NJ Governor Proposes Benefit Hike Halt

March 2, 2005 (PLANSPONSOR.com) - Faced with what he described as a "fiscal crisis" in the Garden State, Acting New Jersey Governor Richard Codey has called for a moratorium on public employee benefit increases.

In his budget address to the state legislature in Trenton Tuesday, Codey also said he plans to appoint a task force to examine ways to reduce costs, according to a Gannett News report. The proposed budget faces a $340 million mandatory spike in costs for health benefits, retiree medical care and pensions – bringing the overall cost for these items to $2.4 billion or nearly 9% of the spending plan, according to the report.

“Today I am calling for a timeout to this madness of entitlement spending,” Codey said, whose description of the benefits as entitlements raised objections from employee unions.

In the speech, Codey blamed both Republicans and Democrats for allowing state spending to spiral out of control. “The good news is we’re not bankrupt. The bad news is we’re close,” Codey said. Later in the address, Codey added, according to the news report: “We have to face some tough choices about what we can afford and what we should fund because we cannot do everything.”

Although the $27.4 billion proposal is $600 million smaller than the budget signed in June, spending for the state government itself rises due to what the administration said are increases mandated by laws, contracts and court rulings.

The Legislature will still have a large say before the budget becomes final. The Senate and Assembly now take up Codey’s proposal, and under the state constitution must pass the budget and have it signed by the governor by July 1.