Tom Keene's Econo Chat

Governor, what is your biggest headache these days?
Our pension system [for state and local workers] in New Jersey is $46 billion underfunded. Even if the state made every dime of its contribution for the next 15 years, at the end we'd be $85 billion underfunded. Our health benefit plan is $67 billion underfunded.

What's the most important pension reform you'd like to make?
Raising the state worker retirement age to 65 from 62 is very important. I think also eliminating cost-of-living adjustments. The COLAs are an extraordinary cost driver in our pension costs. We also need to increase the pension contribution that public-sector employees are making to a uniform 8.5 percent [of salary]. Right now, a state employee pays anywhere from 3 percent to a high of 8.5 percent.

The unions aren't just going to lie down and take this.
They're already fighting. But I went before the firefighters' convention and I said, you know, I understand why you're angry. For 20 years governors have been lying to you about the kind of benefits they can provide you. I'm the first guy who's telling the truth, which is if we don't do these reforms, we are going to wind up with you not having a pension in 10 or 15 years.

How did that go over?
Better than you thought it would. In the beginning, probably a third of the folks there were booing. When we got done, it was much less than that.

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