In a major setback for New Jersey's state public unions, the Democratic legislative leadership has committed to significant changes to state pension and health care benefits backed by Governor Chris Christie.
In an unprecedented sign of bi-partisan consensus, Democratic leader Senate President Stephen Sweeney and Assembly Shelia Oliver joined their Republican counterparts and Governor Christie on Wednesday in pledging to enact the cost-cutting reforms by the end of this month.
The joint statement about the deal was issued from Christie's press office was on behalf of Sweeney, Oliver, GOP Senate Minority Leader Thomas Kean, Jr. and Assembly Minority Leader Alex DeCroce.
“After months of serious discussions, we are pleased to announce that we have reached agreement on legislation to reform our public pension and health benefits systems in New Jersey," read the statement. "It saves the public pension system for current and future retirees, and enhances fairness and choice in our health benefits system."
The statement closed with a commitment to enact the major changes in just a matter of weeks as part of the state's budget process, which must be wrapped up by the end of June.
Boosters of the Christie-Sweeney deal said that a legacy of bi-partisan malfeasance had left the state with over $100 billion in unfunded liabilities. For decades, both parties mismanaged the public pension system by failing to make billions in required contributions even as they expanded benefits for public workers. And New Jersey has the distinction of being the only state to have received a sanction letter from the Securities and Exchange Commission for materially misleading bond investors over the course of several years about the condition of their state pension funds.
The final deal resulted from intense behind-the-scenes negotiations between Sweeney, a long time official in the State's Ironworkers Union, and Christie. Each compromised, with Christie giving up on a requirement that all public workers retire at age 65 and not younger. Instead this rule will only apply to new hires.
Christie also gave ground on his demand that state workers pay 30 percent of health premiums, which Christie insists tracks what Federal workers are required to do. Instead the final deal called for premiums to be based on a percentage of each worker's pay, which Sweeney argued would buffer the impact on the many state workers at the lower end of the pay scale.
The reforms also eliminated the imposition of an automatic cost of living adjustment allowances for pensioners. While Christie initially proposed zeroing out the adjustments entirely, the final plan left the door open for them should pension funds again become healthy.
The deal immediately made bare a long-simmering fissure within the Democratic Party, with Assembly Majority Leader Joe Cryan denouncing the bi-partisan deal as a sell-out of the Democratic Party's long-standing commitment to collective bargaining for public unions.
The state's leading state employee union, the Communications Workers of America, called the current internal debate within the Democratic Party nothing short of "a fight for the soul of the party."
For the CWA, Sweeney and Oliver's public alignment with Christie on the hot button issues of pensions and health care came as the union is in the midst of contract negotiations with the Christie Administration. CWA has developed its own detailed plan to cut public employee health care costs that it said would save taxpayers hundreds of millions of dollars a year. Bob Masters with the CWA likened the move to impose health care and pension reforms by legislative fiat as a "Walker-esque" like attack on the union's "right" to collectively bargain, comparing the deal to Wisconsin governor Scott Walker's recent push to reframe the social contract between public workers and the state unified Democrats.
But unlike the situation in Wisconsin, the New Jersey deal threatens to blow apart the party of Roosevelt. These summer storm clouds have formed even as the party prepares for legislative elections in the fall where all 80 Assembly seats and all 40 Senate seats are up.
The Sweeney-Oliver faction of the Democratic Party is gambling that their tough love with public unions members who have jobs and benefits will be perceived as real leadership in a state where so many are still unemployed and scrambling to pay rising property on homes that continue to lose value.