TRENTON — New Jersey's pension crisis
will get worse in the next several years,
even if state officials add $500 million to
the pension systems as planned, a state
actuary testified last week.
Actuary Janet H. Cranna also said the state
will be forced to continue selling assets,
such as stocks and bonds, in order to pay
pensioners, thereby weakening the system
But the pension crisis would not have been
nearly as bad had the state government
contributed to the system all along, Cranna
said, instead of largely skipping payments
for 10 years.
The testimony, which came as the state
released its annual valuation reports for the
pension funds, further clarified not only
how badly underfunded the state's pension
system is, but that billions of dollars in
state contributions are needed to turn
around the fortunes for the funds for
800,000 current or retired government
Yet, contributing billions of dollars to pensions
would put further pressure on the
state budget in a year in which the state
already faces a $10.5 billion deficit and
officials could be ordered by the state
Supreme Court to provide more money to
educate children from low-income families.
Eileen Norcross, a senior researcher at
George Mason University in Virginia, who
has written about New Jersey's pensions,
said state officials are only beginning to
grapple with the enormity of the system's
"They can't get around the fact that they
have to increase the amount they pay into
the system," Norcross said in an interview.
"These are budget choices. But they are
benefits for vested workers that they have
Norcross said some experts have
estimated New Jersey will have to
contribute $10 billion a year toward its
pensions by 2020.
The valuation reports, and the comments by
the actuary, prompted an exchange
between officials that rose to a near
shouting match as they blamed various
interest groups for the system's woes.
Some of the overall numbers — such as the
fact that the state system faces a $53.8
billion unfunded bill for pensions to paid
over the next 30 years — had been
released in late December. That does not
even factor in some $56 billion in long-
term retiree health care costs, for which
virtually no money has been set aside.
Cranna's pointed comments came while
she presented reports on the systems that
oversee pensions for local police and
firefighters, as well as most rank-and-file
local and state government workers in the
Cranna's firm, Buck Associates, was not
hired to review the teachers' system. But
since that system faces the largest
unfunded liability, at $24.5 billion, her
comments would apply just the same.
"The state is in a negative cash-flow
position," Cranna said. "It would be prudent
to start making (the full) contributions. At
these ratios, the system is not funded well
Gov. Chris Christie has proposed broad
changes for the pension system. He wants
employees to work longer before they
retire, roll back a 9 percent boost given in
2001, and require that some contribute
more money toward their pensions. Last year,
the state passed a series of
reforms for new employees. Those reforms
would not have any effect on the pension
system's current condition, Cranna said.
Another law would require the state to
catch up to its needed pension contribution
in seven years. In the budget to be
adopted by July, that would amount to a
little more than $500 million, or one-
seventh of the $3.5 billion necessary if the
system were to be considered fully funded
for the year.
Christie, a Republican, has said he may not
even want to make that one-seventh
payment in the upcoming budget. State
Senate President Stephen M. Sweeney, a
Democrat, has insisted on that payment in
order for pension reforms to be passed.
But Cranna said that approach — taking
seven years to catch up to full needed
contributions — will only put the system
The pension system is still factoring in losses in
the stock market from the
financial crisis in 2008 and 2009, Cranna
added. Meanwhile, more state workers are
retiring, causing further stress on the
If the state had never stopped making its
pension contributions, the pension covering
local police officers would have another $3
billion and 83 percent of the money it
needs, Cranna said. That's a level of
funding that experts say is considered safe
The pension fund that pays for most rank-
and-file state workers would have 60
percent of the money it needs if the state
had continued to make contributions, well
up from the 42 percent it has now, Cranna
Similarly, the pension funds for most rank-
and-file local government workers would h
ave $2.2 billion and also be better
funded, Cranna added.
State worker Anthony F. Miskowski stood
up and told the trustees for the police and
fire fund that they need to tell the state's
leaders that they must do everything
possible to shore up pensions.
"It's your responsibility," Miskowski said.
"Sell the Statehouse, and put the money in
the pension fund."
Board Chairman John G. Sierchio
responded by telling Miskowski that such a
message is hard to sell to political leaders.
"Actuary reports don't get people elected,"
Miskowski said. "I think everyone agrees
with you. It's been said before."
Then, L. Mason Neely, chief financial officer
for East Brunswick, told Sierchio, a
representative of the New Jersey
Policeman's Benevolent Association, that
the unions were partly to blame for the
The unions, including the PBA, Neely said,
had in previous years endorsed the idea of
skipping pension payments so that there
would be more money for state aid and
Sierchio shot back quickly.
"I didn't hear your mayor going to the
Senate and Assembly saying, "Don't do this,
we want to pay,' " Sierchio said, his voice
"You're wrong," interjected Neely, a
longtime pension watchdog. "I stood there
and said it."
If Chris Christie is determined to wring a "YouTube moment" out of his every public appearance -- and it looks like he is indeed determined to do this -- it's going to be a long couple of years in New Jersey. The editorial board of the Newark Star-Ledger sounds positively exhausted with the governor already, because he staged yet another "confrontation" with a "rude questioner" -- that is to say, he yelled insults at a constituent with the temerity to disagree with him.
"It doesn’t matter who you are," the paper writes. "If you disagree with him, Christie will try to humiliate you publicly."
But some people find this totally delightful, because Chris Christie is basically an amusing comic television show character, like Charlie Sheen or Pat Buchanan. Whether it helps Christie politically depends on whether New Jersey residents find it funny or get bored with it. But Christie will continue doing it, because it's a major part of his "brand."
In lieu of class solidarity, which is a privilege only afforded to the wealthy these days, American politics are mostly about tribal self-identification. Most Republicans get this, and that's why being a shouty asshole doesn't hurt Christie. Democrats -- with a couple of exceptions, like Anthony Weiner -- are not so good at this, which is why MSNBC's liberal hosts whine about how Obama needs to "get tough" all the time without ever explaining how that would help him achieve policy goals and not just make them feel like they're backing a winner.
