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NJ governor pledges millionaires' tax veto
Newjerseynewsroom.com - By the numbers: N.J. pension and benefit changes
Star Ledger - Christie's treasurer blasts N.J. Dems, calls their $30.6B proposed budget 'unconstitutional,' 'irresponsible'
Star Ledger column - Moran: A right-wing reform? No, a taxpayer rescue
Daily Record - Assembly urged to hold up action on charter school bills
NJ governor pledges millionaires' tax veto
Newjerseynewsroom.com - By the numbers: N.J. pension and benefit changes
Star Ledger - Christie's treasurer blasts N.J. Dems, calls their $30.6B proposed budget 'unconstitutional,' 'irresponsible'
Star Ledger column - Moran: A right-wing reform? No, a taxpayer rescue
Daily Record - Assembly urged to hold up action on charter school bills
Star Ledger - Christie's treasurer blasts N.J. Dems, calls their $30.6B proposed budget 'unconstitutional,' 'irresponsible'
Published: Wednesday, June 29, 2011, 6:05 AM Updated: Wednesday, June 29, 2011, 8:16 AM
TRENTON — New Jersey Treasurer Andrew P. Sidamon-Eristoff last night told Democratic leaders their budget proposal is "unconstitutional" and warned them that if it remains unchanged the governor will use his "full range of constitutional remedies," according to a letter obtained by The Star-Ledger. The letter comes less than 24 hours before lawmakers are expected to vote on the Democrats' $30.6 billion budget proposal, roughly $1 billion higher than the plan Gov. Chris Christie offered. The treasurer said Democrats are using revenue estimates that are more than $300 million higher than those Christie certified last week, thus running afoul of the law. He also said Democrats "fabricated" higher revenue figures to boost this year’s ending surplus. "This budget is not just irresponsible, but ultimately creates a deficit that violates the state’s constitutional obligation to have a balanced budget," Sidamon-Eristoff wrote. Click here for Treasurer Sidamon-Eristoff's letter The letter provides a preview of how Christie plans to deal with the Democratic proposal and how he will defend his refusal of elements of the plan on a constitutional, rather than a policy, basis. Democrats responded Tuesday night that they are not obligated to use the governor’s revenue estimates, and they are holding out hope that he will adjust them upward when he considers their budget proposal. Democrats are relying on estimates provided by the nonpartisan Office of Legislative Services, which they say historically has a better track record than whoever is sitting in the governor’s office. "This ridiculous letter is the clearest sign yet that the Republicans are panicking over the prospect of opposing a responsible budget that protects middle-class property taxpayers and seniors, restores health care for women and creates jobs," Assembly Democratic spokesman Tom Hester said. "The governor should either practice his talk of bipartisan compromise and sign this budget or own up to his drastic cuts," Hester said. Democrats want to use the additional revenue to provide $1.1 billion in additional funding for schools, including roughly $500 million for the Abbott districts as required by the state Supreme Court. They also want to provide tax relief to seniors and working-class residents. The treasurer also criticized Democrats for overestimating cost savings from the health and pension overhaul. Christie initially targeted those savings at $323 million, but he now expects much less due to changes in the final legislation. Before they included it in their own budget, Democrats had called the governor’s savings estimates inflated. Sidamon-Eristoff warned Democrats that Christie would be forced to rectify the situation if the budget as proposed is approved, but he did not provide specific actions the governor would take. "If they are not resolved, the Legislature would have failed in its unique constitutional obligation to enact a balanced budget, in which event the governor would have no choice but to avail himself to the full range of constitutional remedies available to him," Sidamon-Eristoff wrote. Christie has the power to veto any line item out of the budget, or trim spending. Democrats do not hold a veto-proof majority. Earlier Tuesday, Republican lawmakers accused Democrats of misleading the public with their budget "They are trying to get their street cred back," said state Sen. Kevin O’Toole (R-Essex), referring to the recent passage of health and benefit reforms that pitted unions against Democratic leaders. "At the end of the day, their plan is not sustainable and I can’t see this governor signing a budget that takes us down a path that he’s worked so hard to avoid." Democratic lawmakers are united behind their budget, making it likely that it will be approved Wednesday by both legislative chambers along partisan lines and sent to the governor’s desk. NJ governor pledges millionaires' tax veto |
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Posted 6/28/2011 8:20 PM ET |
TRENTON, N.J. (AP) — Gov. Chris Christie says a millionaires' tax will be dead on arrival if it reaches his desk.
