Taxing the 1% won’t cover the under-funding gap, you’d either have to raise state income taxes by 29% overall or raise the NJ sales tax to 10% just to maintain existing benefits…such measures would face significant obstacles from State constitutional mandates on the use of specific revenue sources for particular purposes, such as the dedication of all income taxes to property tax relief. In addition, the State must obey federal mandates, honor bonded obligations and meet other funding demands. As a result, roughly 87% of State revenues are effectively committed to specific purposes before the budgeting process begins. The remaining funds—$4.3 billion in the current budget—are counted on for vital functions such as law enforcement, public safety, the judiciary, and executive department offices. A “millionaires’ tax” imposing an average $50,000 additional annual tax on each millionaire, for example, would make only a small dent in the funding shortfall. It would still require the State to impose a 23% income tax increase on every other taxpayer. As a matter of political reality, potential tax increases of this magnitude would first be preceded by substantial benefit reductions. If existing pension and retiree health benefits are considered beyond reach, the remaining options would involve actions such as reducing active employees’ health benefits to the equivalent of Bronze-level coverage under the Patient Protection and Affordable Care Act (“ACA”) and eliminating retirement benefits for employees hired after 2010.
Very few private sector jobs offer pensions anymore, and subsidized health care coverage until age 65 is only for public sector workers. So why are my taxes going to subsidize these things for public workers, some of whom make more than the median household income in Ridgewood? The original contract to provide a pension and healthcare coverage for those in public service was based off of trade-off: lower wages in return for retirement security. That trade-off no longer holds true, and because retirees are living longer in to their mid-80s on average, the pension and healthcare bills are piling up… and yet these guys in Trenton just want to keep on raising my taxes?
Sweeney, Sarlo, and Prieto… you think these goons are going to fight for NJ state taxpayers and ask the unions to make concessions on lower benefits and higher pension and healthcare premium contributions? Yeah right, they’re bought with union funds and paid for by votes from members of the NJEA, the AFL-CIO, the PBA and the FMBA. The same broken system’s been in place since the 1990s. Time to clean house, just raising taxes solves nothing and is already proving unsustainable.
According to the state’s pension report on page 4, new accounting standards mean the state’s underfunded pension liability is now $83bn, plus we have a $53bn unfunded healthcare bill, plus a $21bn deficit in pensions for local government employees. Add in the $14bn in post-employment benefits like paying out accumulated leave, and these Democrats in Trenton have rung up a $170 BILLION unpaid bill since the 1990s without having any plan how to pay for it except raising taxes. Average property tax bills in Ridgewood have more than doubled in the last 15 years, and yet we still have this huge unpaid bill. $170bn is 7 years worth of the entire state budget. If any of us ran credit card bills at 7X our annual budget, we’d be bankrupt, but these guys just want to keep raising taxes like nothing’s wrong. Fact facts, we can’t afford the current level of benefits.
Ask your local Democrat candidate for NJ State Senate (all 80 seats are up for re-election this November) why they’re pushing tax hikes without asking for any concessions or benefit reductions from the unions; they’re paying for the votes promised by their union backers who also just met in AC last week to decide which Democrat candidates to give political contributions to as well. It’s the circle of life for these thugs. Meanwhile, the real answer why they’re pushing tax hikes with no benefit cuts is because NJ now spends more providing health benefits for 46,000 early retirees than the state spends on 132,000 Medicare-eligible retirees. That’s insane, but this very expensive benefit remains available to these early retirees (mainly police & fire). As a result, while the average annual employer cost to provide family coverage for an active public employee is approximately $16,000, it costs a public employer, on average, $26,000 a year to provide family coverage for an early retiree until they become eligible for Medicare. Early retirees thus represent a substantial expense that is borne entirely by State and local governments and will likely be subject to 40% ACA excise taxes starting in 2018.
Federal law does not mandate provision of any retiree health benefits, which are governed by a variety of State statutes and labor agreements. It would be inequitable and unaffordable for early retirees to continue to receive above-Platinum-level coverage ($26,000 annual family coverage without a retiree cost contribution while current employee benefits are reduced.
Every one’s hands are dirty from both parties just continue to kick the can down the road.
Why are my taxes paying for $26,000 family coverage for early retirees who also get average pensions of $57,000 a year plus $80,000 accumulated leave payouts when they retire? Most of these early retirees are in their early fifties which means we’re paying for 13 years of platinum health coverage before they qualify for Medicaid, 40% excise taxes on that coverage from 2018, and pensions for more years (35 years) than these guys actually worked (25 years) if they live to the average male lifespan of 85. Not bad for 7% contributions towards those pensions and max out of pocket healthcare premium cost of $480 a year. These early retirees are literally stealing from taxpayers in the name of contractually promised benefits that we cannot afford. And the Dems just want to keep raising taxes to pay for the theft.
As usual full of misinformation:
Public workers are paying more towards their pensions and many (including all new hires since that day) will be getting less under the deal that Christie walked away from.