Alex Pareene writes about politics for Salon. Email him at firstname.lastname@example.org and follow him on Twitter @pareene More: Alex Pareene
Published: Tuesday, December 07, 2010, 6:00 AM Updated: Tuesday, December 07, 2010, 7:46 AM
Star-Ledger Editorial Board
Aristide Economopoulos/The Star-Ledger Keith Chaudruc, left, of Madison, tries to get a word in (but he can't) as Gov. Chris Christie berates him at a town hall meeting in Parsippany on Friday.
Two years ago, when Chris Christie announced he was running for governor, he dismissed questions about his days as the Godzilla freeholder — when he breathed fire on almost every issue, insulted Morris County colleagues and needlessly stomped on countless toes. Tossed out after one term, Christie assured us he had learned his lesson. He was a different man.
“Who wouldn’t be?” he said. “If you’re not a different person 12 years later than when I began my last political campaign, you’ve got problems.” He added: “I’m more mature.”
Nearly a year after he was elected, we wonder: Where’s the maturity?
The latest display of contempt for anyone who disagrees with him was on display at a town hall meeting Friday in Parsippany.
Keith Chaudruc, of Madison, asked the governor how he could sign off on a tax cut for the rich while lunch-pail stiffs were hit with painful increases like transit fare hikes. After some give and take, Christie invited Chaudruc to the stage for “a conversation.”
Chaudruc, reluctant to be part of another Christie YouTube moment, was escorted to the stage by a state trooper. Chaudruc never got another word in. Twice Chaudruc’s size, Christie crowded his personal space, raised his voice and lectured him on economics with a wagging finger. Each time Chaudruc tried to make a point, Christie cut him off.
When Christie finished, Chaudruc motioned for the microphone. This was, after all, a “conversation.” Christie shooed him away and a trooper herded Chaudruc off stage.
The clip appears on YouTube under the title “Christie rips apart rude questioner,” a headline written, no doubt, by a Christie disciple.
By bullying a citizen, hogging the microphone and condescendingly dismissing him, Christie was the rude one. But it’s nothing new.
Christie has turned state politics into one never-ending yo’ mama joke. It doesn’t matter who you are — school superintendent, teacher, student, U.S. senator, state Assembly leader, former education commissioner or just a regular guy trying to have a conversation: If you disagree with him, Christie will try to humiliate you publicly.
Some find Christie entertaining, but his combativeness is counterproductive and breeds the kind of hate speech that plaques the nation.
New Jersey Democrats offer compromise on salary cap, but Governor Christie rejects it
Democrats yesterday overcame intense opposition within their own ranks and made a historic compromise to contain the cost of public employees.
This is a big deal. The Democrats agreed to a 2 percent cap on salary increases for police and firefighters in arbitration awards, a measure that will help avert massive layoffs as towns adjust to the 2 percent cap on property taxes. In the governor’s so-called tool box of reforms, this is the big hammer.
Public-employee unions hate this plan because it limits what they can gain at the bargaining table. But that bargaining has helped to create the mess we’re in today.
It’s allowed cops to retire with trunkloads of cash for unused sick time. It’s allowed early retirements, free lifetime health benefits and big raises, even when most taxpayers are coping with pay freezes. The salary cap is a needed corrective.
So how did Gov. Chris Christie react? By snarling, mostly. Instead of shaking the hand that Democrats extended, he slapped it away.
He even accused Assembly Speaker Sheila Oliver of lying when she claimed she had tried to arrange a meeting to discuss the issue. As it turns out, she was right. He owes her an apology.
Yes, the Democrats softened the governor’s plan around the edges. But each of their changes are reasonable.
They would exempt health and pension benefits from the cap, just as those costs are exempted in the property tax cap the governor signed last summer. Without that, rising health costs could force public employees to take pay cuts forever, a position that’s simply not reasonable.
Last summer, the governor’s office defended those exemptions by saying his office could contain pension and health costs with reforms from Trenton. That remains true today.
Democrats also would sunset the salary cap at three years to see how it’s working, and average the increases over the life of the contract. They would exempt police uniform allowances and continuing education from the cap.
If the governor wants reform, this solid proposal offers him a chance to be a statesman and strike a deal, as he did last summer on property taxes. The danger is that he will pick a fight instead, so he can have an election issue next year. We don’t need an endless stream of YouTube moments, with the governor starring as the tough guy from Jersey.
We need reform. And the Democrats just gave the governor a chance to seize it.
TRENTON — Democratic legislative leaders today proposed a 2 percent cap on raises police officers and firefighters can get from arbitrators, a change that would expire after three years and not cover costs for health benefits.
One month after announcing a similar breakthrough, only to see it wither after lacking support among Assembly Democrats, the legislative leaders said they intend to send the arbitration bill to Gov. Chris Christie on Dec. 13.
"I don't think anyone today, any mayor in the state, would dream that we could ever possibly have gotten as far as we've gotten," said Senate President Stephen M. Sweeney, D-Gloucester. "This is light years away, it's revolutionary, the changes to binding arbitration."
Arbitration and civil-service reforms are the two biggest proposals in the "tool kit' Christie and mayors have been pushing lawmakers to adopt, saying it would help local governments control costs and meet a new 2 percent property tax cap.
Christie said he'd be willing to negotiate with lawmakers over the proposal's details in private but blasted today's announcement for lacking specificity.
"This proposal is probably the same kind of cap that the Democrats passed when Jon Corzine was here, full of holes like a piece of Swiss cheese that will allow the special interests to continue to get more and more money out of the taxpayers," Christie said.
Christie said he'd conditionally veto "watered-down relief" that didn't meet his goals. His version of the plan doesn't expire after three years and includes costs for things such as health benefits within the cap, he said.
"The tool kit has to happen. Not the watered-down tool kit has to happen. Not the tool kit written by special interests has to happen. The tool kit, which was my tool kit, has to happen. They promised. They better deliver," Christie said.
Sweeney said health benefits and pension costs aren't included under the 2 percent property tax cap that takes effect Jan. 1 and therefore shouldn't be in the arbitration cap.
"That's not the same cap that we put on the towns. When we put the cap on the towns, we took health and pension costs out. So why would we impose them in on this cap? There was an issue of fairness," Sweeney said.
