NJBIA's Public Policy Forum: The Road to Recovery REGISTER

One of the biggest reasons New Jersey is such a high-tax state is the structural problems surrounding the state’s finances — namely state pensions, public-employee health benefits and interest on debt.

So NJBIA was encouraged when lawmakers took the politically courageous step of passing a bill that would have reduced the cost of health benefits for county college employees – who would still be receiving competitive benefits. Unfortunately, Gov. Phil Murphy vetoed the bill on Dec. 17.

“This veto is a setback for the kind of state fiscal reforms New Jersey desperately needs,” said NJBIA President and CEO Michele Siekerka.

“Legislative leaders showed vision and foresight in crafting these bipartisan reforms and a majority of legislators showed tremendous political courage to vote for them,” she said. “These are the kinds of actions that need to be taken to help improve New Jersey’s fiscal health.”

The legislation, S-2455, would have simply moved county college workers and retirees from the School Employees Health Benefits Plan (SEHBP) to membership in the State Health Benefits Plan (SHBP).

Senate President Stephen Sweeney, who sponsored the bill and has been championing the type of structural fiscal reforms for New Jersey, pointed out that the costs of public employee pensions and health benefits and the interest on the high amount of state debt are taking funds away from programs that could benefit people and businesses.

“It is a terrible irony when we have a Governor calling for free county college tuition at the same time that he refuses to reduce healthcare costs and produce savings that could be used in support of the colleges and their students,” Sweeney said.

In his veto message, Gov. Murphy contended that the bill was not needed because recent changes to the SEHBP were yielding millions of dollars in savings. He also agreed with the New Jersey Education Association’s position that changes proposed in the bill should be subject to collective bargaining.

Sweeney told reporters that while some savings had been realized through changes adopted in the SEHBP, his bill would have provided more substantial savings.

Earlier this year, Sweeney put together a group of economic and policy experts to tackle issues such as the state’s out-of-control health benefit costs and its notoriously underfunded pension system. The result, a report called “A Path to Progress,” laid out thoughtful fiscal reforms, many of which NJBIA supports.

While shifting employees from the school employees’ health benefits plan to the state health benefits plan would have saved taxpayers millions of dollars, it is a relatively modest proposal compared to the fixes New Jersey needs to make to get its finances back in balance.