N.J. Pension Change May Skip Governor, Go to Voters, Lawmaker Says

(Bloomberg) -- New Jersey’s highest-ranking state lawmaker said voters may decide on his pensions overhaul, a day after hecklers forced him to end a public meeting on a bills package aimed at rescuing the worker retirement system from insolvency.

Senate President Steve Sweeney on Thursday introduced a set of 27 bills that includes the introduction of 401(k)-style accounts for new hires and a shift from top-tier health-insurance plans that will be highly taxed starting in 2022. The bills, he says, would rescue one of the nation’s lowest-funded pension systems, improve overall fiscal health and boost New Jersey’s credit rating. The workers say new hires would bear an unfair burden as a result.

Governor Phil Murphy, a Democrat and retired Goldman Sachs Group Inc. senior director, is reluctant to change pensions for unions whose endorsements were key to his November 2017 election. Murphy in March negotiated 2 percent annual pay raises for Communications Workers of America New Jersey’s 32,000 members in a four-year contract that included health-care cuts. The union says its insurance negotiations save the state $2 billion a year.

Sweeney’s proposals have support from Democratic and Republican lawmakers, chambers of commerce, finance experts and local and county governments. He expects votes on at least some of the legislation in June, as lawmakers hash out the governor’s $38.6 billion spending plan that is due July 1. If the bills fail, Sweeney said, he’ll ask voters in November to make the changes via constitutional amendment.

“For the first time in my lifetime, we will cut property taxes for real,” said Sweeney, who was instrumental to Republican Governor Chris Christie’s 2010 law that compelled workers to contribute more for benefits and retire at an older age. The senator resisted a second round of cuts when Christie backtracked on a promise to raise pension contributions.

In New Jersey, 65% of residents want public workers to pay more toward their pensions, and 64% said their health benefits should be more in line with private employees’, according to a Rutgers-Eagleton poll of 1,203 adults released April 10.

Almost 80% of those surveyed said property taxes, the nation’s highest, were unfair. The poll, conducted in conjunction with the New Jersey Business and Industry Association, which supports Sweeney’s plan, had a 3.7 percentage point margin of error.

Sweeney’s own plan came under attack on Thursday at a New Brunswick appearance to discuss the bills. He left after 20 minutes of heckling by audience members, some wearing T-shirts identifying them as members of the CWA, the state’s largest public-employees union. A loudspeaker blasted Twisted Sister’s 1984 anthem “We’re Not Gonna Take It.”

Sweeney, in a phone interview today, said opponents used “Trumpian tactics” to quash debate. “This is a tactic to scare people away, to silence people,” he said. “Sorry, guys. I’m not going away. I’m not afraid of you.”

Seth Hahn, the CWA chapter’s political director, said the audience included trades-union members -- allies of Sweeney, a career ironworker -- and some tried to intimidate his own members. He said the meeting offered no opportunity to speak, and questions had to be written and submitted.

‘They’ve never met with us,” Hahn said in an interview. “They’ve never allowed us to present our view. They’re actively trying to suppress dialogue.”

One of the union’s chief criticisms is the retirement-savings proposal, which would channel some gains back to the state for pension payments. Hahn said that unfairly targets new hires who would be enrolled in the plan.

New Jersey’s pension system, with $76.2 billion in assets, has at least $100 billion in unfunded obligations.

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