Plans to overhaul NJ’s government face murky path ahead

TRENTON » New Jersey’s Senate president is pushing a raft of costsaving proposals to rescue the state from potential fiscal ruin, but the bipartisan recommendations face an uncertain future in the Legislature and with Gov. Phil Murphy.

Senate President Stephen Sweeney, a Democrat, unveiled the recommendations on Thursday from the Economic and Fiscal Policy Workgroup after seven months of consideration by the 25-member panel.

Among the recommendations is shifting state and local workers from a defined-benefit pension plan to a hybrid 401(k)-style plan for new workers and those with fewer than five years of service. The panel also is calling for cutting health benefits for retirees from platinum plans to gold.

Other changes include merging school districts into regional systems that would go from kindergarten to 12th grade and allowing for the voluntary establishment of up to two countywide districts as a pilot program. Another proposal calls for reviewing the state’s sales tax exemptions.

The committee also recommended exploring the viability of transferring major assets, such as the New Jersey Turnpike system, to the state pension to lower the retirement system’s unfunded liability.

Sweeney pledges a series of meetings across the state to push for the changes the panel recommended and says he expects a political battle over the measure.

“Of course we’re going to have a fight,” Sweeney said. “Any change that’s worth anything comes with a fight. The easy stuff is done. It’s gone.”

A particularly challenging issue is pension and health benefit changes, which continually bedevil the state and represent what the committee calls a $152 billion liability.

Republican and Democratic reaction to the recommendations has been mixed. Assembly Speaker Craig Coughlin, a Democrat, says he looks forward to reviewing the proposals. Murphy, also a Democrat, said he welcomes a conversation, but he stopped short of embracing the proposals.

Tellingly, the state’s biggest teachers’ union, the New Jersey Education Association, which has feuded fiercely with Sweeney in recent years, bashed the plan.

“The report glosses over the state’s failure to meet its obligations and get its fiscal house in order,” the union’s leaders said in a statement.

The union is a major Murphy supporter, which strains relations with Sweeney because he faced a Republican challenger bankrolled by it in last year’s election.

The bad blood between Sweeney and the union goes back to his support for pension changes under Gov. Chris Christie, a Republican.

Senate Minority Leader Tom Kean Jr., a Republican, said the proposals mirror what the GOP has put forward before and he’s confident his caucus can work with Sweeney.

But other Republicans don’t sound so open. Doug Steinhardt, the state party’s chairman, suggested the calls for lowering costs and cutting benefits to help the state’s strained budget weren’t sincere.

“While their words today say they want to own the lower tax narrative, their actions kill it,” he said.

He pointed to this year’s budget, which hiked taxes on annual incomes over $5 million and rates on businesses making more than $1 million.

Business groups praised the effort to make the state affordable. But they want more time review and “digest” the recommendations, state Chamber of Commerce President Tom Bracken said.

Whether any of the proposals makes it to Sweeney’s desk is unclear. Sweeney promised committee hearings with some legislation expected to be drafted in the coming months.

Up next, Sweeney said, would be the hiring of an actuary to crunch the pension figures. As of Thursday, the potential savings, or costs, of any of the proposals was unclear.