Posted by cjrothma January 26, 2009 20:04PM
Legislation allowing local governments and school districts to defer half a billion dollars in pension payments — a key and controversial piece of Gov. Jon Corzine’s budget agenda — cleared a hurdle today, passing the Assembly Budget Committee.
The 7-5 vote followed heated testimony from leaders of unions representing teachers, police and firefighters, as well as a spirited defense from Treasurer David Rousseau.
Under questioning from lawmakers, Rousseau said the plan is far from ideal, but is the only way to help towns avoid layoffs or big property tax hikes to balance their budgets during an economic crisis.
“This isn’t something we came to you with bands behind us, press releases touting a great program,” Rousseau said. “This is something we need to do to give municipalities the tools to keep property taxes under control…and we don’t want to see additional people laid off from their jobs.”
The proposal — which had been stalled since it hit turbulence in the Senate in December — passed the committee almost along party lines, with Democrats in favor and Republicans opposed. The exception was Assemblyman Joseph Vas (D-Middlesex), who voted against it.
The plan would allow towns to pay 50 percent of their pension obligations this year, 60 percent in 2010, 80 percent in 2011 and 100 percent in 2012. Corzine has said he will strictly enforce a 4 percent annual cap on local property tax increases, restricting municipalities’ revenue-raising options in a year when their state aid will likely be cut.
Bill sponsor Assemblyman Joseph Cryan (D-Union) predicted the measure now has enough juice to clear the Legislature. Cryan and co-sponsor Assemblyman Gary Schaer (D-Passaic) said opponents have yet to offer a realistic alternative, even as they acknowledged problems with putting off payments into the retirement fund for state workers.
“I hate this legislation. I think it is awful. But I think there is no choice,” Schaer said.
Republicans disagreed, saying the proposal would increase the burden on towns in the long run, and questioning why local governments that choose not to defer payments would still be forced to put that money into a separate account.
“We’re going to create such a monster in three years that no one will be able to solve,” said Assemblyman Joseph Malone (R-Burlington).
Assemblyman Declan O’Scanlon (R-Monmouth) called the plan “wildly irresponsible.”
Union leaders also joined in the attack, with representatives of the New Jersey Education Association and New Jersey State Policemen’s Benevolent Association among those worrying about the deferral’s long-term effects.
“We’re just kicking the can down the road. We’re going to have to pay it sometime,” said PBA president Anthony Wieners.
But their pleas did not change the final outcome, which committee chairman Assemblyman Lou Greenwald (D-Camden) called a harbinger of the wrenching budget choices to come.
“This is the beginning of a very difficult year,” he said.