A summary of the bill says it would bar arbitrators from awarding contracts where the average salary increase exceeds 2 percent. But a three-year contract would be allowed to award raises of 0 percent, 1 percent and 4 percent, which wouldn't have been permitted under the original Republican plan. The cap would cover longevity, length-of-service and other salary increments.
Assemblyman Declan O'Scanlon Jr., R-Monmouth, said the Democrats' proposal wouldn't fix the system because it would sunset in three years. He predicted labor contracts expiring a year or two after such a cap takes effect would be made shorter so they'd expire just as the cap did.
"Their reform is not real reform at all. It's merely a very brief 2 percent salary cap. It's not real arbitration reform. It's a disgraceful skirting of the issue, quite frankly," O'Scanlon said. "Either they are very happy panderers, or they don't understand the policy."
Public-safety unions were consulted as the proposal was developed and said they're supportive.
Bill Lavin, president of the New Jersey State Firemen's Mutual Benevolent Association, called the proposal "a fair compromise...that's not certainly a bill we love to any degree." He said an arbitration cap can't cover health-care.
"That would guarantee a continual reduction in our salary, versus an opportunity to actually get a raise. That's a huge difference," Lavin said. "An all-inclusive cap of all expenses reduces our salary on a continual basis, and we think that's unfair."
Christie blasted Democrats for refusing to share their proposal with him in advance of releasing it publicly, but Democrats insisted they tried to arrange to meet with him Monday.
"The Senate president and I attempted to meet with the governor yesterday, but he had a very packed-in schedule," said Assembly Speaker Sheila Y. Oliver, D-Essex. "Because we did want to describe for the governor what we were able to accomplish. I think this bill represents all of the elements that Gov. Christie had concerns with."
Christie said Oliver was "'not telling the truth" about asking for a meeting.
"Lie. Never came down here. Never tried to speak to me," Christie said. "I got here about 11 o'clock yesterday morning, 11:30, after my Hackettstown event, and was here until 6:45. The speaker never came down here. She never asked for a meeting. Untrue."
The executive director of the Assembly Democrats' office, Bill Caruso, showed reporters e-mails dated Monday addressed to Christie's deputy chief counsel, Kevin O'Dowd, requesting a meeting. Caruso said those went unanswered.
Many politicians, local and state, want everyone to believe that binding arbitration is the reason local property taxes are high, when this simply is not true. Not daunted by the truth, the Governor and his allies are pushing for changes to binding arbitration that will reduce public safety, that will end innovative and cooperative approaches and will not save money nor preserve public safety and it certainly will not reduce your property taxes,
The truth is that arbitration is rarely used in the firefighter world as approximately 10% of the firefighter contracts over the last five years have been arbitrated and not negotiated. The truth is that binding arbitration exists because firefighters are not permitted by law to strike. When management and the bargaining group cannot agree on a contract, they must resort to binding arbitration, which is expensive for both management and labor. If these changes were instituted, more contracts would end in arbitration. This would increase the cost to local taxpayers not decrease it.
The push for these changes is a way to change the subject when the unpleasant truth is that the Governor is balancing the State’s budget on the backs of local property taxpayers by reducing aid to municipalities and school districts by more than $1.2 billion dollars in the current budget year. These cuts, and not arbitration, will raise your taxes and reduce your safety and quality of life.
We see the effects already. Layoffs of firefighters are already occurring around the state and most recently 30 firefighters were laid off in Atlantic City. There are threatened cuts in many departments, like Camden and Newark, that will mean firefighters cannot get to fires as quickly as needed and do not have the resources to fight them. Small fires can get out of control very quickly, costing lives and harming the State’s economy. Fiscally, we are seeing tax increases in many towns because they cannot balance their budgets when Trenton is taking back promised aid.
To divert attention, the Governor claims the problem is with arbitration and wants the law to mandate a 2% hard cap. This makes no sense when he (the Governor) has not dealt with health care costs, fuel cost and any other cost that a municipality has no control over. There is no benefit to taxpayers because taxes will still increase to cover these increased costs. Instituting a hard cap will no doubt increase costs because there will be no incentive to cooperate or work together on any local level and that means drawn out disputes and arbitrations with substantial costs for all.
We have been working with many towns to get federal funds and grants to retain firefighters, rehire firefighters through Federal SAFER grants and for firefighting equipment through Federal FIRE Act grants. In many areas, firefighters have worked together with municipal officials to improve fire fighting and manage costs, but that truth is lost when people pursue an agenda of blaming others and do not tell the truth to the public.
These efforts by the Governor and his allies are part of a political agenda where attacking the men and women who fight fires and rescue people, who protect the public and who teach your children are more important than governing. The Governor is misleading the public for his own agenda of trying to break the unions, and change the subject from the costs of balancing the State’s budget by cutting aid to cities and towns and squandering opportunities for millions in grant funds.
That is the truth and it has nothing to do with arbitration.
The PFANJ represents 3,300 fire fighters and paramedics in New Jersey. It is the state association in NJ for the IAFF, headquartered in Washington, which represents more than 297,000 full-time professional fire fighters and paramedics. The IAFF is the leading advocate in North America for the health and safety of first responders. More information is available at www.iaff.org
Wondering why New Jersey isn't finishing its much-needed commuter tunnel to New York? Easy, says David Brooks. Blame public employees, their pensions and their pay. "States across the nation will be paralyzed for the rest of our lives because they face unfunded pension obligations," he writes.
State pension systems are a problem. But they're not the problem right now. And they're certainly not what's standing between New Jersey and its tunnel. After all, Christie didn't fund the pension system this year. He simply skipped the $3.1 billion payment, saying he wouldn’t add money to a "broken" system. If I didn't buy lunch today, you can hardly blame the cost of my lunch for the fact that I don't have bus fare.
