NJ Democrats Propose Salary and Benefits Cuts to Ease $30B Deficit

June 2, 2006 (PLANSPONSOR.com) - Three Democratic New Jersey lawmakers have proposed a plan that would cut workers' salaries and benefits by 15%, saving the state an estimated $700 million.

According to the Atlantic City Press, the state worker plan would include measures such as increasing the state retirement age from 55 to 60, reducing the number of state holidays, and a ban on cashing out on unused sick and vacation time. It also called for a ban on multiple pensions and would force retired state workers to pay for health care benefits and limit the health benefits to full-time employees.

The state worker plan was proposed by Senator Stephen Sweeney and two assemblymen from his district, according to the Press report.

The proposal aroused opposition from the governor’s press secretary Anthony Coley, who said “The budget is not the time or the place for contract negotiations,” the Atlantic City Press reported. The president of New Jersey’s largest state workers’ union, Carla Katz of the Communications Workers of America, also condemned breaking contract obligations with state workers. The current state worker contract expires June 30, 2007.

According to the newspaper, the agressive proposal is not expected to pass legislative muster.

The state said in January it would begin investing in hedge funds as one way to help lift the pension system out of a $30 billion deficit (See NJ Turns to Hedge Funds to Overcome Pension Deficit ). The state must pass a budget by July 1.

The proposal comes a few days after New Jersey Republicans proposed researching 401(k)-type retirement plans for new public workers, only allowing public workers to have pensions at one job, banning large salary increases and discontinuing pensions for public contractors (See NJ Republicans Propose Pension Bill).