Christie Says NJ Must Cut Retiree Benefits Or Face Bankruptcy

Mark J. Magyar | July 23, 2014 | Politics
Governor kicks off ‘No Pain, No Gain’ summer tour to sell pension reform in front of protesting police and firefighters

Credit: Governor's Office/Tim Larsen
Gov. Chris Christie speaks during a recent "town hall"-style gathering in Beach Haven.
Addressing a Jersey Shore crowd in which 200 protesting police and firefighters outnumbered Long Beach Islanders, Gov. Chris Christie yesterday asserted that New Jersey has to cut pension and health benefits for retirees or follow Detroit into bankruptcy.

“We have to pare back benefits,” said Christie, who promised to unveil a comprehensive plan by the end of August to cut pensions and healthcare costs for both retirees and current public employees.

“In the end, there will be a reduction in benefits. There’s no other way to do it,” Christie said. “Whatever I propose will be roundly criticized. It will not be easy, it will be hard and it will hurt.”

Christie’s message was not what the unionized police and firefighters and retirees — who criticized the governor for scapegoating them on the pension issue — wanted to hear.

Not after Christie raised pension contributions for uniformed personnel from 8.5 percent of salary to 10 percent, eliminated cost-of-living increases for retirees, hiked healthcare payments for current employees, and cut pension payments for those who took early retirement — and then refused to keep his end of the bargain by not making $2.4 billion in pension payments due last year and this year.

“People need to understand that our pension system is sustainable,” said Eddie Donnelly, president of the New Jersey Firemen’s Mutual Benevolent Association, criticizing Christie for plugging the state’s budget shortfall this spring by unilaterally refusing to comply with the 2010 law he signed requiring the state to ramp up to full actuarially required funding of the pension system by Fiscal Year 2018.

Donnelly said it was Christie’s idea “for cost of living adjustments to be eliminated from our retirees and for our newest members to have their benefits reduced” as part of a 2011 package designed to ensure the future solvency of the pension system. “We lived up to that end of the deal. He refuses to live up to his end of the deal, and now he wants more from us.”

Tom Lombardi, president of New Jersey Policemen’s Benevolent Association Retired Officers Local 600, said “it’s a shame that Christie has been creating the misconception that everybody’s getting big payouts when some of our older guys are getting pensions of $11,000 a year.”

Lombardi, who retired as a watch commander in Millburn in 1995 after 26 years with a $39,000 pension that hit $45,000 before his pension was frozen, noted that a lot of retired officers do not get Social Security because their towns did not participate in the federal system. “Our pensions aren’t free,” he said. “We paid into our pensions. It’s shameful how Christie’s trying to portray us.”

Christie kicked off his “No Pain, No Gain” summer tour to promote the need for pension and health benefit cuts with a nod to the contributions of the state’s uniformed personnel. He noted that he had attended two funerals this week for a police officer murdered in Jersey City and a Waldwick officer killed by a truck while sitting in his police car, and urged attendees to think of them and their families that night.

But 15 minutes later, he took a shot at the assembled police and firefighter union leaders when he warned the crowd that when he issues his plan for pension and health benefit reform later this summer, “special interests will say ‘We want ours and we don’t care what happens to anybody else.”

Christie, whose pension cuts are headed back to court this summer, declined to discuss his promised plan to revamp the pension and health benefits system at yesterday’s town hall meeting, held in a wooden gazebo overlooking Barnegat Bay at Bayview Park in Beach Haven.

But the governor warned that “there’s not a lot of places left to do things except to look at a whole different variety of ways to reduce benefits or to increase contributions by employees.” Another option, he said, is to increase the retirement age.
He made it clear, however, that as long as he is governor, raising taxes to pay down the $40 billion unfunded liability in the pension system for retired teachers and state government workers — which he characterized as “paying for the sins of my predecessors” — will not be an option.

“You cannot raise taxes enough in New Jersey to pay for the pension hole that’s been dug,” Christie said, noting that the $1.6 billion tax increases on millionaires and corporations he vetoed last month would only have covered the remainder of the $2.25 billion pension payment due in the current FY15 budget.

“Next year, it will be $3 billion, then $4 billion, then $5 billion the year after that,” he noted, questioning whether voters wanted him to raise taxes every year.

“The answer for Democrats in the Legislature, every time, is ‘Raise taxes.’ The answer for the unions, every time, is ‘Raise taxes.’ In 2002, 2003, and 2004, Gov. (Jim) McGreevey raised taxes every year,” he said, adding that a Boston College study found that $70 billion in wealth left the state over the next five years as a result.

Looking across the boulevard at Beach Haven’s summer homes, Christie suggested that there are “people who live on this island every summer and live 184 days of the year in Florida” to establish residence in a state with no income tax. “People don’t have to leave New Jersey to leave the tax rolls,” he warned. “They just have to live there one more day than they live here.”

However, Senate Budget Committee Chairman Paul Sarlo (D-Bergen) dismissed Christie’s argument.

“For the state’s wealthy residents, it has been ‘No Pain But All Gain.’ Under this governor, millionaires have received tax breaks as their incomes have grown disproportionately when compared to middle- and working-class residents. Businesses have reaped significant tax savings and record profits while the state’s job recovery has lagged behind the rest of the nation,” Sarlo said.

“For middle- and working-class families, it’s been ‘All Pain But No Gain.’ They’ve seen their property tax rebates slashed, resulting in 20 percent spikes in the actual amount they pay. Working-class families have painfully done without their full Earned Income Tax Credit, slashed by the governor. Public workers have lived up to the reform agreement and are paying more for their retirement benefits while Gov. Christie has failed to live up to his promise and fully fund the pension system.”

While Christie contended that he invited Democrats in April to produce a plan to fix the pension system, Sarlo said the surcharges in the millionaire’s tax and the corporate income tax that Democrats sent Christie “balanced the budget, met our obligations, and restored financial integrity to the pension system — but he rejected it.”

Christie’s decision to hold his town hall meeting in Bayview Park, where police and fire union leaders built one of 26 parks in towns damaged by superstorm Sandy to honor the 26 shooting victims from the Sandy Hill Elementary School massacre in Connecticut, was also criticized by union leaders.

Christie not only vetoed a proposed law to cut the magazine capacity of semiautomatic weapons from 15 to 10, but refused to meet with a delegation of parents of some of the murdered schoolchildren.

“It’s classic Christie,” Donnelly, the firefighters union leader, said of Christie’s refusal to move the site of the town hall meeting from the park. “He has to pick a fight.”

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