New Jersey Gov. Chris Christie last week signed his first bills into law, ushering in pension-reform initiatives that will help local governments and school districts with rising employee-benefit costs.
All state workers, including teachers, will pay at least 1.5% of their salary toward health care benefits.
Lawmakers expect that change will bring $314 million of savings next year for local governments, according to Assembly Speaker Sheila Oliver, D-Essex.
Christie signed the bills shortly after the General Assembly approved the measures Monday evening. The three bills received widespread support from both Democrats and Republicans.
New state and local employees will need to work full-time to be able to qualify for pension programs and health insurance benefits.
Sick-leave payouts at the local level will now match the state’s limit of $15,000 for its employees.
Public-sector workers that hold multiple jobs will have only one pension that is based on the employee’s highest salary.
New employee pension plans will be recalculated by dividing the number of years worked by 60 rather than 55. That change will reverse the 9% benefit enhancement enacted in 2001.
In addition, new police and fire employees’ pensions will be subject to a salary cap, with any salary above that limit calculated towards a 401K-type program.
Reining in salary and benefit costs would help cities and towns with their operating expenses and potentially reduce property tax hikes.
The Garden State has some of the highest property taxes in the country. The New Jersey League of Municipalities has expressed its support for pension reforms.
“Yesterday, the General Assembly and the governor took the needed first steps to provide property tax relief to our citizens,” NJLM executive director Bill Dressel said in a prepared statement. “This necessary reform is the first, but important, step to providing a more equitable system for both enrollees and taxpayers.”
In a separate issue, the Senate last week approved a bill that would require the state to make its entire yearly pension contribution by fiscal 2019, including immediate costs and a percentage of future obligations.
New Jersey would begin allocating larger pension contributions beginning in fiscal 2012 and increase them annually until they reach the full payment in fiscal 2019.
The measure now heads to the General Assembly for its consideration.