Sweeney: No Pension Reform Unless NJ Pays Up
TRENTON, N.J. (AP) – An overhaul of the New Jersey pension system won’t fly without a guarantee from the governor that the state will begin paying its share, the Legislature’s top Democrat said.
Senate President Stephen Sweeney said he’ll soon announce major pension reforms that will hinge on Gov. Chris Christie agreeing to start paying into the system. Christie skipped a $3.1 billion payment this year, the latest in a series of missed or greatly reduced payments by governors of both parties over most of the past 20 years.
“I’m going to give him real reform, but he’s only going to get it with the payment,” Sweeney said during a recent interview. “We both want to reform the pensions. I also want to make it real. Making it real is when you fund it.”
New Jersey’s pension funds for government workers, teachers and police and firefighters are underfunded by $53.9 billion, up $8 billion from a year ago, according to recent figures released by the state Treasury Department.
Other states straining under the weight of pension obligations are capping benefits, directing new workers to 401(k) programs and barring part-time employers from enrolling in the system.
In New Jersey, pension experts have helped convince lawmakers that the system will run out of money unless changes are made that would affect current workers and those already retired. However, Sweeney, who has sometimes tangled with public worker unions, said he won’t insist on additional sacrifices from public-sector employees unless the state is prepared to meet its obligation to the work force.
“If he’s not going to make his payment, no matter what we do it’s not going to fix the pension,” Sweeney said. “You can’t not pay your portion especially when the workers continue to pay theirs.”
Sweeney was mum about other details of his proposed changes, including how much they could be expected to save. The changes would require approval from the Democratic-controlled Legislature.
Christie has said he would pay into the system in the coming year if revenues allow, but he’s also insisted that the system would be in the red even if the state had made all its payments. He has been urging the Legislature since taking office a year ago to overhaul the pension system by making benefits less generous.
Christie has proposed changes that include rolling back a 9 percent pension increase the Legislature granted a decade ago when the economy — and the pension system — were flush. He’s also proposed raising the retirement age to 65, from 62, and making all workers contribute 8.5 percent of their salaries to their pensions, a greater percentage than most do now.
The Legislature enacted some changes last March, which included requiring all beneficiaries to begin contributing 1.5 percent of their salaries toward their health care. Union leaders lost a law suit blocking the changes.
The state’s contribution to pensions could become an issue in next year’s budget, which the Republican governor will introduce next month and the Democratic Legislature will run on in November.
Christie signed a law last year that requires the state to pay in to the retirees’ system beginning with a one-seventh contribution totaling $512 million in June. The budget supersedes that statute, however. Lawmakers led by Sen. Tom Kean Jr. tried but failed last year to get the requirement written into the state Constitution.
Even Sweeney, who co-sponsored the legislation in the Senate, acknowledged that it’s unrealistic for the state to make its full contribution of more than $3 billion a year without a phase-in period.
(Copyright 2011 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)