TRENTON, N.J. (AP) — New Jersey’s Senate president is warning that government retirees could see a two-thirds reduction in their pensions in less than 10 years unless lawmakers can fix a $54 billion deficit in the retirement system.
In a meeting with reporters Thursday, Senate President Stephen Sweeney expressed new urgency in fixing the significantly underfunded pension and health insurance systems for government workers and retirees. He said changes that will cost workers more need to happen by June 30, the deadline for passing a state budget and the date the contract expires for 40,000 union state workers.
“We have a $100 billion deficit between pension and health care — it’s not acceptable,” said Sweeney, a South Jersey Democrat. “It’s not fair to the workers. The promises that were made are not going to be kept. How do we look someone in the eye who’s worked 30 or 35 years and in 2018, all of a sudden people’s pensions are cut by two-thirds and they can’t live anymore?”
Both Sweeney and Christie, a Republican, have proposed pension and health insurance reforms that they say are designed to save the systems. But Sweeney acknowledged Thursday that a majority of Senate Democrats don’t back his proposals and that his pension plan may not save enough to keep the system afloat.
“This is really serious — 2018 is the earliest we think the pensions will go broke, but they’re going broke before 2020,” he said. “That window is shrinking and that number is growing, and there’s got to be some drastic changes. My original bill, I don’t know if it’s enough.”
Sweeney’s and Christie’s pension proposals both raise the amount that workers would be required to contribute, but the amount would vary and be set annually under Sweeney’s plan and would be fixed at 8.5 percent under Christie’s proposal. Christie’s plan raises the retirement age from 62 to 65 for most workers, which Sweeney’s doesn’t. Christie has proposed rolling back a 9 percent raise in pension benefits granted 10 years ago, while Sweeney proposes that workers pay more for the enhanced benefit.
Sweeney has said pension reforms would include a requirement that the state pay its share into the system, which the unions support. The state has skipped or greatly reduced its annual pension payment for most of the past 20 years, including missing a $3 billion payment this year, which has contributed to the system’s deficit.
Their health benefits proposals also differ. Christie wants all workers to pay 30 percent of their health insurance costs immediately while Sweeney has proposed a sliding scale of 12 to 30 of the cost of the plan, based on income and phased in over seven years. The number of health care plans would increase under both proposals.
The Communications Workers of America put forth their own health care giveback proposal, which they say would save the state $240 million in the fourth and final year of a new contract.
Sweeney said pension and health benefits reforms need to happen either through labor negotiations or legislation. He said the proposals have been tied together to enhance their chances of passage.
“The people of New Jersey are looking for relief and they’re looking for reform, and I can tell you, it’s coming,” Sweeney said.
The CWA wants health care changes negotiated as part of the collective bargaining process. Christie has been pushing for legislation.
Sweeney acknowledged Thursday that he would need support from Senate Republicans if he hoped to get the measures approved. There’s no indication whether the Assembly would go along.
Copyright 2011 The Associated Press.