to pass until the state makes a pension payment. The state has frequently skipped billions in required contributions — $3.1 billion this year — to make room for other state budget priorities. Christie said he intends to make the payment, but warned Sweeney can’t "have it both ways" — demand the payment and then complain about other budget cuts.
Unions said they would sue if the proposals advanced through the Legislature.
"The governor’s proposals are illegal," said Hetty Rosenstein, state director for the Communications Workers of America.
"You don’t fix problems by throwing out red meat at a press conference and attacking the lowest-paid workers and the people with the most modest pension plan."
Bill Lavin, president of the state Firefighters Mutual Benevolent Association, said the proposals would "compromise the public safety ... "It’s a young man’s job, and to believe we can force people to work longer to get less benefits is wreckless," he said.
Gov. Chris Christie talks about health care during a town hall meeting at the Gloucester Township Senior/Community Center in Gloucester Township.The Attorney General’s office under former Gov. Jon Corzine warned a court could rule similar pension cuts unconstitutional. Christie said he is ready for a lawsuit.
"If they want to sue me, tell them to get in line," Christie said. "I’ve got plenty of lawyers to defend our positions."
Rosenstein said requiring state workers and teachers — but not police officers and firefighters — to increase the percentage of salary paid toward the pension funds would be discriminatory toward women and minorities.
That was also pointed out by a supporter of the plan, League of Municipalities President Bill Dressel. He called the pension system "a ticking time bomb" but said he hoped more would be done to cut into pensions for police officers and firefighters.
Pensions are calculated based on years worked and salary or average salary. Christie wants to raise the number of years used to calculate that average salary from three years to five for state workers and school employees, and one year to three years for police and firefighters.
Assembly Speaker Sheila Oliver (D-Essex) said making workers pay health care based on the cost of premiums would hurt lower paid workers.
Matt Friedman and Jessica Calefati contributed to this report.