June 16, 2011
Re: Health and Pension Benefit Reform Released from Committee
Today, the Senate Budget and Appropriations Committee released from committee by a 9-4 vote S-2937, which reforms the State’s pension and health benefit systems. The bill is posted for a Senate floor vote on Monday. Please see our June 14th Dear Mayor letter.
Mayors Eldridge Hawkins of Orange and Wilda Diaz of Perth Amboy presented testimony in support of this legislation. The League of Municipalities has long advocated for pension and health benefit reforms. While pension and health benefit costs are one of the main cost drivers for municipal budgets, they are generally outside the municipality’s control. These costs serve to drive up local costs which in turn force cuts elsewhere in the budget, often to valued and vital public services.
Mayor Hawkins made the following statement:
“Since the passage of the 2% hard cap last July, nearly every municipality in the State has undergone a budget process without the overwhelming majority of the management reforms that were promised. Many have been forced to severely reduce vital services, including public personnel reductions, and make other difficult and often draconian budget choices. Pension and Health Care reforms are very difficult issues to tackle in a manner that ensures the financial solvency of the pension systems so they will exist in the future without over burdening municipalities and tax payers. We applaud the efforts of those who can craft such legislation which would accomplish this while protecting our current retirees and grandfathering those eligible for retirement by not breaking our commitment to them.”
Mayor Diaz offered the following statement:
“Local governments and our taxpayers need relief and it must be provided now. The 2% tax levy cap was instituted without attention being given to reducing costs to municipalities. Since approximately 70% of local government costs are tied up in personnel and personnel related expenses, the prime drivers of these costs are pension and health insurance costs. S-2937 is much needed reform.”
We commend Senate President Sweeney for championing this legislation. We also thank Speaker Oliver, Senator Kean, Assemblyman DeCroce and Governor Christie for their agreement to advance this reform. Today is the first step to reform, insuring the long-term viability of these systems and relief to our taxpayers.
It is extremely important that the Senate and the Assembly pass pension and health benefit reform legislation by June 30th in order to realize savings in this year’s budget. We would encourage you to contact your Senate and Assembly representatives as well as the Governor’s office to impress upon them the importance of passing pension and health benefit reform in an expeditious manner.
The League will continue to advise you of any developments as circumstances warrant. If you have any questions please do not hesitate contact Lori Buckelew at firstname.lastname@example.org or 609-695-3481 x112.
Very truly yours,
William G. Dressel, Jr.