Tuesday, September 14, 2010

Christie: You'll Hate Me Now; Thank Me, Later

Speaking to an overflow crowd at a town hall meeting in South Jersey today, New Jersey Governor Chris Christie said that when he was elected Governor last November he felt like he was invited to a party.
"The only trouble was that I was invited to arrive at the party at 8 o'clock but when I got there I discovered that the party actually began at noon. So, when I arrived I found a place littered with empty bottles, broken furniture and people out cold on the floor. The place had been trashed. I had two choices: Walk out or start to clean the place up."
Christie said he's decided to clean up after the mess. And, to him that means doing the hard work to straighten out New Jersey's finances, reform the public employees' pension and health care system and begin to get the state back on a sound financial footing.
With Lt. Governor Kim Guadagno at his side today in Gloucester Township, Christie said: "We are under no delusion that you sent us to Trenton to run a charm school. We understand that there's hard work to be done."
The Governor called for significant changes and cutbacks in the pension  and health care systems for all state workers, including police, fire fighters and teachers. And he also proposed that all participants in the health care system (including retired teachers) pay for 30 percent of their health care benefits.The move would be phased in over four years, culminating in 2014.
Among the other reforms proposed by the Governor today:
  • Teachers, municipal employees and state employees would have to work 30 years instead of the current 25 to qualify for for a full pension.
  • Annual cost of living increases for state and local retirees would come to an end.
  • Active employees would have to contribute 8.5 percent of salaries to the pension system, an amount already paid by police and firefighters. Teachers current contribute 5.5 percent. 
  • Retiree monthly pension payments would not be affected.Alteration of the state's pension formula to cuts for all future service after the reforms take place.
Christie also proposed a cap on the amount of sick time and vacation time that could be accumulated by those in the state system so that the state would not be paying employees for sick and vacation days after a certain point. And he suggested that all those in the system should be given more health care choices so that they have the option to choose more economical and/or limited plans.
To those who are directly affected by the changes that he proposes, Christie said: "You may hate me now but in eight to 10 years you may very well be thanking me for saving the system because if we don't do something now the crash will come and the system will go broke."
The Governor said that the state pension system is already $46 billion in debt and that the health care system is more than $60 billion in debt." That's more than $100 billion," Christie explained. "And I did say BILLION."
Christie stressed that the only changes that he proposes for those already retired under state pension systems would be the health care contribution. "Their pensions will not be affected," the Governor said.
“I know these reforms will not be popular with everyone,” said Governor Christie. “I also know that failure to follow through with dramatic pension reform will imperil the system for everyone, and that failure to control and share costs of health care benefits will continue to eat away at our state and local budgets. We must reverse the damage caused by fairy tale promises that have fattened benefits and pensions to unsustainable levels while ballooning unfunded liabilities to breathtaking levels.”
In the end, Christie claims that his  pension reforms will transform the current system by bringing public employee costs into line with other states and the federal government. The Governor believes that  updating an out-of-date pension system will save taxpayer dollars, dramatically reduce unfunded liabilities over time and ensure long-term stability with better than 90 percent actuarial funding within 30 years. The Administration claims that absent the meaningful reforms proposed by Governor Christie, New Jersey’s unfunded pension liability will spike from $46 billion today, to $181 billion by 2041.
And Christie repeated again that he intends to keep his pledge not to raise taxes.
Without the Governor’s reforms, the cost of public employee benefits to taxpayers will grow 40 percent over the next four years. The cost to the state for public employee benefits has already doubled as a percentage of State budget since 2001.
"These are ugly, hard truths." Christie said today. "We can either begin to get ourselves out of this hole or dig it deeper. There is no magic formula. We have to do the hard work to get out of this mess."

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