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New Jersey‘s Public Pension and Health Benefit Systems Need Fundamental Reform

by John Stephenson / /

Dear Legislator:

     New Jersey taxpayers face a growing and unmanageable burden in the form of thestate’s public employee pension and benefit systems, and we urge you toconsider the long-term reforms proposed by Governor Chris Christie.

     State estimates forecast an unfunded pension liability in excess of $110billion, while a study using private-sector accounting methods by the MercatusCenter at George Mason University forecasts an unfunded liability of nearly$180 billion. The raw dollar amounts and increasing share of the state budgetmake this cost unsustainable for state taxpayers, and further delay of seriousreforms only exacerbates the problem.

     The legislature deserves praise for its bipartisan work on pension and healthbenefit reforms during the 2006 special session on property taxes, and for theimprovements enacted earlier this year. New Jersey is already further down theroad of reform than other states facing problems of similar scale.

     However, the action taken earlier this year is not enough to prevent futureinsolvency. Governor Christie’s proposals to adjust benefit calculations,increase the retirement age, change benefit options and use a more realisticformula for predicting investment returns, would largely close the entitlementgap, and thus deserves your immediate support. 

     Proposedchanges to health benefit packages, such as greater cost sharing and a broadermenu of benefit choices for employees, will help rein in unfunded healthcareliabilities and annual costs, while offering protections to taxpayers.  Itis time again for the real bi-partisan leadership you have demonstrated in thepast on behalf of the hard working citizens we all represent in our variousleadership roles.

     The New Jersey Taxpayers Alliance also supports closing the defined benefitplan to new hires, and offering new state and local employees a definedcontribution retirement plan, which has become standard in the federalgovernment and private sectors. While this shift will lead to short- andmedium-term increases in the state’s contribution to retirement accounts, itwould also safeguard future taxpayers from the huge unfunded liabilities facedunder current conditions.

     We hope you will continue your bipartisan work to revitalize New Jersey andprotect its taxpayers by making these reforms to the state’s pension andbenefit systems.     

     And finally, we look forward to continue working with you to reform New Jersey,and make it an even greater place to live, learn, and do business. 

     Let’smake the Garden State a national leader in positive fiscal reform.

Sincerely,

John Stephenson
State Government AffairsManager
National Taxpayers Union

JoshuaCulling
StateAffairs Manager
Americans for Tax Reform

JohnGalandak
President
Commerceand Industry Association of New Jersey

HenryLevari
BusinessDirector
Excellent Education forEveryone

JeffreyT. Kaszerman
Director,Government Relations
New Jersey Society of CPAs

SalRisalvato
ExecutiveDirector
NewJersey Gasoline-C Store-Automotive Association

JerryCantrell
President
New Jersey Taxpayers Alliance

DeborahDowdell
ExecutiveDirector
New Jersey Restaurant Association

Neil Coleman
President
New Jersey Taxpayers Association

Laurie Ehlbeck 
State Director
National Federation of Independent Business/NewJersey