The Press of Atlantic City reports that the state’s towns, counties, and school districts would be able to hold onto about $540 million of the $1 billion pension contributions they are scheduled to make in April. In exchange for the relief Corzine suggested that few towns would be allowed to raise their budgets more than the state-capped 4% next year.
Corzine said the legislation would allow municipalities, counties, schools and local authorities to postpone 50% of their pension obligations for three years or set the funds aside for eventual repayment, according to The Press. The proposed legislation would require full funding of the pension system by 2012.
Corzine’s proposal came as the state Treasury announced the state pension was worth $61.9 billion as of October 31, a decline of $15.8 billion since July 1, mostly due to stock losses.
Estimates earlier this year indicated the state’s unfunded pension liability in excess of $28 billion, the news report said.
Last week, in a letter to U.S. Treasury Secretary Henry Paulson, Mayors Michael Nutter of Philadelphia, Shirley Franklin of Atlanta, and Phil Gordon of Phoenix called on officials to use some of the federal government bailout money to help local governments pay their pension costs (See Mayors to U.S. Treasury: We Need Pension Help from Bailout).