Health care premiums are a lot more than $480 a year. I pay a higher percentage than the average paid in the private sector.
Very few people retire at 50. In fact most teachers retire well into their sixties. My plan WAS to work until I was 67.
Very few people have family coverage after they retire, because their families are older by then.
Most people will see little or nothing in accumulated leave payments when they retire. I expect to get zero dollars when I retire.
The figures quoted above are the exception rather than the rule.
The reason that the pension fund is in so much trouble is the money not paid into it for the last twenty years by the State of New Jersey. This money was directed to other things, such as property tax refunds etc. So the money was used to better the lives of all New Jerseyans, not just public workers.
Public workers are limited to 2% pay increases (on average) for the rest of their working lives, no matter what happens with the economy.
But let’s not let the facts get in the way of the rhetoric.
My buddy a police officer for a Bergen County town just retired at age 52 with a $9800 per month pension plus the $26k healthcare plan.
How is that justifiable or sustainable? It’s insanity.
Christie’ line item veto and the Dumbocrsts inability to override his veto are the only things between state taxpayers and a +23% state tax increase on everyone. Sweeney, Sarlo and Prieto only ever try for a “millionaire’s tax” because they’re playing politics, but the minute they see a chance, our state taxes, NJ sales tax and gasoline tax are all going up on everyone… To pay for pensions. This will lead to a legal challenge because of state constitutional mandates on the use of specific revenue sources for a particular purpose, ie pensions. Wake up people, don’t vote for any NJ state senate candidate who supports tax increases
I know 12 Village & BoE retirees who currently draw $100k++ pensions and get $26,0000 family healthcare plans. The Village will add 9 more to these ranks in the next two years, and the BoE will add at least three. That’s not to mention the other retires under $100k pensions. So for just our 25 most expensive retirees that’s equivalent to $3.3 million a year in pensions & healthcare benefits by end 2016. When the 40% excise tax on those “platinum-level” health plans kicks in from 2018, that cost will jump to $3.7 million a year. That’s equivalent to 8% of the entire Village budget being spent on only 25 people, or less than 0.1% of our Village population. How does this make any sense?
Let’s start drafting some candidates who will be able to focus on tax cuts and benefit reductions & increased healthcare contribution amounts for current employees and retirees in both the State and Village.
The Dems are just Union lackeys and have been since the 90s in NZj. Send them packing in November so we can lower taxes. It’s shameful what public sector retirees are doing making current employees suffer so they can keep their existing pension & healthcare benefits. If I was an active employee, I’d be mad as hell about getting downgraded to bronze level health coverage and losing my pension if I was hired after 2010. Daddy will be dead in 2035.
to 5,20 yeah tell that to the police and fire dept,s
Why is no one outraged that every year we send tens of BILLIONS with a B more to DC than we get back so the red states can feed at the federal trough…. Our reps on BOTH sides of the aisle screw us. If we could reduce the red state welfare and we could get 70 cents back on the buck these issues would still be out there but we wouldn’t be fretting about the funds going bust and soaking local taxpayers more.
Local PFRS and local PERS are the only funds that will have money left after 2035…. Everyone else is asset stripping as much as they can now. Sad about the coming healthcare downgrades to bronze for current employees ahead of the 40% ACA excise tax in 2018… Why would the early retirees allow that without increasing their own contribution amounts for platinum coverage before becoming Medicare-eligible at age 65?
Paul, with the highest state + local taxes in the land, why are NJ taxpayers subsiding red states?
Looks like the state budget does more than just subsidize red states… our antiquated local government system with 21 counties (10% of local taxes), 560 municipalities (25% of local taxes, with public safety taking 50% of that) and 660 school districts (65% of local taxes) ensures that we duplicate too many services, employ too many people in municipal govts and at BoEs across the state… all feasting at the public trough for their own priorities, its called too many fiefdoms, too many chiefs, and taxing everyone else to death to pay for it. But the unions just complain about home rule to protect their own. Maybe if we had only 250 municipalities we’d be able to reduce local taxes? Merge Glen Rock, Ridgewood, Ho-Ho-Kus, Waldwick and Midland Park and that’s five municipal governments and school districts merged in to one.
That’s right 12:28… home rule has its cost
Greece unpaid debt EUR320bn = US$355BN. NJ unpaid debt just for pensions & healthcare $170BN ($83bn unfunded state pensions, $53bn unfunded future healthcare bills, plus a $21bn deficit in pensions for local government employees, and $14bn in post-employment benefits like paying out accumulated leave). Add in NJ’s state & local general obligation debt, plus the $17BN debt owed by the Transportation Trust Fund which is a vampire squid of greed and corruption, and NJ all by itself has US$200BN in debt, equivalent to more than 60% of the amount of unpaid bills in Greece. Which leads to the joke that instead of “Going Dutch” when you pay for dinner, we now have a new term “Go Jersey” where people eat, drink and make merry but then when the bill arrives they simply stand up and show their empty pockets and express their inability to pay up.