CONTACT: Sebastian D’Elia
Public Information Director
COUNTY MANAGER URGES UNION COUNTY DELEGATION
TO SUPPORT NJ SENATE BILL 14 Bill would allow Pension Deferral plan for Municipal and county governments
ELIZABETH--In a letter drafted to the Union County State legislative delegation in the 20th, 21st, 22nd, and 29th districts, Union County Manager George W. Devanney urges the passage of Senate Bill 14, which would allow a one-time pension deferral to local and county governments.
Supporters of the legislation include Gov. Jon S. Corzine, who has said towns need the measure in order to keep property taxes in check during the recession.
Corzine also needs the measure to pass in order to offset mid-year state aid cuts his administration needs to fill an estimated $2.8 billion deficit in the state's current fiscal year spending plan.
Although Corzine and the New Jersey League of Municipalities have lobbied hard for the measure. With its outcome uncertain, the County of Union is now preparing for a second round of layoffs.
In his letter, Devanney noted that the pension deferral plan can be viewed as New Jersey’s “stimulus package” to its local and county governments.
“…we have taken steps to reduce our workforce and economize services,” Devanney wrote. “We are still mindful, however, that it must be done responsibly and not in a way that further jeopardizes the economy as a whole.”
Devanney stated in his letter that Union County has put forward a “responsible budget” that reduces personnel costs in excess of $5 million a year, eliminates services, realizes nearly $1 million in savings through negotiated employee givebacks, increases taxes and generates over $1.5 million in new revenues.
“We are painfully aware that this historic recessionary period has placed extraordinary pressure on property taxpayers. So this pension deferral plan should be looked upon as New Jersey’s “stimulus package” to assist local and county governments by staving off further layoffs and reductions in governmental services,” Devanney noted in his letter.
The proposed deferrals would allow towns and schools to defer as much as 50 percent of their required pension contribution in 2009, 40 percent in 2010 and 20 percent in 2011. Full payment would be required in 2012 and the deferred payments also would have to be made up over a period of 15 years.
While a component of the Union County budget involves the usage of $4 million in pension deferral monies, “we did not arrive at this decision to use the funds lightly,” Devanney wrote.
“In fact, in ordinary times, we would not require a pension deferral at all and have included a plan to pay this one back responsibly and quickly,” the letter states.
Union County is expecting to generate recurring revenues equivalent to and greater than the amount deferred by 2010 and 2011 in order to reduce the tax impact, Devanney wrote. Although Union County is eligible to defer one half of its pension liability of $10 million, the County is opting to only defer $4 million and have the remaining $6 million held in trust.