Public employees would pay more for benefits under plan

TRENTON - Many Statehouse observers viewed a 2 percent cap on property-tax increases signed into law last summer as an easy political move that did little to address what really drives up government costs.

Now, the Legislature is getting down to the hard part.

Senate President Stephen Sweeney (D., Gloucester) on Tuesday unveiled a proposal aimed at reining in taxes by requiring public employees to pay between 12 percent and 30 percent of their insurance costs.

The cap keeps local governments from increasing taxes more than 2 percent, but taxes are expected to rise beyond that level in part because the measure exempts employee health care, a substantial and ever-increasing expense.

Gov. Christie, who has proposed having all public employees pick up 30 percent of their health care, called the Sweeney measure "encouraging."

Sweeney said the system of providing medical coverage was no longer sustainable. He wants to bring public workers' health benefits in line with those in private business, saying public employees receive "Cadillac" benefits.

Public-sector unions are expected to oppose further concessions from their members, and the plan could face push-back from Democratic lawmakers relying on labor support in November, when all 120 seats in the Democratic-controlled Legislature are up for grabs.

Sweeney wants to make the changes by June 30, when the state is required to adopt its spending plan for the 2012 fiscal year, but acknowledged, "This is going to be a challenge."

It's part of a broader look that state leaders are taking at scaling back public-sector benefits, as Sweeney and Christie also battle over the best way to revamp the state's troubled pension system.

"There's a bigger gulf between our pension proposals than between our health proposals," Christie said during a Trenton news conference.

The cost of providing health benefits to current and retired government workers consumes about 9 percent of the state budget, which appropriates $2.5 billion for the expense.

Sweeney's proposal expands on a law he helped pass last year - vigorously opposed by unions - requiring public workers to start contributing 1.5 percent of their salaries toward health benefits. But it does not go as far as the governor's measure, which Sweeney said was unfair to lower-paid and even middle-income employees.

Higher contributions would be phased in over seven years and vary depending on a public worker's salary.

An employee who makes under $30,000, for example, initially would pay 2 percent toward his or her health insurance and 12 percent after seven years.

The plan has five scales, with the highest-paid workers - those earning $100,000 and above - paying 12 percent toward their coverage in the first year of the change and eventually footing the bill for 30 percent.

The legislation would affect only new retirees, due to Sweeney's concerns that calling for changes to current retirees could be illegal.

And it is designed to affect even employees of towns and school districts that do not participate in the State Health Benefits Plan.

The proposal directs each board of education and local government to create a committee of labor and management representatives to find the best approaches to health care, and incorporate incentives to lead a healthy lifestyle into the premium structure. Those governments also would have to offer at least five health-benefits options.

And there would be an immediate ban on local governments and school districts entering the state benefits plan, which could benefit the private insurance industry, including major insurance firm Conner Strong, where George Norcross, a South Jersey Democratic powerbroker and one of Sweeney's closest allies, is an executive.

Sweeney did not return a message late Tuesday afternoon seeking more information about that provision. Sweeney spokesman Derek Roseman said that for a long time, towns and school districts have hopped in and out of the state benefits plan, meaning the so-called risk pool keeps changing.

"That's what you're trying to prevent. Let's let the State Health Benefits Plan stabilize its risk pool," he said.

Camden Mayor Dana L. Redd, who has been involved in difficult union negotiations during a city budget crisis, praised the proposal in a statement. She said the plan addresses the problem of escalating health-benefits costs in a "smart, workable manner."

But a spokesman for the state's largest teachers' union voiced dismay, saying the state keeps coming back to the same people - public employees - for more money to deal with its budget crisis.

"You're talking about health-care contributions that at the low end are several thousand dollars out of people's pockets," said Steve Baker, a spokesman for the New Jersey Education Association. "These are middle-class and working-class taxpayers."

He said Sweeney's plan was better than Christie's, but "just because there's a worse proposal out there doesn't make this a good proposal."

Christie railed against public-sector unions at a town-hall meeting in Lincoln Park on Tuesday morning, telling attendees, "We can't have two classes of people in New Jersey - people who get rich fringe benefits, and people who pay for them."