Democrats are expected to approve a bill Wednesday that would tax the state's 16,000 or so wealthiest income tax filers at 10.75 percent for two years. They want to use most of the revenue to boost aid to suburban schools.
Christie called the surcharge a "jobs killer" and said there's no chance he'll sign it.
Appearing on Millennium Radio's "Ask the Governor" program Tuesday, the Republican governor says the tax would make New Jersey uncompetitive with neighboring states that have lower income tax rates.
He said New York is about to drop its top rate to 7 percent while in Pennsylvania the rate is 3 percent.
Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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Posted 6/28/2011 8:20 PM ET |
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Newjerseynewsroom.com - By the numbers: N.J. pension and benefit changes
Tuesday, 28 June 2011 15:54
Governor’s office touts reform plan
Here is how the governor’s office describes the new law:
The Pension Reform Plan:
The reforms will ensure long-term solvency, while slowing the rapid growth of government costs, spending and taxes that have overwhelmed taxpayers.
With reform, future retirees are protected and New Jerseyans provided with over $120 billion in taxpayer savings through 2041.
Increasing the Funding Ratio of the Pension System to 88 percent.
These changes protect the pension system for retirees, increasing the funded ratio of the combined state and local systems from the current 62 percent to more than 88 percent over the next 30 years. By 2041, this will reduce total pension underfunding to $37 billion. Without these changes, the unfunded liability across the pension systems would have climbed to $183 billion, resulting in a major impact on state and local budgets.
Providing New Jerseyans Over $120 Billion in Taxpayer Savings by 2041
· This comprehensive set of changes means critical savings for state and local governments and real property tax relief for New Jerseyans.
· $79 billion in State Contribution Savings: Over the next 30 years, the state pension contribution will be $148 billion, a projected savings of nearly $80 billion. Without change, the state is projected to contribute $227 billion over the same period.
· $43 billion in Local Government Contribution Savings: Over the next 30 years, local government pension contributions will be $70 billion, a projected savings of nearly $43 billion. Without change, local governments are projected to contribute $113 billion over the same period.
RELATED:
Christie signs controversial bill to raise health and pension costs for 500K public workers
Changes for All New Public Employee Retirement System (PERS) and Teachers Pension and Annuity Fund (TPAF) Employees:
Updating the Formula for Retirement Eligibility:
Establishing the normal and early retirement age at 65 years.
Adjusting the early retirement penalty to 3 percent for each year.
Increasing eligibility for early retirement to 30 years of service.
Changes for All New Police and Fire Retirement System (PFRS) Employees:
Updating the Formula for “Special Retirement” Eligibility:
Changes eligibility for special retirement from 65 percent with 25 years of service to 65 percent with 30 years and 60 percent with 25 years.
Changes for All Active Employees (Judicial Retirement System (JRS), PERS, TPAF, PFRS and SPRS):
Employee Contribution Rate:
Current
Reform Legislation
PERS/TPAF 5.5% 6.5% (+1 additional point phased-in over 7 years to a 7.5% total)
PFRS 8.5% 10.0%
SPRS 7.5% 9.0%
JRS 3.0% 12.0% (increase phased-in over 7 years)
Changes for All Current and Future Retirees:
Eliminating Automatic Annual Payment Increases: Eliminates all statutory Cost of Living Adjustments (COLAs).
A New Paradigm for Pension Plan Design:
The legislation creates a new Plan Design Committee for each pension plan. The Committees will have new authority to change important plan design features --- such as retirement ages, employee contribution levels, and future cost-of-living adjustments (COLA) --- within a financially prudent framework that mandates an ongoing, stable level of funding for each system.
A “Target Fund Ratio” (TFR) will define the boards’ ability to make plan design changes. The TFR is a target ratio of a fund’s actuarial value of assets (AVA) to that fund’s actuarially determined liabilities. In general, only funds that are at or above the TFR will have flexibility to make plan design changes.
A “Target Fund Ratio” (TFR) of 75 percent is established as of the legislation’s effective date, increasing to 80 percent over seven years.
Only funds meeting or exceeding TFR will be eligible to make plan design changes. Funds below TFR may not make changes.
Funds above the TFR but below 80 percent (during the seven-year phase-in period) may make only those changes that do not reduce their funded ratio upon implementation or below the TFR at any time within the succeeding thirty years.
Plans above 80 percent may not make changes that bring their funded ratio below 80 percent upon implementation or at any time within the succeeding thirty years.
