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2-24-15 Governor Delivers FY'16 Budget Message This Afternoon

The Record - Christie lays out $33.8B budget; includes pitch to freeze pensions for public employees FEBRUARY 24, 2015, 1:00 PM LAST UPDATED: TUESDAY, FEBRUARY 24, 2015, 5:17 PMBY DUSTIN RACIOPPI AND MELISSA HAYESSTATE HOUSE BUREAU | Governor Christie unveiled a $33.8 billion budget in a speech Tuesday that focused heavily on the state¡¦s ailing pension system and included a pitch to freeze pensions for public employees.¡§By putting forward new solutions to age old problems, we are creating a national model,¡¨ said Christie, a two-term governor now considering a run for president. Christie announced what he called a ¡§groundbreaking¡¨ plan to freeze the existing pension plan and replace it with a new one, a deal that he has quietly brokered with the New Jersey Education Association, a massive organization that has been at odds with Christie.Related: Full text of Governor Christie's Budget AddressThe plan, called the ¡§Roadmap for Reform,¡¨ would require an amendment to the state Constitution, to be voted on in November. Christie said the reform would transfer control of the existing and new plan from the state to a trust overseen by the NJEA. The payment amounts and percentages of annual increases, Christie said, are ¡§subject to further discussion.¡¨NJEA President Wendell Steinhauer, however, said that ¡§the governor kind of embellished¡¨ the terms of their relationship and that ¡§there is not a deal.¡¨ The association is open to working with the administration to find solutions.¡§We¡¦re trying to get somewhere, and where we¡¦re trying to get is to a pension that is not in question every four or five years as to how the funding is going to happen,¡¨ Steinhauer said. Democrats in the Legislature seized on that difference between the association and the governor.¡§There (were) clear missed signals today,¡¨ said Assembly Speaker Vincent Prieto, D-Secaucus. ¡§Apparently he has a deal on a roadmap; I have no idea what that means.¡¨ NJEA President Wendell Steinhauer, however, said that ¡§the governor kind of embellished¡¨ the terms of their relationship and that ¡§there is not a deal.¡¨ The association is open to working with the administration to find solutions.¡§We¡¦re trying to get somewhere, and where we¡¦re trying to get is to a pension that is not in question every four or five years as to how the funding is going to happen,¡¨ Steinhauer said. Related: No funding for business incentive program in Christie budgetDemocrats in the Legislature seized on that difference between the association and the governor.¡§There (were) clear missed signals today,¡¨ said Assembly Speaker Vincent Prieto, D-Secaucus. ¡§Apparently he has a deal on a roadmap; I have no idea what that means.¡¨Christie¡¦s address to a joint session of the Legislature highlighted what he said are pension fund contributions that total more to the system than any other governor. On Tuesday, Christie announced a plan to spend $1.3 billion on pensions, the most in state history, he said, and that would bring his total contributions as governor to $4.2 billion.But Christie¡¦s talk on boosting pension contributions comes just one day after a Superior Court judge ruled that Christie must work with the Legislature to find a way to pay nearly $1.6 billion into the pension fund that he had cut from the 2015 budget. That decision will have no impact on the 2016 budget, the administration said.In an oblique reference to Monday¡¦s court ruling, Christie said: ¡§The numbers do not lie, and let me tell you this: We don¡¦t need any court to tell us we have a serious problem. I have stood behind this podium for five years speaking candidly about this problem.¡¨ Related: Public employee pensions would be frozen, future benefits reduced under reform plan Funding for the $1.3 billion pension payment is expected to come through a 3.8 percent increase in revenues and making ¡§difficult choices¡¨ ¡V cuts ¡V elsewhere in the budget, Treasurer Andrew Sidamon-Eristoff said. Christie had slashed the current year¡¦s pension payment by nearly $1.6 billion because revenue projections had been overly optimistic. But Sidamon-Eristoff said the $3.8 percent projection for 2016 is ¡§reasonable.¡¨¡§The steady improvement in the economy and decreasing unemployment supports our expectation that sales tax will grow,¡¨ he said.The governor¡¦s budget does not include any new taxes and it will keep aid to towns and public schools as well as property tax relief at current levels. No district will lose K-12 funding, Sidamon-Eristoff said. The budget does not also address the state¡¦s faltering fund for transportation improvements, a fund that many say needs to be replenished with higher gas taxes because nearly all of the money it takes in goes out now to pay debts. Democrats were strongly critical that there was no mention by Christie of the Transportation Trust Fund.And Democrats were not happy with the governor¡¦s budget address overall, saying it lacked detail, shifted blame and had no vision. Senate President Stephen Sweeney was especially critical of Christie¡¦s repeated rejection over the years of a millionaire¡¦s tax and a corporate business tax to raise revenues.