GLOUCESTER TWP — Calling on New Jersey to be "more solvent and more honest," Gov. Chris Christie today proposed a vast package of changes to pensions and benefits for many current public workers that will shift more costs to employees to help state and local governments cope with looming health and retirement bills.

Speaking at a town-hall style event in Gloucester Township, Christie proposed changes that would affect every public worker - including judges, teachers, police officers and firefighters - such as requiring bigger contributions into their pension and paying for health care based on premiums instead of a percent of salary.

"Pensions are all about numbers," he said. "There's no magic...We cannot sustain them."

The proposals would provide more immediate relief for government budgets than an initial package of changes signed in March that mostly affected future hires.

Stock-market losses, a growing public workforce and a decade-worth of the state not paying its bills have led to an estimated shortfall of $46 billion that represents the difference between how much New Jersey has pledged to its public workers for retirement payments and how much it has saved in investments.

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Health care costs are even bigger, with state and local governments owing an estimated $67 billion in future costs. Instead of saving or investing money for this cost, bills are paid as they come due, according to state figures. This year, the state will spend more than

$2.5 billion out of a $29.4 billion budget on health care for state and school workers. Estimates for both the health care and pension gaps are current as of around July 1, 2009.

For state and many school employees, Christie’s proposal would not only undo a 9 percent increase granted in 2001 for many employees, it would go further and make pension savings less lucrative than before the increase, he said. He would also increase the retirement age to 65 and penalize workers who retire early.

Pensions are calculated using formulas that count how many years an employee has worked and the average salary over the final years of a career. The plan would increase the number of years included in that average from three to five for state workers and teachers, and one to three years for police and firefighters, he said. The plan would also eliminate automatic cost-of-living adjustments in pensions.

Some parts of the plan would decrease costs for the state, but others — at least on paper — would make the shortfall appear to grow. For example, Christie proposed decreasing the assumed rate-of-return on investments to 7.5 percent from 8.25 percent, a move several other states have done or are considering. That means the state will assume it will make less money in the market and, therefore, require state and local governments to pay more to make up for the gap. But experts have said it’s a more realistic way of predicting how much pensions will cost.

"It's going to mean more hard choices," he said.

Christie also proposed restructuring how employees contribute to health care. Rather than pay 1.5 percent of salary a year toward health care costs, Christie proposed requiring employees to pay 30 percent of the price of the health care premium. Co-pays and other costs would also increase.

Christie also proposed requiring all workers to contribute 8.5 percent of their salaries toward their pensions — the same as firefighters and police officers — up from 5.5 percent for other workers or 3 percent for some judges.