NJBIA is s opposing costly legislation that would undermine the 2007 public worker pension reforms.
The legislation, A-5160/S-3997, is being pushed through the lame duck Legislature and had been scheduled to be heard Thursday afternoon in two committees: The Assembly Appropriations Committee and the Senate Budget & Appropriations Committee.
“The pension reforms enacted under the Corzine administration and continued in the Christie Administration were made because New Jersey taxpayers who pay public workers’ salaries could not afford to provide platinum level retirement benefits,” said NJBIA Chief Government Affairs Officer Chris Emigholz.
“This legislation will potentially cost state and local taxpayers hundreds of millions of dollars that we currently do not have available in our state budget.”
The legislation currently removes the various membership tiers established in PERS and transfers all current non-retired PERS members to the most expensive Tier 1 set by the Division of Pensions and Benefits. A fiscal impact statement by the Office of Legislative Services (OLS) says this provision of the bill alone will cost state and local taxpayers an estimated $537.9 million annually, with local property taxpayers bearing nearly 70% of that cost, but NJBIA heard that the bill was going to be amended which would change the cost.
The bill also permits public employees currently enrolled in the Defined Contribution Retirement Program (DCRP) to opt into transferring to PERS. The DCRP is a 401K-style plan for newer workers and some part-time workers, such as bus drivers and classroom paraprofessionals, which does not provide retirement health benefits.
OLS did not calculate what the cost to taxpayers would be of transferring DCRP workers into PERS, but it would still have a cost to taxpayers, Emigholz said.
After the Senate committee meeting had started, it was announced that S-3997 may not be voted on as expected, which would be good news for taxpayers, Emigholz said.
“NJBIA opposes this bill because our state budget is not remotely close to being in a position to be able to roll back the prior cost-saving bipartisan pension reforms,” Emigholz said. “Additionally, the affordability issues in New Jersey that just dominated the statewide elections a few months ago demand that this poor legislation not move forward.
“We hope that this is a sign the Legislature realizes this bad bill only makes us less affordable,” he said.
Update: Late Thursday, the Assembly Appropriations Committee voted to release a committee substitute for A-1560.