In general, pension funds are considered to be adequately funded if their AVA funded ratio is at or above 80 percent (the federal standard for “at-risk” funds).
At the end of fiscal 2010, the State’s plans’ combined AVA funded level was just 56 percent.
The State Investment Council will expand from 13 to 16 members and include more direct public employee stakeholder input.
Changes to Reflect More Realistic and Financially Sound Principles:
Amortization methodology is changed from a percentage of pay schedule (which defers the retirement of any unfunded liability) to a level dollar amount each year in order to retire part of the system’s unfunded liability each year and earlier than the previous methodology.
Amortization methodology is changed from a 30 year open period (which retires less of the unfunded liability each year and results in a lower funded ratio) to a maximum open period of 20 years (phased-in over 19 years).
The Health Benefit Reform Plan: Transforming the System to Create Choice and Lower Costs for New Jersey Taxpayers
The changes will modernize the state employee health benefits plans by bringing the system more in line with the private sector and federal government. Today, New Jersey’s unfunded other post-employment Benefits (OPEB) liability for providing health benefits is $71.4 billion. These changes will substantially lower health benefits costs for local governments, including those at the county, school and municipal levels, representing another major step forward in providing real, long-term property tax relief. New Jersey spends $4.4 billion annually on public employees and retiree health care costs, with the cost of health benefits making up 9 percent of the state’s budget today.
The changes will result in $3.1 billion savings for taxpayers over the next 10 years alone, while increasing choice for employees and ensuring affordability.
Cost Sharing Reforms for Active Employees:
All public employees will pay a statutorily-established percent of premium (“premium share”), instead of a percentage of salary, for all State Health Benefits Plan (SHBP)/School Employee Health Benefits Plan (SEHBP) and non-SHBP/SEHBP participating plans.
The employee’s share will phase in over four years.
The premium share requirement will not affect employees until their current contract expires.
Premium shares will vary by salary level and coverage, but may not be less than 1.5 percent of salary (the current standard).
Current employees (excepting those with 20 or more years of service as of the effective date) will pay a premium share in retirement based on the date they reach 25 years of service. If they reach 25 years after the effective date, the employee will pay the premium share in effect based on the date s/he reaches 25 years (i.e., if the employee reaches 25 years in year two of the four year phase-in, then the employee, in retirement, will pay the premium share in effect in year two of the phase-in.)
Changes for Current Retirees:
There will be no change with respect to premium cost sharing for current retirees.
Changes for Local and Education Employees Outside SHBP/SEHBP:
If the employer is not participating in the SHBP/SEHBP, then the employer and employee could agree to a different premium share and out-of-pocket cost arrangement that results in the same level of savings as the statutory premium share formula and plan design changes in the SHBP/SEHBP.
Savings would have to be certified by Division of Local Government Services and Division of Pensions and Benefits and the local Financial Officer in each local entity.
All local employers are required to offer a Section 125 “cafeteria plan” to employees.
Health Plan Design Reforms
Joint Employer and Employee Plan Design Committees:
For both SHBP and SEHBP, a state-level joint employee-employer Plan Design Committee is established. The employer and employees are equally represented.
Committee Role in Plan Design:
The committees are responsible for providing plans with at least three levels of coverage, featuring varying levels out-of-pocket costs. The committees have sole discretion to set the amounts for maximums, co-pays, deductibles, and other such participant costs for each plan.
The committees must also provide for a high deductible health plan.
All current statutory requirements with respect to plan design will be repealed.
— TOM HESTER SR., NEWJERSEYNEWSROOM.COM
Star Ledger column - Moran: A right-wing reform? No, a taxpayer rescue
Published: Wednesday, June 29, 2011, 5:30 AM
By Tom Moran/ The Star-LedgerThe Star-Ledger
But he’s bothered these days, especially yesterday when Gov. Chris Christie and Democratic leaders shook hands over pension and health reform.
It’s not the money stuff that really grates on Wowkanech. It’s the fact that this agreement suspends the right to bargain over health benefits. Instead, those terms are now set by law.
To the unions, and to their allies in the Democratic Party, collective bargaining rights are sacred — and pinching them like this is unforgivable.
“It is a terrible moment for anyone who cares about democracy and workers’ rights,” Wowkanech said.
That is how most Democrats feel. Sen. Barbara Buono (D-Middlesex) and Assemblyman Joseph Cryan (D-Union) are both banging this drum hard, rallying the more liberal members of their caucuses against the leadership.
