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NJ Governor cuts state employee benefits

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June 30, 2011

New Jersey

By David Godow

TRENTON, New Jersey:

Following on the heels of similar measures in Ohio, Michigan and Massachusetts, Governor of New Jersey Chris Christie signed legislation on Tuesday that would increase pension and health contributions paid by 500,000 state workers and prohibits collective bargaining over the issue for the next four years. According to Christie, the measure would save the state $132 billion over the next 30 years and help close the $110 billion long-term gap in the state's public employee retirement system.[1]

Under the bill, new state hires will see their retirement age bumped from 62 to 65 and will have to pay for health care in retirement. Even state workers currently collecting pensions will see cost-of-living adjustments halted until the budget situation improves. Employees making $60,000 could see their yearly costs for health insurance more than double for single coverage or triple for a family plan. Additionally, all state workers will have to contribute an additional 1 percent of their pay to pensions.[2]

New Jerseyans already face the highest state and local tax burden in the state -- 12.2% of income, according to the Tax Foundation, a Washington, D.C.-based think tank.[3] That simple fact may have eased the passage of Christie's proposal, which received support from the Republican minority as well as the state's Democratic leadership. Though a majority of Democrats in both houses opposed the plan, Assemblyman and Senate leaders were able to force the plan through.

Though Tuesday's signing may help to ameliorate the state's long-term budget problems, it won't make addressing Trenton's more immediate fiscal concerns any easier. Governor Christie and Senator Stephen Sweeney noted that they remained far apart on next fiscal year's budget. The Democrat-held state legislature passed a proposal on Wednesday, but Christie immediately rejected it because of a proposed tax increase on the state's highest earners. The fight over New Jersey's fiscal future will continue next week as the governor weighs his response.

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