Brooks's column doesn't do much to put the pension obligations of the states in context, so we'll do it here. Just today, Alicia H. Munnell, Jean-Pierre Aubry and Laura Quinby released a paper (pdf) tallying up the pension problem. "Public plans are substantially underfunded," they conclude, but "in the aggregate, they currently account for only 3.8 percent of state and local spending." Roll that around for a minute. Pension obligations currently account for 3.8 percent of the average state's spending. That's not where the current crisis is coming from. If you want to see where the state fiscal crisis is coming from, turn to this graph from the Milken Institute:
"The problem in this moment," says Betsy Zeidman, director of the Center for Emerging Domestic Markets at the Milken Institute, "is revenue." The word "revenue," incidentally, doesn't appear in Brooks's column.
But that's what changed. In the months before the financial crisis, in fact, states had built up record rainy-day funds and were starting infrastructure projects. Then Wall Street collapsed, and so too did the revenue states got from taxing property, incomes and sales. At the same time, the need to spend on social services went up rather than down. The result? A terrible strain on state budgets. But not one you can blame public employees for.
If you look forward 10 years, of course, pensions become a much bigger problem. But not the biggest one. "Assuming 30-year amortization beginning in 2014, [pensions] would rise to only 5.0 percent [of total state spending] and, even assuming a 5 percent discount rate, to only 9.1 percent." Just like for the federal government, it's health-care spending, not pensions, which poses the greatest long-term threat to the states:
Brooks also attacks public-sector employees from another angle: "Nationally, state and local workers earn on average $14 more per hour in wages and benefits than their private sector counterparts," he writes. This relies on a loose definition of the word "counterpart." It doesn't mean "compared to the workers like them." It means "compared to the average worker."
If you compare workers (pdf) of like education, experience, etc., you'll find that blue-collar workers in the public sector do a bit better than blue-collar workers in the private sector, but white-collar workers do a lot worse. The calculations that compare average wages neglect to mention that public-sector jobs tend to be white-collar positions, while most positions in the private sector aren't. More than half of all public employees have college degrees, compared to about 35 percent of private-sector employees. What's that? You want a table?
This shouldn't be too much of a surprise. Ever talked to a lawyer who works for the government, or a teacher? Have they ever told you they signed up with the public sector because the money is so good? Meanwhile, would that we'd offered more money, and attracted more talent, to the regulatory agencies in the run-up to the crisis. That investment would have paid for itself a thousand times over.
Then Brooks takes one final turn: "This situation, if you’ll forgive me for saying so, has been the Democratic Party’s epic failure," he says. He's forgiven, but he's also, well, wrong. As any expert can tell you, most every state is facing these problems over the next few decades. Are we really to believe that Democrats are dominant in every state legislature in the country?
Moreover, state budget problems have a spending side and a revenue side. Democrats (and some Republicans) and the unions have increased spending on public employees. But Republicans (and some Democrats) and business interests have passed massive unfunded tax cuts that turned pension programs into ticking time bombs. See California for more on this play. There's plenty of blame to go around.
There are real challenges facing states in the coming years. But these are serious, complex challenges, not a simple morality play in which we just need to get tough with state employees and all will be well. In the short-term, the problems facing states -- the problems that are forcing them to stop construction of ongoing projects -- are not driven by pensions or public employees, but by the financial crisis.
The challenges facing them later are not nearly so simple as greedy state employees or runaway pension spending. Health care is a major player here, as it is everywhere else. And while states are facing serious pension problems because they still offer defined-benefit pensions, we're also going to see the retirement of millions of private-sector workers who don't have defined-benefit pensions, and either haven't contributed enough to their 401(k)s or saw their wealth wiped out in the recent turmoil. We're facing a pension crisis in the public sector, but we're also looking at a retirement crisis in the private sector.
These problems aren't going to be easy to fix, and there's going to be plenty of pain to go around -- including for unions. But before we can start working on solutions, we need to describe the challenges clearly.
TRENTON — Assembly Majority Leader Joseph Cryan (D-Union) will announce legislation Thursday proposing towns be allowed to temporarily exclude the cost of public safety personnel under a new law capping annual property tax collection increases at 2 percent.
The measure would allow municipalities and counties to raise property taxes outside the 2 percent cap to pay police officers, firefighters and emergency workers.
"When you move a cap quickly, sometimes you have to make some adjustments, and public safety is an area that requires one in my view," said Cryan, an undersheriff in Union County. "We haven’t provided local leaders an option to put a value on public safety."
Gov. Chris Christie signed legislation in July tightening the state’s cap on property tax increases from 4 to 2 percent. The law, which goes into effect next year, allows four exceptions: pension and health insurance costs, increased school enrollment, debt payments and states of emergency.
Police union leaders will hold a press conference today at the Statehouse to announce the number of cops in New Jersey has fallen 11 percent from January 2009 to earlier this month because of budget cuts — and that it could be cut further when the cap law takes effect next year.
"We want to highlight that there’s a decrease in police protection across the state," said Jim Ryan, spokesman for the New Jersey State Policemen’s Benevolent Association. "It’s accelerating."
Ryan said 40 police officers are scheduled to be laid off today in Atlantic City.
"Without replacing these manpower levels, we’ll see a steady increase in crime," he said. "That’s our concern."
Bruce Stout, a criminology professor at the College of New Jersey, said lowering the number of police increases the risk of crime, although it’s not always a direct correlation.
"You can’t just add police. You have to be smart about policing as well," he said. "If you’re doing cutting edge policing, then those additional officers are likely to have an impact."
Cryan’s bill would allow public safety personnel to be an exception to the property tax cap for budgets enacted before 2014. He said the cap can be reinstated then because towns will have had time to renegotiate contracts and the economic crisis should have subsided.
Assembly Speaker Sheila Oliver (D-Essex) declined comment, saying she needs to review Cryan’s proposal.
Spokesmen for Senate President Stephen Sweeney (D-Gloucester) and Christie also declined comment.
Trenton – New Jersey Gov. Chris Christie’s ongoing assault on public employee pensions is not just unfair and illegal, it threatens to dismantle a retirement system that has helped to create a stable middle class, the backbone of the U.S. economy.
Christie, stepping up his attacks on working citizens of New Jersey that began during his campaign for governor, now vows to increase the retirement age on public workers, change pension rules and require public employees to pay more for health care.
