By Briana Vannozzi
Correspondent
Assemblyman Declan O’Scanlon’s proposal looks and sounds a lot like the ones put forth by the governor and the commissions created to review the debt-ridden pension system.
“If you look at, in today’s dollars, what the shortfalls would be the sixth year out just in pension and health benefits and some other marginal growth factored in, you take those categories from about 13 to 14 percent of our budget this year to 27 percent of our budget in 2023,” O’Scanlon said.
He plans to avoid that with a three-part plan:
- Keeping a constitutional amendment requiring the pension payments. But on an annual basis instead of quarterly as proposed by Democrats.
- Overhauling public-sector health benefits to make the pension payments.
- And creating a seven-member task force to decide the details of reformed health benefit plans.
“Our plan will save approximately two and a quarter billion dollars as soon as it’s implemented,” O’Scanlon said.
The bulk of his found savings will come from the health benefit reforms.
“We take all public sector employees from the platinum level health plan down to a gold level plan or something just north of that,” he said.
That brings in an estimated savings of $810 million a year, he says. The next step is to transfer early and existing retirees to exchange programs — where available — netting another $600 million a year. Several other reforms would make up the rest.
“This proposal today has components of it that are worthwhile looking at. We’re going to look at the details, but it gives the maneuverability and flexibility that we’re looking for in case the economy goes south on us,” said New Jersey Chamber of Commerce Executive Vice President of Government Relations Michael Egenton.
“The constitutional mandate to make the payments will only go into effect if the reforms happen,” O’Scanlon said.
O’Scanlon says there’s a built in safety valve to the constitutional mandate. It allows the state to suspend pension payments in any given year if revenue falls below 1.5 percent of the budget for the amount of the difference. And to share revenue if it increases by more than a half percent.
But the director for the state’s largest worker union, Hetty Rosenstein, is skeptical saying that “would probably allow the Christie administration to never make the pension payment anyway, since that would merely allow them to do what they have done for two decades.”
Though it’s unlikely, Assemblyman O’Scanlon says it is possible for the Legislature and unions to have a “kumbaya” moment. And get the super majority needed to pass the constitutional amendment and have it ready in time to put it on this November’s ballot.