New Jersey lawmakers are scheduled to vote today on a pension reform bill that could help decrease pension abuses and the state’s estimated $18 billion unfunded pension liability, a needed savings if the state is to follow through with implementing a property tax credit to its residents.
The accompanying bills for both the Senate and the General Assembly are part of the state’s overall agenda for creating sustainable property tax relief. Residents pay an average annual property tax of $6,000, roughly double the national average, said Assembly spokesman Derek Roseman.
While the state hopes to ease residents and their property tax burden, lawmakers are also juggling the demands of not only the $18 billion pension liability, but also an unfunded other post employee benefits liability that is estimated to exceed $20 billion, according to Roseman.
For the state to sustain a decrease in its property tax revenue, lawmakers are looking at spending cuts to offset the difference and lesson pension and OPEB costs.
“I think we can all agree that it is absolutely certain that maximizing savings in wages, health benefits, and pension benefits must be an essential part of any financing package for property tax relief,” Gov. Jon Corzine wrote in a Dec. 10 letter to Senate President Richard Codey and Assembly Speaker Joseph Roberts, urging them to move forward with the proposed pension reforms.
Last month, joint committees from both the Senate and the Assembly released 98 recommendations for creating sustainable property tax relief. On Monday, the lawmakers moved eight bills through the Legislature, affecting 19 recommendations while officials are anticipating today’s sessions to work on three more bills that will bring the Legislature closer to finalizing the original 98 recommendations.
“At the end of the day, we should be halfway there,” Assembly spokesman Joe Donnelly said.
The bills hit a snag last week when Corzine expressed his wish to address pension changes for rank-and-file employees through the collective bargaining process while bill S-8 in the Senate and bill A-16 in the Assembly would focus on pension benefits for elected and appointed officials.
In the letter, Corzine wrote that his administration has been negotiating with union leaders to address pension and health care benefits for future state employees. Currently, employees’ pensions are based on a percentage of their final three years of employment, in which sometimes workers receive a sizable increase in their salary before retiring, according to Jim Griffin, a spokesman for Senate Democrats. The new plan would assess the last five years of an employee’s salary.
“It’s much more reflective of the actual salary someone earned over their career,” he said.
Griffin said if Corzine is unable to bring about pension reforms for union employees through his collective bargaining negotiations, the Legislature will “plan on picking it up at a later date.”
But while the Legislature is putting forth a “concerted effort” to pass all the bills related to property tax relief, the state’s Jan. 1 deadline to enact a 20% decrease in property taxes is rapidly approaching.
“The goal here is to get these bills right, and if that takes a little more time, then that will be time well spent,” Donnelly said.