Christie has joined a handful of other radical right-leaning lawmakers in a nationwide effort to paint hard-working public employees like fire fighters as a new privileged class simply because many of them have pensions as part of their compensation. They want the public to believe fire fighters, police officers and other public employees are to blame for massive deficits in state budgets.
“Christie has painted public workers as villains in the minds of the media,” said Dominick Marino, president of the Professional Firefighters Association of New Jersey (PFANJ). “He is trying to break up every union in the state of New Jersey. If it was up to him, New Jersey would be a right-to-work state.”
But his assault on fire fighter benefits has more to do with his philosophical contempt for public sector unions than actually fixing New Jersey’s fiscal problems.
When Christie ran for governor, he vowed to get tough on the state’s public employee unions. Immediately upon taking office, he proposed 33 pieces of legislation – all intended to weaken, and eventually break, public employee unions.
New Jersey voters, battered by a prolonged economic crisis that began during the Bush administration, elected Christie over incumbent Gov. Jon Corzine by a modest margin of 4 percent. Once in office, Christie immediately began his attacks on public workers, nurturing and feeding media stereotypes of government workers as lazy, overpaid bureaucrats.
In Christie’s mind, the fire fighters who put themselves in danger don’t deserve a steady retirement after a career of community service.
As part of the effort to demonize public workers, Christie claims public employees make a lot more money than private sector workers. But his assertion is simply false.
The truth is that state and local workers earn less on average than their private sector counterparts, according to a joint study by the Center for State and Local Government Excellence and the National Institute on Retirement Security.
That study found that public workers earn 11 percent to 12 percent less than workers in private companies. Health and retirement benefits comprise 32.7 percent of total public sector compensation, compared to 29.2 percent for private sectors workers. Even accounting for benefits, the study found public sector compensation less than private sector compensation.
Regardless of who earns more, public or private sector workers, the handful of troubled public pensions would be in a lot better financial shape if employers had maintained their commitment to pay their share.
Christie, like many lawmakers responsible for helping to manage government pensions, has decided simply not to pay the state’s legally required contribution this year of $3.1 billion. He has brazenly warned opponents of his pension reform plan “If they want to sue me, tell them to get in line.”
The Professional Firefighters Association of New Jersey is already in that line and will stand as long as it takes to achieve justice. The PFANJ has filed a lawsuit against the state for skipping its payments, part of a costly six-year legal battle with the state.
Christie’s attacks on fire fighter pensions amount to an attack on middle class families of New Jersey. One
fact that has not yet been absorbed by lawmakers and the media covering the pension fight is that fire fighters do not collect Social Security. When the Social Security Act was enacted in the 1930s, it expressly excluded public workers. While Congress has amended the law over the years to include more public employees, most fire fighters remain outside of the system.
“Fire fighters must depend on state and local pension systems for their retirement benefits. Public employee pensions work when they are properly funded. Steady contributions during both good times and bad provide adequate retirement income for tens of thousands of New Jersey citizens,” Marino said. “Christie’s attack on public employees may make good politics in a heated election year. But it is bad fiscal policy. The PFANJ will not let Christie dismantle fire fighter pensions. We fight fires until the public is safe, and we will not stop until this fire is fully extinguished.”
The PFANJ represents 3,300 fire fighters and paramedics in New Jersey. It is the state association in NJ for the IAFF, headquartered in Washington, which represents more than 297,000 full-time professional fire fighters and paramedics. The IAFF is the leading advocate in North America for the health and safety of first responders. More information is available at www.iaff.org
An attached Pension Fact Sheet baldly states, "The cumulative impact of the reforms Governor Christie is proposing, projected over the thirty year period, will reduce total pension underfunding from $181 billion in 2041 without reform to $23 billion in 2041 and increase the aggregate funded ratio from the present level of 66% to more than 90% in 30 years." The Fact Sheet provides scant financial support for this conclusion. Requesting immediate legislative action based on a 30-year estimate is the height of folly. The ups and downs of the stock and bond markets, interest rates, and investment wisdom are just a few confounding factors. 30-year estimates of pension cost increases are unreliable and subject to manipulation. The accounting methods used, as in the past, can generate a range of overly optimistic or pessimistic results. And of course in 30 years Christie will be long gone. The Treasury website provides no further financial data.
The second attached Fact Sheet addresses the State Healthcare Benefit System and is equally vague. It states, "Without Immediate Action, Costs Will Increase By More Than 40 Percent Over The Next Four Years." Once again there is no support to indicate how this assertion was determined.
For there to be public trust and confidence in the Governor's proposals, he must provide short term ascertainable outcome data, explanations as to how costs are calculated, and what accounting methods are being used. As he did with his privatization and gaming reports, he demands bold changes but fails to provide the data needed to make informed, intelligent choices. This lack of forthrightness is no different from what we are witnessing now in the womens' heath care bill where our Governor and Treasurer make claims but refuse to provide supporting documents.
GLOUCESTER TOWNSHIP — Gov. Chris Christie unveiled one of the more aggressive pension and health benefit reform efforts in the nation on Tuesday, sending unions and Democrats into battle over what do next for a system that now demands billions of dollars a year from the state budget.
Christie, a Republican, called for pension cuts, increased retirement ages and healthcare contributions well in excess of what unions had bitterly fought against only months ago.
Unions and Democrats responded by demanding that the state renew paying pension contributions after years of failing to fund, or woefully under-funding, the system. One prominent union leader declared that even if successful, Christie would lose in court over the changes.
In a senior citizen community center packed with some 150 people, Christie compared his first eight months in dealing with the state’s fiscal situation to arriving in a room right after a big beer party.
“There were a bunch of drunk people passed out on the floor, a whole bunch of empties lying around, broken dishes,’’ Christie said. “So I showed up. Now I have two choices. Walk out, or clean up. We’re going to clean up.’’
Christie acknowledged the state having missed pension contributions for years was a problem. But he declared that even if the state makes its required pension payments for the next 15 years, it would still face some $85 billion in unfunded liabilities.
