Assembly Speaker Vincent Prieto, left, and Senate President Stephen Sweeney talk before a news conference with the New Jersey State AFL-CIO unions in Trenton. The new conference addressed the need Gov. Chris Christie to meet his Chapter 78 obligation by putting the required $3.1 billion into the pension system for fiscal year 2016. Thursday, June, 25, 2015 (Patti Sapone | NJ Advance Media for NJ.com)
NJ.com - TRENTON - State Assembly Speaker Vincent Prieto is quietly floating a plan to increase state payments into the public employee retirement system and cut down New Jersey's fast-growing state pension debt.
The plan, which Prieto (D-Hudson) unveiled to labor leaders in a private meeting Thursday in Secaucus, would give the state five years to phase in the full contribution recommended by actuaries to keep the public-sector retirement system solvent, according to several sources familiar with the proposal who requested anonymity because it has not been made public.
Prieto's plan for state pension payments marks a shift for the Assembly leader, who was among the Democratic lawmakers calling on Gov. Chris Christie to live up to the terms of a plan to phase in state payments over a seven-year period that began in 2012.
Labor leaders said the speaker's proposal represents his efforts to salvage the original funding agreement and save the retirement system. Unlike Republican Christie's pitch for a complete redesign of health and retirement benefits that stands little chance of passing the Democratic-controlled state Legislature, the unions appear more open to hearing out Prieto, whose proposal wouldn't alter benefits.
"We are certainly open to a full discussion of what the state's options are because the problem hasn't gone away," said Steve Wollmer, spokesman for the New Jersey Education Association. "There have been a lot of proposals out there, and this adds to the mix. And somewhere in the mix we believe is a solution to the funding problem."
"We can't let the pension system crash and burn. That's unthinkable," he added.
In a meeting lasting less than an hour, Prieto briefed union leaders on the blueprint, which would build on this year's $1.3 billion planned payment, sources said.
State Senate leadership has not yet seen the plan, a Senate aide said. Prieto did not respond to a request for comment.
The speaker's suggestion to increase funding over five years would actually slow down the existing payment plan originally designed to bring the annual payment up to the full amount recommended by actuaries in 2018.
The state is in the fifth year of this seven-year phase in but is billions behind schedule. After keeping pace with the promised payments for two years, Christie drastically cut them after lagging tax collections threw the state finances off course.
In the current fiscal year, the state will contribute $1.3 billion, $1.8 billion less than the $3.1 billion promised in the pension overhaul and still an even smaller share of the $4.3 billion recommended by actuaries.
While labor leaders demanded the governor "make the payment," Christie instead offered to stretch the rising installments out over 10 years until reaching the actuarial recommendation in 2023. The Treasury Department projects that the state would pay about $6 billion a year for decades after, $1 billion a year more than under the original agreement.
Christie's action to cut the pension payments was upheld in early June, when the state Supreme Court ruled contributions into the pension system are not constitutionally protected.
But Democrats and labor leaders didn't relent.
The ruling set up a showdown as Democrats voted to raise taxes on the wealthy to fund benefits that were instantly vetoed by Christie. Meanwhile, Democrats have refused Christie's calls for deeper reforms.
But labor leaders on Thursday signaled they were more receptive to Prieto.
"The FOP appreciates the work Speaker Prieto and his staff have put into finding alternative solutions to the pension funding issues looming ahead," said James Stewart Jr., vice president of the Fraternal Order of Police.
Pat Colligan, president of the New Jersey State Policemen's Benevolent Association, said the union will review the full proposal, once available, "and digest it and see if it's a viable plan for us."