For Senate President Stephen Sweeney (D-Gloucester), this issue could be a career killer. He wants to run for governor someday, perhaps for U.S. Senate, but the public worker unions are determined to get revenge. And they probably have the power to derail him in a Democratic primary.
So let’s look at collective bargaining, starting with the good stuff. Bargaining is what gave us an eight-hour workday, weekends off, basic workplace safety and wages that helped build the middle class in America. We owe all that to the unions, and they did it at the bargaining table.
But those gains were made by private sector unions. And the public sector is different in key ways.
For one, public worker unions have political power and can hand pick the people on the other side of the bargaining table. With money and volunteers, they can dominate local politics, especially in low-turnout elections.
This happens all over New Jersey. In Edison, for example, the police union is the big dog in town and the result is an average cop salary of more than $100,000.
Another big difference: Governments don’t go bankrupt, or move to Mexico. When auto workers negotiate with GM, they know that if they get greedy, they could lose it all. The cops in Edison have no such fears. So why not press for that deal that gives you and your family free health care for life?
Here’s one final difference: In the public sector, the people who pay the bills are the common folk, not the fat cats. The class-warfare language of the private labor movement doesn’t fit here.
Ask yourself this: Is it progressive to ask a senior on a fixed income to pay higher property taxes so that a cop or teacher can avoid paying a reasonable share of their health costs?
Today, the public sector is the last holdout for unions. But that’s something new. It wasn’t until 1959 that Wisconsin became the first state to allow public worker unions to bargain collectively. Until then, even Democratic heroes like Franklin Roosevelt thought the idea was nuts.
Fast forward to present-day New Jersey. If we are to believe people like Wowkanech, Buono and Cryan, this reform is a radical right-wing departure.
Really? We already set pension benefits by law, without bargaining, and no one complains about that. So why is it a threat to democracy if we handle health care the same way?
This reform doesn’t actually kill bargaining over health care; it suspends that right for four years. It pushes the “reset” button so that these costs can be contained.
Yes, it is a heavy hand, and a last resort after watching teachers refuse a pay freeze, and watching cops in Newark and Camden refuse to give up benefits even in the face of mass layoffs. Wowkanech may love that system, but the mayors and school boards, not so much.
For Wowkanech, the right to bargain is a sacred thing. And given labor’s heroic role in building the middle class, that’s understandable. He’s a labor guy and he has reason to be proud. And in fairness, the unions didn’t create this problem on their own. It was the politicians who signed all those contracts and set the rules.
But this reform is the only way out. It will save an average of more than $4 billion a year. And in the end, public workers will still have pension and health benefits that are more generous than those in the private sector.
That is a good and fair outcome. And it would not have happened at the bargaining table.
Tom Moran may be reached at tmoran@starledger.com or (973) 392-5728. Share your views at njvoices.com.
Daily Record - Assembly urged to hold up action on charter school bills
7:20 PM, Jun. 28, 2011 |
TRENTON — Charter school advocates say a four-bill package under consideration in the state Assembly should be pulled from votes because the bills undermine growth of quality charters.
The bills have been listed for action at today’s Assembly session. An Assembly staff member said Speaker Sheila Oliver, D-Essex, has not indicated that those plans will change.
One of the measures requires a referendum for a charter school startup, something that will “discourage applicants” and would “also politicize the process,” said Carlos Perez, president and chief executive officer of the New Jersey Charter Schools Association.
Perez along with teachers and representatives of charter schools — including Princeton Charter School and Trenton charters Foundation Academy and Paul Robeson — held a press conference Tuesday to urge Oliver to hold the bills.
The other bills aim to allow in some cases private schools to convert to charters and go under state oversight, to allow colleges to authorize new charters, and to keep track of charter performance and finances.
A charter school is a public school — with public funding — that operates independently of the local school district’s board of education.
Not all of the changes contained in the bills are bad, Perez said, but his association is collaborating with Gov. Chris Christie’s administration, Department of Education officials and key lawmakers “on the drafting of comprehensive legislation” to update New Jersey’s 15-year-old charter school law, Perez said.
The current Assembly bills represent a “piecemeal” approach with several questionable policies, including steering 1 percent of the public per-pupil funding toward costs incurred by charter school authorizers. Perez said that diminishes money for classroom costs.
Bob Jordan 609-984-4343, bjordan@njpressmedia.com