¡§The plan is, ¡¥I give up, I can¡¦t fix it, so we¡¦re just going to break our word and not try,¡¦¡¨ said Sweeney, D-Gloucester.Over the course of the 26-minute speech, Christie was at moments critical of the media, who he said has tried to convince the public that his pension reforms from 2011 have been ineffective, and of some legislators, who Christie said argue that raising taxes will fill the pension gap.Christie also renewed his commitment to giving ¡§the type of leadership our state requires.¡¨¡§I will never give up on New Jersey,¡¨ he said. ¡§This is why the people have sent me to this chair twice and we will not stop fighting for them until my last day as governor.¡¨Sen. Loretta Weinberg, D-Teaneck, a frequent critic of Christie, used those words to throw doubt on the governor¡¦s White House aspirations.¡§I¡¦m glad he said he isn¡¦t going to give up on New Jersey, because I don¡¦t think he¡¦s going to be able to,¡¨ she said. Email: racioppi@northjersey.com Pension and Benefit Study CommissionNon-Partisan Study Commission Asked To Think Big And Be Bold: Governor Christie signed Executive Order 161 creating a non-partisan ¡§New Jersey Pension and Health Benefit Study Commission.¡¨ The panel of experts are tasked with thinking big and being bold when it comes to developing recommendations for how New Jersey can create a sustainable retirement and health benefits system. The Commission¡¦s charge is to think long term and outside of the box when it comes combating these ever growing entitlement costs. The Study Commission will review:„X The history of the State¡¦s pension and health benefit systems in order to understand what has led to the current crisis;„X The soon-to-be-completed Department of the Treasury¡¦s Division of Pensions and Benefits¡¦ exhaustive review of potential public employee entitlement reform proposals;„X Reforms proposed and enacted by other states or government entityes;„X Pension and health benefits provided in the private sector; and„X Other factors it deems relevant in order to develop recommendations regarding reform that will lead to the systems being in better financial shape with less cost to the taxpayers while providing public employees and retirees with an appropriate level of benefits.Published Reports:A Roadmap to Resolution: Report of the New Jersey Pension and Health Benefit Study (Feb. 24, 2015) (949 Kb)Roadmap for Reform: An Agreement with the New Jersey Education Association (Feb. 24, 2015) (784 Kb)Truth & Consequence: Status Report of the New Jersey Pension and Health Benefit Study Commission (Sept. 25, 2014) (857 Kb) The Pensions and Benefits Study Commission welcomes the opportunity to review your ideas and suggestions to make the system sustainable for taxpayers and retirees. Study Commission ExpertsThomas J. Healey, CFA, Partner, Healey Development LLC, former Asst. Sec. of the US Treasury for Domestic Finances under President Reagan. Mr. Healey will coordinate the work of the Study Commission.Tom Byrne, managing member and founder of Byrne Asset Management; vice chairman of the New Jersey State Investment CouncilRaymond Chambers, philanthropist, founding chairman of the NJ Performing Arts CenterLeonard W. Davis, CFO, SCS Commodities Corporation, manager of private equity, technology, and natural resource companiesCarl Hess, Managing Director of The Americas for Towers Watson and former Managing Director of Towers Watson Investment businessDr. Ethan Kra, Ph.D, Ethan E. Kra Actuarial Services, specializing in analyzing economic and accounting implications of financing strategies and vehicles for employee and executive benefitsKen Kunzman, Partner, Connell Foley, co-Counsel since 1978 of the Pension and Welfare Funds for Locals 472 and 172 Heavy and General Laborers Fund of New JerseyLarry Sher, October Three ConsultingPartner, consulting actuary and member of the senior leadership team for a full service, actuarial, consulting and technology firm that is a leading force behind the reemergence of defined benefit plans across the countryMargaret Berger, Mercerconsulting actuary and Principal for the Retirement Practice of a global consulting leader in talent, health, retirement, and investments, with specific expertise in defined benefit plans, nonqualified plans and retiree medical and life insurance plansRaj Tatta, Retired Senior Partner, PricewaterhouseCoopers LLP, with emphasis on being the key partner for Human Resource Services. He brought his skills to the Global Fund to Fight AIDS, Tuberculosis and Malaria with restructuring their Human Resources¡¦ policies and procedures. Last Updated: Tuesday, 02/24/15 Star Ledger - NJEA accuses Christie of overstating pension deal, says it's 'deeply disappointed' By Matt Arco | NJ Advance Media for NJ.com Email the author | Follow on Twitter on February 24, 2015 at 4:52 PM, updated February 24, 2015 at 6:00 PM TRENTON Gov. Chris Christie touted as an ally today in his annual state budget address says the governor "overstated" their partnership.The New Jersey Education Association, the state's largest public worker union, issued a sharp response to Christie's budget proposal after the governor said the commission he appointed to tackle the state's ailing pension system "reached an unprecedented accord with the NJEA."