A proposal to allow towns to pay only a fraction of what they should toward pensions for the next three years was released by a State Senate committee yesterday and heads to the full Senate for a vote Monday.

The Corzine administration pitched the idea last month as a way to help towns keep property taxes from soaring in a dismal economy.

Under the bill, which was not available to the public at the time of the Senate Budget and Appropriations Committee vote yesterday afternoon, municipalities could skip up to $1.3 billion in pension payments over the next three years. In fiscal year 2009, municipalities could skip half of their required payments; in 2010, 40 percent; and in 2011, 20 percent. In 2012, towns would be required to pay the full amount.

The administration has said the ultimate cost to taxpayers of deferring pension payments will depend on the performance of investments.

"Many local governments are looking down the barrel of a loaded gun right now because revenues have declined so drastically," said Senate President Richard J. Codey (D., Essex), who sponsored the bill. "Until we can come up with other solutions or procure additional federal aid, this will help provide immediate assistance to towns and counties."

William J. Dressel Jr., executive director of the New Jersey State League of Municipalities, agreed towns have few alternatives if they are to keep property taxes under control.

The proposal, which affects the pension systems for government employees, teachers, police and firefighters, is drawing strong opposition from Republicans and at least one Democrat.

"This is fiscal irresponsibility at its height," said Sen. Leonard Lance, (R., Hunterdon) an outspoken fiscal conservative who will soon leave the statehouse for a congressional seat.

Lance noted that skipping payments now would mean higher payments later on.

"This governor ran for office pledging that he would not do what this bill does," Lance said. "This governor ran for office saying we were at the end of fiscal gimmicks."

A bill needs 21 affirmative votes to pass in the Senate. Lance said all 17 Republican senators will vote against the proposal, which requires legislative approval.

Joining them will be at least one Democrat, Sen. Stephen Sweeney, of Gloucester County.

"I think it's bad policy," he said. "By doing this, you're just pushing the pain onto someone else in the future."

Sweeney said he credits Corzine for getting the state to start contributing toward employee pensions for the first time in years. Before that, the state had not paid into employee pension funds since the Whitman administration allowed the state and municipalities to take a "pension holiday."

The current proposal, Sweeney said, goes against lawmakers' efforts in recent years to try to build the pension funds back up again. As of June 2007, the long-term pension shortfall for the state stood at $28 billion, including $10 billion for local governments.

Unions representing the employees whose pensions could be affected also criticized the proposal.

Bob Master, regional political director for the Communication Workers of America, called the plan "hasty, ill-conceived and very detrimental to the pension fund."

In Corzine's "state of the state" address in January, he sternly called for a change in the state's "credit card" culture in spending. The governor talked about the need to reduce the state's $32 billion in bonded debt - one of the highest per capita in the nation - the unfunded pension liabilities and $60 billion in unfunded health-care costs for future retirees

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"Taxes were raised, fees were increased. Trust funds were raided, pension liabilities went unfunded. Spending gimmicks were found. And bonded indebtedness swelled to $32 billion," Corzine said.

"The ongoing deficits didn't disappear. They were just stuffed into the closet."

Contact staff writer Adrienne Lu at 609-989-8990 or alu@phillynews.com

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