Published June 20, 2011
TRENTON, N.J. – The move to stabilize New Jersey's underfunded pension and health care systems by requiring public workers to pay sharply more for the benefits while suspending bargaining over health care was fast-tracked through the Legislature Monday, after Democrats joined with Republicans to buck the powerful public employee unions.
The Senate passed the bill 24-15 as a gallery full of raucous union members looked on; eight Democrats aligned with all 15 Republicans to pass the bill. An Assembly budget panel advanced the measure hours later, also without the majority party's support.
A vote by the full Assembly is set for Thursday. Gov. Chris Christie has already indicated his support.
"The time for political calculations is over," said Senate President Stephen Sweeney, a Democrat and member of the ironworkers' union, who sponsored the bill. "The time for passing the buck to someone else is over."
The Assembly Budget Committee approved the bill 7-5 after an eight-hour hearing that began with an impassioned plea from Assembly Speaker Sheila Oliver. Three Democrats paired with four Republicans; five Democrats voted 'no.'
"This is the correct legislation for this moment," Oliver said. "This bill will ensure a strong future for our state."
The Republican governor, a driving force behind the landmark legislation, praised the Senate for its action.
"This is a watershed moment for New Jersey, proving that the stakes are too high and the consequences all too real to stand by and do nothing," he said in a written statement. "As a result of Democrats and Republicans coming together to confront the tough issues, we are providing a sustainable future for our pension and health benefit system, saving New Jersey taxpayers hundreds of billions of dollars and securing a fiscally responsible future for our state."
Sweeney and Oliver, also a Democrat, struck a deal with Christie and GOP legislative leaders to advance the bill. They rejected repeated calls from union leaders and Democrats to split the bill and force the governor to negotiate health care with the largest public worker union, the Communications Workers of America, whose contract expires June 30.
"You've made the governor not do his job," said Adam Liebtag a Communications Workers of America local president.
An amendment relaxing a potential deal-killer — a provision restricting public workers' access to out-of-state medical care unless similar care wasn't available in-state — was approved in the Senate, 24-14.
The change instructs new health care boards to create insurance plans that include only in-state providers, as well as options that include coverage for out-of-state providers. Employees could choose the plan they want, but more extensive benefits would cost more.
Senate Majority Leader Barbara Buono was among many to question the effectiveness of the last-minute change.
"I don't think there is any physician that would knowingly sign this certification," she said. "It doesn't need to be watered down. It doesn't need to be amended. It needs to be stricken."
The employee benefits legislation requires a half-million teachers, police, firefighters and other public workers to pay a portion of their health insurance premiums based on income. Pension contributions would also rise, by 1 percent immediately, and by an additional percent or more after a seven-year phase-in. Automatic cost-of-living increases on pensions would disappear, for now.
The average New Jersey public worker — who earns $60,000 and contributes $900 toward health care — would see their yearly health care costs rise to $2,056 for single coverage or $3,230 for a family plan, after a four-year phase-in.
The legislation is intended to shore up underfunded retirement systems, which are short of eventual liabilities by a combined $110 billion.
Bill Dressel, the head of New Jersey's League of Municipalities, told lawmakers the state's unfunded pension liability is "a ticking time bomb" that they now have a chance to defuse.
Sweeney estimates the pension savings at $120 billion over 30 years and the health care savings at $3 billion over 10 years. However, the law contains a sunset provision that allows collective bargaining to resume over health care in four years. A Treasury official testified last week that the health care portion of the bill would save $10 million the first year, not the $323 million Christie's budget anticipates.
Public-sector unions remain vehemently opposed to the legislation, in part, because it limits collective bargaining over health care. They also say the bill does nothing to contain health care costs, like encouraging bulk purchasing, and is being steam-rolled through the Legislature. Hundreds turned out at the Capitol on Monday for another day of protests that started with a march across the Delaware River into Trenton.
"You can spin this legislation any way you want, but the bottom line is this legislation circumvents the collective bargaining process," said Dominick Marino, president of the Professional Firefighters Association of New Jersey. "Don't kid yourselves, this bill is anti-labor. It is in no way a bill that helps labor, nor is it the right thing to do."
More than 3,000 public workers showed up at the Statehouse Thursday to protest when the bill was up for a vote in a Senate committee.
"This is the defining moment for the labor movement in our generation," New Jersey AFL-CIO President Charles Wowkanech wrote in an email to enlist support for Monday's rally, the latest of several recent Capitol protests.
The provision to allow collective bargaining over health care to resume after four years did little to quell union objections. Objections also did not diminish over any attempt to limit access to out-of-state care.
The effort to limit public employees' collective bargaining rights has gained momentum in other states. The GOP-led effort in Wisconsin calls for public workers to pay more for health and pension benefits beginning in late August unless a lawsuit by a coalition of unions is successful.
In Ohio, Gov. John Kasich in March signed a law limiting bargaining rights, which has yet to go into effect. And in Michigan, the Republican state Senate has passed measures to require most public employees to cover at least 20 percent of the cost of buying their health insurance coverage, with some flexibility for local bargaining units.
The Massachusetts House passed a bill in late April stripping public-sector unions of the right to bargain over health care.