________________________________________ MORE: Democrats say Christie's speech wasn't about N.J. budget The union was swift to respond, declaring "politics trumped policy" in the governor's address."NJEA is deeply disappointed that Gov. Chris Christie overstated the nature of the understanding we reached with the commission after many months of conversation," NJEA President Wendell Steinhauer said in a statement, less than two hours after Christie's speech."We have not agreed to any changes to pensions or health benefits," he said. "We have only agreed to continue looking at all solutions that may provide our members with more stable pensions and affordable, high-quality benefits."The response undermined Christie's statements today when the governor sought to tout working with an unlikely ally in tackling the state's pension woes.The NJEA has spent more than $30 million since Christie was elected to combat the governor, who has frequently criticized the union.Christie's office on Monday said his administration and the NJEA were working on "groundbreaking changes" to fix the state's pension system.Christie has routinely burnished his ability to work across party lines as a major selling point to voters across the nation. And today, he touted a working relationship with the state's largest teacher union, the New Jersey Education Association."For the last five months, the (pension) commission has worked with the NJEA to find common ground," Christie said. "I am pleased to announce today that the commission, with my support, has reached an unprecedented accord with the NJEA on a 'Roadmap for Reform' to solve our long-term problems with the pension and health benefit systems."Before the speech, the NJEA made clear a deal has not been struck between the union of the governor on overhauling New Jersey's ailing pension system."I think what's been described as an agreement is really a roadmap and a path forward," said Edward Richardson, executive director of the NJEA."The intricacies of pension reform policy has not been agreed to," he said, adding, "But we want to continue working on it."But Christie's office said today it never implied a deal was struck between the union and the administration. Rather, it said the NJEA agreed on a framework and was committed to engaging in discussions moving forward."We are all in agreement that there is more work to be down, but there is a roadmap signed by all parties as to what the path forward needs to be," said Christie spokesman Kevin Roberts. MORE POLITICSMatt Arco may be reached at marco@njadvancemedia.com. Follow him on Twitter @MatthewArco. Find NJ.com Politics on Facebook. The Record - Reform 'roadmap' would overhaul N.J. public employee pension, health benefits FEBRUARY 24, 2015, 3:08 PM LAST UPDATED: TUESDAY, FEBRUARY 24, 2015, 7:17 PMBY HERB JACKSONWASHINGTON CORRESPONDENT | Public employee pensions would be frozen, and future benefits reduced to levels more common in the private sector under a benefit reform "roadmap" that Governor Christie endorsed in his annual budget speech on Tuesday.Christie urged labor unions to work with his administration to fill in the details of the plan, and said the state's largest teachers union, the New Jersey Education Association, had already agreed to a conceptual framework.If ultimately approved by the Legislature and voters in a constitutional amendment, union employees would see their current state pension benefits frozen. And once unions take control of the pension system from the state, another component of the plan, union leaders would be able to establish a new retirement plan for employees, one that could cut retirement payments to lower costs. NJEA's president, Wendell Steinhauer, said the union only agreed to parts of what was proposed, and to continue negotiating.To get unions to agree to concessions, the state is offering to turn over control of retiree systems to them in the future. Christie also said the state should write a commitment into its constitution to make future payments for promised benefits. Christie and previous governors have skipped payments when budgets got tight, creating a massive unfunded liability.Related: Christie lays out $33.8B budget; includes pitch to freeze pensions for public employees The roadmap was developed by a special study commission Christie appointed that released its report during his budget speech.The commission called for overhauling both pensions and health benefits, and said that the existing health plan for public workers is more generous than the "platinum" plan offered under the Affordable Care Act, or Obamacare. Noting that employers could satisfy the federal law by offering a "bronze" level plan, the commission called for setting the standard at the level offered by most large private companies in the state, which is closer to the "gold" level.The framework calls for realigning the state and local responsibilities for retiree costs, a recognition that while the state pays for teachers, municipalities must pay into the state system for most of their employees' benefits. According to the commission, municipal savings from lowered health insurance costs would provide enough money that they could help contribute to reducing the unfunded benefits costs.Steinhauer, of NJEA, said the union discussed creating a "union-managed pension system funded by employees and employers," having the state pay in full for the cost of benefits currently earned by active and retired employees, and ways to deliver better health care at a lower cost.But he said Christie had overstated what the union had endorsed and was "deeply disappointed."The commission, in it's report, anticipated a rough road ahead."We recognize that there are elements of this approach that are likely to be unpopular at first, but believe in time they will be viewed as the best way to move forward," the report said. "Under the circumstances, continued inaction is the same as conceding failure." Email: jackson@northjersey.com Blog: northjersey.com/thepoliticalstat