NJ lawmakers once again moving quickly to boost pensions for some of their own

Catherine Carrera | NorthJersey

Show Caption Hide Caption Sweeney: handful of politicians benefit from pension-padding (2017) N.J. Senate President Stephen Sweeney told reporters that 'handfuls' of politicians will benefit from pension-padding bill, A-5322, which passed the Senate on Monday, Dec. 18, 2017.

New Jersey lawmakers are rushing ahead with a bill that would boost retirement benefits for their colleagues as they plan votes on a budget that likely means a state government shutdown, all while the pension system remains one of the nation's most troubled.

Who would get the pension perk is not exactly clear. How much they get and how much it would ultimately cost taxpayers are also questions lawmakers are not answering.

If they do go ahead with the pension boost, it would be the second time this year that lawmakers agreed to increase benefits for one of their own.

The proposed bill would be an extension, lawmakers say, of a measure signed earlier this year by former Gov. Chris Christie, a Republican, which seemed to primarily benefit his ally and former Camden Mayor Dana Redd, a Democrat.

Under the proposed measure, which was advanced by the Assembly budget committee Monday, an elected official could submit a written request to re-enroll for Public Employee Retirement System benefits if the official had been removed from the system as a result of a 2007 law.

“Leadership said, ‘Would you mind putting this in?’ and they explained it to me and it seemed to be reasonable,” said Assemblyman John McKeon, D-Morris, who introduced the bill last week.

Elected officials who came into office after July 1, 2007, were placed into a system similar to a 401(k), instead of the more generous PERS. That law also removed elected officials from PERS if they switched roles after 2007; that applied to Redd who became mayor in 2010 after having served on the council. Because of that changed role, she was removed from the system.

Democratic legislators said the law signed by Christie in January "fixed" the 2007 law, making it so that officials like Redd can re-enroll in the system and get benefits for the years they were out of the system but serving in another elective capacity.

The proposed bill would amend that law to allow those elected officials to re-enter by a written request, receive retirement allowance for the time they were out of the system and get a retroactive payment for the years they were out. But the officials won't need to make any additional payment, the bill states.

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“Why should they be penalized?" McKeon said. "All this does is allow them to get, if they want to, to get credit for the years from 2007 up until the date of retirement.”

But the state has one of the worst-funded pension systems in the country, with a liability of about $124 billion, according to Standard & Poor's estimates.

“It’s not really about the dollars, because the system already owes so much that a handful of legislators getting more money isn’t going to break a system that’s already broken, unfortunately,” said Steven Malanga, a fellow at the conservative Manhattan Institute. Malanga co-authored a January report titled, “Garden State Crowd-Out: How New Jersey’s Pension Crisis Threatens the State Budget.”

'Just unthinkable'

But he said the bill “corrodes the moral authority” of the legislators who are tasked with fixing the pension system.

“It’s just unthinkable that they would do that, because the New Jersey pension system is the worst-funded pension system in America,” Malanga said. “How can legislators having to deal with this tremendous problem be giving themselves more at the same time?”

Neither McKeon nor Republican Assemblyman Edward Thomson was able to comment when asked Wednesday about who would benefit from the proposed bill. According to Politico, which was the first to report on the bill and its effect, Assemblyman Ralph Caputo, D-Essex, and Sen. James Beach, D-Camden, could benefit from the bill.

Thomson, who voted against the bill in committee, said the bill makes it easier for elected officials to benefit from PERS without going through the process of re-enrolling if they were out of the system.

“You went off payroll as of 2008, let’s say. It’s now 2018. What they’re saying with this bill is, ‘You know, we’ve made a mistake. We’ll allow you to get that 10 years of credit; you don’t even have to re-enroll,’ ” said Thomson, R-Monmouth, adding that during those 10 years the officials would have had to be in “some type of public employment.”

The Senate and Assembly planned votes Thursday on a budget plan and a package of tax increases. Lawmakers and Murphy have been at odds over taxing the rich versus rich corporations, and increasing the sales tax by three-eighths of a cent, and the threat of a government shutdown looms because of that disagreement.

In 2005, Murphy led the Benefits Review Task Force, which issued a report on the state’s pension system under then-Gov. Dick Codey.

“The state pension system primarily exists to provide retirement security to public employees who dedicate their careers to public employment,” the report said. “It was never intended to be a means for a handful of politically connected individuals to enhance their own retirement benefits at public expense.”

Malanga said the state faces a “crisis situation” because of the underfunded pension system that lawmakers continue to take from.

“They’re getting ready to shut down the state. It’s just unbelievable,” he said. “This is really an ‘only in New Jersey’ moment.”

Staff Writer Nicholas Pugliese contributed to this article. Email: carrera@northjersey.com