“If all we do is pour money into a broken and failed system, that broken and failed system will swallow that money alive, and get hungrier for more.’’ Christie said. “We can’t afford to continue like that.’’
Christie’s half-hour speech drew a largely positive response from those in the senior center.
Eric Lawrence, 54, of Gloucester Township, a former computer operations manager who was laid off 10 years ago and later became disabled from a stroke, praised Christie for trying to trim back public workers.
“I love this man,’’ Lawrence said in an interview. “To see him take a hold of the public sector -- without the private sector, the public sector doesn’t exist.’’
But not all were happy. As Christie outlined proposed pension changes for police and firefighters, some township police working security in the room audibly gasped and began to mutter.
Ronald G. Bakley, 64, a retired police officer who now serves as director of the labor council for the state Fraternal Order of Police, told Christie during the question-and-answer session he was offended by the beer party story, since he believed the public workers in that analogy were the drunk partygoers.
Christie said he was referring to the overall condition of the state.
Bakley, in later comments to reporters, said the FOP realizes the pension system is in arrears and needs to be fixed. But he didn’t think it was right to change the rules of the game for current employees.
“You’re telling officers in the street now that you have to put 30 years in,’’ he said. “That’s not right.’’
Sean D. Grannan Sr., the FOP president for the township police, said Christie wasn’t giving the full explanation of what has happened over the past 15 years.
“We’ve been paying into the system and keeping it solvent,’’ Grannan said. “He wants to paint us as the villain, and that’s not fair.’’
Contacted following the event, Hetty Rosenstein, who heads the state chapter of the Communication Workers of America, predicted that Christie’s proposal would lose in court if enacted because courts have already held that pension and benefits are “non-forfeitable’’ rights.
Rosenstein also said in an interview that Christie’s proposal falls harder on lower-paid government workers who would have average annual pensions of $25,000 or less.
“The governor is slashing a plan that has mostly women and minorities. Once again, it’s an attack on the middle class,’’ Rosenstein said. “This is a bizarre way to negotiate. You don’t call a press conference and make an outlandish attack on the lowest paid workers in the state.’’
Democrats urged the governor to commit money to the pensions system. In a press conference after his event, Christie said he would do so, unless state revenues plunged and he was forced to make cuts.
Democratic Assembly Speaker Sheila Oliver, D-Essex, called on Christie to sit down with the state’s unions.
“I am tired of the approach that divides our state,’’ Oliver said in a statement. “Leaders unite and build consensus. They do not divide and conquer and create enemies of the people who teach our children and protect our safety.’’
Eileen Norcross, senior researcher at George Mason University who has written about New Jersey’s pension problems, said Christie was attempting to move more aggressively than many other states in dealing with the problem, and she predicted that, if approved, unions would fight it in court.
Norcross praised Christie’s effort as “going in the right direction.’’ Still, she said the administration was still too optimistic in some of its projections.
She said she still was unsure how the state would be able to make its full pension contributions in future years. “It’s not a complete fix,’’ she said.
Local politicians in New Jersey use contract arbitration as a scapegoat
Published: Wednesday, June 09, 2010, 6:15 AM Updated: Tuesday, June 08, 2010, 6:41 PM
Star-Ledger Guest Columnist
By Ron Bakley
New Jersey’s local government officials frequently cry that police and other government employee unions intentionally seek arbitration to settle contract disputes.
Sadly, it’s a line of cheap political spin from crafty local politicians to mislead the public.
The dirty little secret is it’s often the politicians themselves who seek arbitration, and they seek it for the most cynical and selfish reasons imaginable.
Many local officials have made the political calculation that they don’t want the messy responsibility for negotiating contract agreements with police officers. Forcing police officers into arbitration means contract decisions fall into the lap of faceless arbitrators. It cleverly allows politicians to escape responsibility for whatever an arbitrator decides. Towns then conveniently just shrug their shoulders and point blame at the police union and arbitrator for the final decision.
As the head negotiator for the Fraternal Order of Police, I can tell you I have seen this scene played out countless times in towns throughout New Jersey.
Scapegoating arbitration is a clever political maneuver, but it’s also a gross dereliction of duty that is costlier to taxpayers than reaching a fair settlement with police officers.
The overheated political rhetoric and overwrought handwringing over binding arbitration and police contracts disguises the fact that it is local officials, not police officers, who misuse arbitration as a tactic to protect their own political skin.
The notion that police unions actively seek arbitration is, to put it bluntly, a lie. Police unions much prefer avoiding arbitration and reaching an equitable and fair settlement with towns through negotiation. Arbitration is an expensive process for the union that can exceed the cost of the matter over which both sides are negotiating.
Workers in private industry, unlike public workers, are sometimes forced to go on strike. For them, it’s the last resort to reach a fair contract with their employer. But police officers and other public workers are legally prohibited from striking. Arbitration is our last resort. It’s a necessary part of public employee contract negotiations. Without it, police officers would be unfairly vulnerable to the fickle and sometimes bizarre whims of local politicians.
New Jersey has endured an increase in arbitration cases over the last several years due not to police unions, but to an appalling lack of leadership among local officials and their reluctance to make, and take responsibility for, tough decisions. This is truly unfortunate because a negotiated settlement — a settlement that is fair and equitable — is always the best outcome.
Ron Bakley is national trustee of the New Jersey Fraternal Order of Police.
Massachusetts shows effects of property tax cap similar to Christie's proposal, report says
Published: Wednesday, June 09, 2010, 5:02 AM Updated: Wednesday, June 09, 2010, 5:16 AM
Lisa Fleisher/Statehouse Bureau
John O'Boyle/The Star-LedgerGov. Chris Christie speaks during a town hall meeting in Robbinsville last week. TRENTON — Hundreds of teachers and emergency-services workers would be laid off. Class sizes would balloon and arts, foreign language and athletics would be slashed. Construction would halt and buildings would crumble.
Those are some of the nightmare scenarios critics described Tuesday as what Massachusetts has to deal with under a 2.5 percent property tax cap, touted by Gov. Chris Christie as the model for what New Jersey needs.
