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State Treasurer Calls Increase in Taxes Inevitable Without Benefits Reforms

Friday, April 8, 2016   (0 Comments)
Share | 04/08/2016

Spending on public-employee benefits may not be the biggest single item in the state budget, but it’s definitely one of the most controversial. The growing amount of money the state plans to dedicate to healthcare and pension benefits for state workers during the next fiscal year was hotly debated throughout a daylong Assembly Budget Committee hearing held in Trenton yesterday. Republicans complained that the state is spending so much now on worker healthcare and pensions that there are few dollars left for other top priorities like education. But Democrats on the panel said Gov. Chris Christie is still shortchanging the state pension system, and they also raised concerns about loosely defined savings from employee healthcare changes that the governor is banking to balance his proposed budget for the next fiscal year.

Christie’s proposed $34.8 billion budget would increase state spending by about $1 billion. Roughly 80 cents out of every dollar in new spending would go toward employee pensions and healthcare. That includes a $555 million increase in funding for the state’s grossly underfunded pension system. To address employee-benefit costs, Christie has called for a new round of benefits changes in the wake of a bipartisan reform law passed in 2011. He wants to freeze enrollment in the current pension system and force employees to accept less generous healthcare plans. Democratic legislative leaders, meanwhile, are backing a constitutional amendment related to pension funding that could go before voters this fall. The amendment would require the state to make pension contributions equal to the full amount calculated by actuaries, and to make those payments on a quarterly basis instead of all at once at the end of each fiscal year.

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