New Jersey Governor Chris Christie signed into law sweeping changes to the state's pensions and health benefits Tuesday that will force current employees to pay more and eliminate cost-of-living increases.
The law crafted by the New Jersey Republican governor will save an estimated $120 billion over 30 years in pension costs for around 500,000 active and retired public workers.
With revenues still below pre-recession levels, Republicans and Democrats across the nation are trying to curb ballooning work force costs, bringing public-sector benefits in line with those of the less generous private sector.
By the time New Jersey's changes are fully phased in, an employee making $70,000 a year -- or slightly above the average -- will pay an extra $5,000 for a family health-care plan and make $1,100 more in pension contributions, the unions said.
The pension-benefits law has been a top priority for Christie since he took office in 2010, and has helped vault him to national prominence, though a few heated exchanges with public servants, including teachers and state legislators, prompted questions about whether he was too abrasive.
On Tuesday, Christie singled out the state's Democratic legislative leaders -- Senate President Stephen Sweeney and Assembly Speaker Sheila Oliver -- for praise. The public, he said, ``expect us to stand for our principles, but they also expect us to be able to sit with each other ... and compromise,'' the governor said in a live video on Twitter.
RAISING THE RETIREMENT AGE
Among a number of changes, the new law makes age 65 ``the normal and early retirement age,'' according to the governor's statement. The law also raises the amount of service needed for early retirement to 30 years, and only allows changes in these kinds of requirements if the pension fund has achieved certain benchmarks for their actuarial asset value.
Curbing the state health benefits system could save another $3.1 billion over the next decade.
It was a huge victory for Christie when the plan was approved by the Democrat-led Legislature this month, to the dismay of some unions that traditionally support Democrats.
``By daring to be bold and take on the risks of addressing the big issues, we are doing what was once unimaginable -- saving billions of dollars for taxpayers, fixing these systems in order to save them, and providing real, long-term fiscal stability for future generations of New Jerseyans,'' he said.
Christie has offered high estimates for how much the changes will save the state over time, but his administration has been slow to release the calculations and assumptions that support those estimates, despite requests from Reuters.
Charles Wowkanech, president of the New Jersey State AFL-CIO, said the new law hurts working families.
``It is a terrible moment for all of the police, firefighters, teachers, state and local government workers who pay taxes, played by the rules, and contributed to their pensions when government didn't,'' he said in a statement.