The cap would reduce “essential educational programs and services” while failing to address the root cause of high property taxes, said a report released Tuesday by the Center on Budget and Policy Priorities, a Washington, D.C.-based think tank opposed to caps.
“Property tax caps do not change state policies in ways that can make government operate better, smarter or more efficiently, nor do they necessarily change local policies in ways that improve government,” the report’s author, Iris Lav, said on a conference call with reporters. “Caps can reduce property taxes, of course, but there are many better ways to do that.”
• Think tank says Christie's property tax cap would hurt N.J. education, public services
• N.J. average property taxes grow 3.3 percent to an average of $7,300
• Gov. Chris Christie proposes 2.5 percent annual property tax cap in 33-bill package
• Studies conflict on whether N.J. tax cap will benefit residents
The Christie administration disagreed with the “premise and conclusions of the study,” a spokesman said in a statement.
“This is not about tying the hands of schools and towns to fund the services New Jerseyans need, but providing the tools to make education and government affordable again for taxpayers,” the statement said. “To simply focus only on the cap and ignore the rest of the reforms is wrong and not what the governor is proposing at all.”
The 2.5 percent cap, the centerpiece of Christie’s plan to curb property taxes, would replace a 4 percent cap critics view as too lenient with exceptions. Christie also has proposed changes to arbitration and civil service rules that would give towns more power over public worker unions.
To get on the ballot by November, the proposed constitutional amendment must pass the Legislature with a three-fifths vote by early August. The Democrats who control the lawmaking body are still undecided on the issue.
If passed, residents would need to approve tax increases above the cap by a 60 percent vote margin. Property taxes in New Jersey rose about 3.3 percent last year to a statewide average of $7,300.
District and municipal consolidation, sales and income taxes and targeted property tax refunds should be considered as alternatives to caps, the report said. The left-leaning budget center’s paper challenged an analysis the right-leaning Manhattan Institute for Policy Research released last month. The institute said a cap would not harm the quality of public education.
Massachusetts’ statewide policies and targeted school funding — not tax limits — have kept test scores competitive, but schools also increased class sizes and cut art, music and foreign language instruction, as well as athletics, the budget center’s report said.
N.J. Gov. Chris Christie's rant reveals a hard-right agenda
Published: Tuesday, June 08, 2010, 5:30 AM Updated: Wednesday, June 09, 2010, 6:15 AM
Tom Moran/ The Star-Ledger
Gov. Chris Christie on NJ Supreme Court and school funding
TRENTON — The reason fanatics like Rush Limbaugh and Glenn Beck adore Gov. Chris Christie has never been so clearly on display as it was last week during his Rant in Robbinsville.
It was one of his town hall meetings, stuffed with friends as usual. But this time he went far beyond the familiar call for a reasonable cap on property taxes.
This time he attacked justices of the state Supreme Court as “people in black robes who are elected by no one” and suggested that they should never defy the majority will. So much for Alexander Hamilton’s quaint notions of judicial independence.
• Entire N.J. judicial panel resigns to protest Gov. Christie's non-tenure of Justice Wallace
• Justice Wallace grateful for colleague support as term ends
• N.J. lawyers group honors ousted state Supreme Court Justice John Wallace Jr.
• Retired N.J. Supreme Court justices ask Gov. Chris Christie to reconsider reappointing Justice Wallace
• Republican groups launch radio ads supporting Gov. Christie's N.J. property tax cap proposal
• Gov. Christie predicts N.J. will go broke without proposed property tax cap
• N.J. seniors fear Gov. Chris Christie's proposed cuts to property tax rebates
The governor also revealed for the first time the real reason he removed Justice John Wallace from the bench: It was the first phase in a larger scheme to take money out of poor urban school districts and spread it around to wealthier suburbs.
“If people wonder why I want to change the Supreme Court, it’s because I don’t have the flexibility to change the school funding formula,” he said. “The Supreme Court theory that if you put more money in, (schools are) going to just by magic get better has proven to be wrong.”
The hope must be that if you repeat this nonsense enough, people will start to believe it. But for the record, New Jersey is closing the racial achievement gap faster than any other state. That’s partly because we’ve built the nation’s best preschool program, no small thing.
Some districts, like Union City, have worked near miracles. Others, like Camden, are still failing horribly.
But let’s place the blame where it belongs — with state and local officials who failed to make the most of the money directed to poor urban areas under the Abbott vs. Burke rulings.
The court can only open the door. Union City showed that it’s possible to walk through it.
The governor also claimed that the court mandated “the overwhelming majority” of state money to go a “small number” or urban districts. It was half the money, and it went to districts attended by nearly 1 in 4 New Jersey students.
Worse, the governor blamed the court for pinching school aid to suburbs like Robinsville, when the real cause is the sweeping cuts to all districts the governor is pushing.
“He’s just wrong,” says David Sciarra of the Education Law Center, who represents students in poor districts. “If he funded the formula, Robbinsville would get $1.7 million more in aid.”
The governor is playing an ugly political game. He wants suburban taxpayers to blame their problems on the cities, with the Supreme Court as the enabler. If he has to smudge a few facts along the way, so be it.
Look up the word “demagogue” in Webster’s dictionary and you find a pretty tight fit with the governor in Robbinsville: “A person who tries to stir up the people by appeals to emotion, prejudice, etc., in order to win them over quickly and so gain power.”
Standing in his way, of course, is the Supreme Court. It found that the state’s reliance on property taxes created enormous disparities that deprived kids in poor cities of a chance for a decent education, violating the state Constitution’s promise.
Here’s how the governor described it: “They’ve taken the power out of the hands of the Legislature to make this judgment and out of the hands of the governor, and the courts are making it. Well, that’s wrong. If judges want to legislate, they should run for the Legislature.”
He added, “They’re put there, and they believe they should stay there without any responsiveness to the people of the state.”
Remember, though, that governors and legislatures in New Jersey created a system that was profoundly unequal. Kids in poor cities were crowded into decrepit buildings with poorly paid teachers in systems funded at slightly more than half the state average.
