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Towns must pay $267M more to fund pensions
Towns must pay $267M more to fund pensions
Star Ledger, July 31, 2006
Adding pressure to New Jersey’s mounting property tax bills, local government officials learned today they will have to fit more than a quarter-billion dollars in new pension payments into their budgets for the upcoming year.
Pension contributions are scheduled to total $650 million this year, for the local share of payments into the two retirement plans that cover retirement benefits for police officers, fire fighters and local government employees.
That’s an increase of $267 million over the pension payments included in this year’s local budgets, and is an expense that was not even included in local budgets before 2004.
“It’s going to have a horrendous impact on municpal budgeting,” said William G. Dressell, Jr., executive director of the New Jersey State League of Municipalities. “It brings into play more service reductions, possible deferral of capital improvement projects and/or higher property taxes.”
State Treasurer Bradley Abelow, whose office released the contribution estimates late this afternoon, offered little comfort to local officials grappling with pension bills that are rising at a clip of about 70 percent annually. He predicted more of the same next summer.
The contributions reflect the amount local governments must pay to set aside enough money to cover retirement benefits already promised to active and retired employees of police and fired departments, school boards, cityt halls and government agencies.
Newark taxpayers, for instance, face a total bill of $20 million to cover payments into the retirement systems on behalf of the city, the police department, the housing authority, certain public school employees and the city parking authority. That’s $12.8 million more than the city owed this year.
“Gov. Corzine has outlined a multi-faceted approach to controlling pension costs and has embarked on fiscal reforms that will bring the state budget under control,” Abelow said in a statement. “While these changes may not come fast enough to ease the pension contribution impact on both state and local governments, the governor and the Legislature are working with a sense of urgency on lasting reforms to ease the tax burden on all New Jerseyans.”
Dressell, however, said that in the face of the soaring pension bills, it appears the state is acting too late to help property taxpayers.
“The patient is lying on its death bed and now you’re talking about maybe we should have administered the medicine last week.”
The New Jersey State League of Municipalities, in the July 27, 2006 "Dear Mayor faxed Issue Alerts and E-Mail Alerts" notified their membership of the increase in Pension and Health benefits payments.
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