Cut Pensions and Benefits, Merge Schools, New Tolls — Plan to Overhaul NJ
A working group organized by the Legislature has pitched a major overhaul of state and local government in New Jersey – different pensions for new workers, scaled-back health benefits, merging all school systems into K-12 districts, even high-occupancy toll lanes on interstates to pay for pensions.
Lawmakers say the sales pitch starts now and that action on some of the ideas will be taken.
“Some of them you’ve heard before. Some of them are new,” Sen. Paul Sarlo, D-Bergen, said of the 36 recommendations. “Some of them are practical, common sense things that should have been done or perhaps are being done already, we need to codify. And some will be much more difficult to get done.”
Sen. Steve Oroho, R-Sussex, said that while some of the ideas have been studied before, there’s a difference this time – the political will is there to actually change things.
“There is no option for inaction,” Oroho said.
The recommended changes include:
- Shift new state and local workers and those with less than five years of service out of the current pension system into a “sustainable hybrid system” structured closer to a 401(k).
- Reduce health coverage benefits for public workers and retirees from the current “platinum” level to “gold” – shifting more of the costs away from the government.
- Require all new retirees to pay the same percent of their health-care premiums that they were paying when working.
- Cap sick-leave payouts at $7,500, or whatever a person has already earned and base the payments on a person’s average career salary, not his or her salary at retirement.
- Merge all K-6 and K-8 school districts into K-12 regional districts.
- Establish countywide school districts in two counties as a pilot program.
- Move toward full state funding and administration of extraordinary special education.
- Require the merger of municipal courts with small caseloads.
- Authorize county governments to provide the full range of local police services to help municipalities lower their costs.
- Review exemptions from the sales tax and consider changes.
- Allow counties to start charging a 1 percent sales tax.
- Permit an income tax deduction for donations to New Jersey-based charities.
- Shift the focus of tax incentive programs to small businesses.
- Add major assets like the New Jersey Turnpike and Garden State Parkway to the state’s pension system, which would lower their unfunded liability and reduce required annual payments while guaranteeing the retirement system a revenue stream.
- Consider high-occupancy toll lanes on federal interstates, like those in Maryland and Virginia, or other interstate road tolls if those become permitted.
Senate President Steve Sweeney, D-Gloucester, said there’s not a chance that the state will be able to double its pension payment to $6.6 billion in four years, as required. He also acknowledged that not all the proposals in the report would be approved and indicated there are some he doesn't like.
“New Jersey is at the crossroads. In fact, we’re beyond the crossroads. We’re in trouble. And if we don’t start doing some things differently immediately, we’re not going to be able to make our obligations,” Sweeney said.
The New Jersey Education Association accused Sweeney of targeting middle-class public workers. It noted that the 25-member working group met in private for six months and included no public employee representatives.
“It’s unfortunate, but not surprising, that Sen. Sweeney’s hand-picked group came up with recommendations that reflect the approach he has taken throughout his decade as Senate president,” the NJEA’s officers said in a written statement. “The report glosses over the state’s failure to meet its obligations and get its fiscal house in order, and instead proposes making public employees pay more for reduced benefits.”
Sweeney said he knows unions want to protect their members but that change is needed to preserve pensions for current employees.
“We want to sit with the unions. We don’t want to have any kind of hostility here. We want to talk to them,” Sweeney said.
He said he isn’t sure how Murphy will react to the recommendations but was insistent that action be taken, no matter how much entities such as public-sector unions resist.
“Of course we’re going to have a fight. Any change that’s worth anything comes with a fight,” Sweeney said. “The easy stuff is done. It’s gone.”