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New Jersey shifts more costs to government workers

Gov. Chris Christie signs into law a measure that requires public employees and retirees to pay more toward healthcare and pensions.

June 28, 2011|By Richard Simon, Los Angeles Times
  • New Jersey Gov. Chris Christie, a Republican, signs the legislation into law. Two key Democrats joined in helping pass the measure.
New Jersey Gov. Chris Christie, a Republican, signs the legislation into… (Mel Evans, AP )

Reporting from Washington — New Jersey Gov. Chris Christie signed legislation Tuesday that would require government workers to pay more for healthcare and pensions, making the state among the largest in the nation to roll back employee benefits to offset fiscal woes.

"New Jersey has once again become a model for America," said Christie, a Republican, who won support from two key Democrats to overcome labor union opposition.

The measure was the latest setback for unions, which lost battles to prevent Republican-run state governments in Ohio and Wisconsin from enacting legislation that limited public employees' collective bargaining rights.

But unlike Wisconsin, where the union-opposed legislation led 14 Democratic senators to flee the state in an unsuccessful effort to block its passage, New Jersey's top Democratic legislative leaders — including one with ties to labor — joined Christie in supporting benefit changes for government workers and retirees. A majority of Democrats in the Legislature, however, opposed the measure.

In defending his vote, Steve Sweeney, Democratic president of the state Senate and a member of the ironworkers union, told colleagues last week: "No one in the last 10 years has advanced more pro-labor legislation than I have. At the same time … I am also responsible to the taxpayers of this state."

Unions have vowed to challenge the legislation in court.

"We expected this from Gov. Christie, but we did not expect so-called Democratic leaders to abandon working families," Hetty Rosenstein, New Jersey state director of the Communications Workers of America, said this month. One recent union protest outside the statehouse featured a funeral procession for the "soul of the Democratic Party."

Christie has called the gap between what's been promised for public employees' retirement benefits and what's been set aside to pay for them "the most critical fiscal issue" facing states. New Jersey has unfunded liabilities in excess of $120 billion for retiree health costs and pensions.

The Pew Center on the States has estimated the shortfall at more than $1 trillion nationwide.

Such shortfalls have spurred about half of the states to enact pension legislation this year. Florida Gov. Rick Scott recently signed a bill requiring state workers to contribute 3% of their salaries toward their pensions, a measure that's already drawn a legal challenge from the state teachers union. Even in heavily Democratic Maryland, lawmakers passed legislation to require public employees to contribute more for their pensions.

The addition of New Jersey to the list could give impetus to efforts by other governors to overhaul their state's pension systems. "The more states that act, the easier it is for additional states to act," said Ron Snell of the National Conference of State Legislatures.

Some Democrats, traditional union allies, have joined in the push to shore up their pension systems, an issue seen by some as "a bipartisan problem … that everybody had a hand in creating," said Patrick Murray, director of the Monmouth University Polling Institute.

"There is a tide of public sentiment sweeping the country that is not really all anti-union, but more so demanding fairness and equality of sacrifice," said Gary Chaison, a professor of industrial relations at Clark University in Massachusetts. "Democrats as well as Republicans have realized that with the public attitude being what it is now, there is more to be gained by opposing public-sector unions than agreeing to their demands in bargaining and getting their election endorsements."

Unions argue they have sacrificed — through job cuts, among other ways — and say the New Jersey rollbacks should have been negotiated rather than legislated.

The New Jersey law affects more than 800,000 current and retired workers, including police officers, firefighters and teachers. Besides requiring employees to pay more for healthcare and pensions, the legislation would suspend cost-of-living increases for retirees' pension checks until the pension system becomes more stable. It also would raise the retirement age.

Steve Wollmer of the New Jersey Education Assn. said the bill would force a teacher earning an average $66,000 a year to pay $9,130 toward healthcare and pension, a $4,500-a-year increase.

"This is not about shared sacrifice," union leader Rosenstein said in an interview. "This was about power.... It's not about sharing payments but shifting payments."

In a Rutgers-Eagleton poll conducted this year, New Jersey voters backed Christie on benefit cuts but strongly supported the union protests in Wisconsin on the grounds that stripping most public employees of their collective bargaining rights went too far.

Pension costs have been an issue in California's budget saga. The Little Hoover Commission, a nonpartisan government panel charged with providing policy advice to lawmakers, advised them to roll back some of the benefits promised to current workers. But the budget deal reached between Gov. Jerry Brown and Democratic lawmakers in Sacramento did not include pension changes.

Times staff writer Evan Halper in Sacramento contributed to this report.

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