That’s what majority rule delivered. And that’s why the court jumped in. Is the governor really suggesting that justices should heel to the majority instead?
New Jersey is ready for a fiscal conservative after a decade in which the public sector continued to swell even as private sector jobs disappeared. Polls show solid majorities want to see Trenton go on a diet and support his plan to cap property taxes.
If the Rant in Robbinsville is any guide, though, Christie has grander plans to push a conservative agenda. That will no doubt tickle Limbaugh and friends.
But it will be a tough sell to the moderate voters of New Jersey.
Ed Murray/The Star-Ledger Gov. Chris Christie during a press conference.
The Mass. model: Is property-tax cap a good fit for N.J.?
By Adrienne Lu
Inquirer Trenton Bureau
Gov. Christie wants to throttle the steady rise of property taxes in New Jersey - already the highest in the nation - by following Massachusetts' lead.
That state's property-tax cap, known as Proposition 21/2, has helped keep property taxes in check since it took effect in 1981.
But experts warn that Massachusetts' experience also holds critical lessons for any state considering a similar approach.
"New Jersey can't say, 'Look, it works in Massachusetts, and it will work here.' It's not the same thing," said Iris Lav, a senior adviser at the left-leaning Center on Budget and Policy Priorities in Washington. Lav, who has studied Proposition 21/2, briefed Garden State legislators Thursday about her findings.
On Monday, Christie formally proposed a constitutional amendment, which would require voter approval, to cap local property-tax increases at 2.5 percent annually. Voters in each town could vote to exceed the cap, and the only other exception would be for debt service.
New Jersey now has a 4 percent cap on property-tax increases and much more wiggle room for exceptions.
In Massachusetts, voters approved Proposition 21/2 in 1980 through a ballot initiative. As in Christie's proposal, local voters may override the 2.5 percent cap. Proposition 21/2 also mandated that property-tax revenue not exceed 2.5 percent of the assessed value of a town, something Christie is not suggesting.
Lav said Massachusetts in 1980 looked very different from New Jersey today.
Massachusetts' economy was booming - so much so that it was called the "Massachusetts Miracle" - while school enrollment was dropping, for example. New Jersey is just starting to recover from a deep recession, and school enrollment is more stable.
The intent of Proposition 21/2 was to keep property taxes in line, not necessarily to reduce government spending, Lav said.
After Proposition 21/2, Massachusetts directed additional state funding to towns to make up for some of the property-tax restrictions and help prevent some cuts in services.
But during tough economic times, including the latest recession, Lav said, state aid has not kept up and towns have had to cut services, including laying off teachers, police officers, firefighters, and other employees; closing fire stations, libraries, senior centers, and recreation centers; and trimming school programs.
"The principal lesson learned is that it works only if the state is willing to give additional assistance to cities and towns," said Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, a nonpartisan public-policy research organization. "A state thinking about this needs to do it with its eyes open to the reality that it means reduced services at the local level because recessions are inevitable. There's no magic here."
Christie has not proposed increasing state aid to municipalities. His budget proposal for the next fiscal year would cut state aid by $446 million, or about 23 percent.
Mary Forsberg, research director of the nonpartisan New Jersey Policy Perspective, said property-tax caps didn't encourage efficiency so much as they resulted in smaller government, which inevitably means reduced services.
"Caps in general are a lazy person's way of doing government," Forsberg said.
In Christie's March budget address, he said Massachusetts had the third-highest property taxes in the nation in 1977, three years before Proposition 21/2 was approved. By 2005, the ranking had dropped to 33d, the governor said, citing figures from the conservative Americans for Tax Reform.
The Associated Press, citing census figures, reported that the impact of Proposition 21/2 had been much less dramatic, with Massachusetts dropping from third in property tax per capita in 1981 to eighth in 2005.
Proponents of Proposition 21/2 say it has accomplished exactly what it set out to do: Slow the growth in property taxes.
Frank Conte, director of communications at the Beacon Hill Institute, a free-market think tank at Suffolk University in Boston, said Proposition 21/2 had helped keep the growth of property taxes reasonable, but only because the state had increased local aid over the years.
Chip Faulkner, associate director of Citizens for Limited Taxation, estimated that had property taxes continued to rise at their pre-Proposition 21/2 rate, they would be at least double what they are.
"It's worked out very well in Massachusetts, and it can work in New Jersey," Faulkner said.
He said complaints about service cuts had been overstated.
"Despite their cries of doom and gloom, we're doing fine in the state," Faulkner said. "Police, fire, roads, highways - everything is fine."
Some communities in Massachusetts have suffered more than others.
The wealthiest towns have voted to override the 2.5 percent cap much more frequently than less-wealthy towns, widening the disparity between the towns, according to several experts.
"As a general matter, the wealthier communities, of course, have been more likely to pass overrides, but a city like Boston has never even attempted one, and [it] wouldn't pass if they did," said Widmer, of the Massachusetts Taxpayers Foundation.
Some observers argue that because Massachusetts has directed state funding to the poorest communities to protect them, middle-class communities have suffered the most, rarely approving overrides but not receiving enough new state funding to offset the caps.
When Christie introduced his cap proposal last week, he said he expected critics to argue that education in New Jersey would suffer.
"This is absolutely wrong," he said. "Massachusetts has accomplished this astonishing drop in property taxes while maintaining the No. 1 K-12 achievement in America."
But, Lav says, Massachusetts' enrollment in kindergarten through 12th grade fell 21 percent between 1980 and 1989.
"If there had been a level number or increasing number of children, it would not have been possible to implement Proposition 21/2 without massive budget cuts, even if the local aid increases," said Geoffrey Beckwith, executive director of the Massachusetts Municipal Association.
Later, in 1993, the state overhauled its education-funding system to increase state aid overall and direct more dollars to urban areas.
Beckwith warned that New Jersey should consider a property-tax cap with caution.
"The only way Proposition 21/2 was implemented without causing major fiscal chaos was because the state stepped in and increased local aid substantially," he said. "If the State of New Jersey is not prepared to do that, then the cap would likely trigger much greater fiscal distress than people are envisioning."