Gov pushes off payment — this time around ALYSSA PASSEGGIO andMELISSA L. GAFFNEY Posted:12/05/08
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Times are tough for New Jersey residents these days. With the cost of living on the rise, the state is forced to burden municipalities with even more expenses — yet less financial aid.
The situation prompted Gov. Jon Corzine to unveil a new timeline for the state’s pension plan contributions; a plan he said would cut towns’ payments in half this year.
According to a press release from the state Department of the Treasury, dated Nov. 24, the governor proposed a 50-percent reduction in payments to the Public Employees Retirement System and the Police and Fire Retirement System.
The deferral is part of an effort to recognize taxpayers’ need to maintain their quality of life despite a depleting fiscal landscape.
The new phase-in period would take place beginning 2009 and extend through 2012, the press release stated. Sixty percent of the full payment would be due during 2010, 80 percent of the entire amount would be required come 2011, and the balance would be sought during 2012.
However, the payment reduction is not optional if Corzine is able to push legislation through the state Assembly and Senate.
Additionally, the deferral halves only those contributions to the pension pot and does not affect payments into life insurance policies.
Aberdeen Township could see about $400,000 of its approximately $860,000 pension bill deferred, according to state documents.
Township Manager Joe Criscuolo said Aberdeen officials are still seeing if participation would be advantageous for the town.
“[The deferments] would just move the current expense into the future for future taxpayers,” Criscuolo said, adding that the option would need to be carefully looked into by the township.
In the borough of Union Beach, where the impact of state decisions such as this are often felt the hardest, the combined municipal deferral of payments to the PERS and PFRS would total more than $123,000, according to reports.
The borough would be mandated to make a payment of nearly $146,000, reports stated.
Municipal payments do not take into consideration any towns’ boards of education, housing authorities, library systems, fire districts and sewerage authorities.
Councilman Robert Howard said he was not one for passing any amount due now on to a governing body down the road. “Whether we would entertain that option would depend on how successful we are with our extraordinary aid application,” Howard said.
As are most towns that run on fiscal year budgets, Union Beach is still waiting on the state for a decision on its aid application.
Keansburg Borough Clerk Tom Cusick also said the town might pursue the deferral plan. According to reports, Keansburg’s municipal pension deferral would total nearly $372,000, requiring a payment of approximately $416,732.
“Keansburg hasn’t made a commitment one way or the other yet,” Cusick said. “We’re waiting for extraordinary aid and discussing the possibility of re-appropriating funds.”
Also following a fiscal year budget, Highlands Borough is currently working on its 2009 plan, and this legislation could affect the introduced work. CFO Stephen Pfeffer said the council did not have a chance to discuss the possible postponement of about $185,000 in pension payments by press time.
Regardless, Pfeffer said it was still premature to make any decisions since information is unclear regarding which towns would be eligible — only calendar-year run municipalities or both — and how the money would be paid back.
“If we get near where we requested [in extraordinary aid], which would be in the area we received last year, it would drop our anticipated tax rate increase where we may not feel it necessary to defer the cost,” Howard explained.
The Union Beach councilman said that if the town were to defer the payment, it would save between 3 and 4 cents on the tax rate. Rather than have to cut department budgets — already bare to the bone — Howard said this might be a viable option, were legislation passed.
“The fact remains that there is an amount due,” he said. “It’s not like [the state] is forgiving it. Who knows what 2012 will bring as far as the budget is concerned.”
Howard recognized that larger municipalities might structure their budgets and liabilities on a 10- to 15-year basis. “To them, this could be helpful,” the councilman said. “Union Beach does it to a degree. We’ve been successful with dealing with things as they occur, on the financial end.”
As one of the larger Bayshore towns, Hazlet Township’s $1.29 million pension payment could be sliced almost in half, to about $680,000, according to state documents, if Corzine’s initiative is passed.
However, Hazlet Chief Financial Officer Catherine Campbell said township officials came to a consensus to budget the money for the payment anyway.
“I’d rather budget it every year as we go along. So if the state says, ‘You owe the money,’ we are not coming up with a 4- or 5-cent increase on the tax rate,” Campbell explained.
Atlantic Highlands Administrator Adam Hubeny went so far as to say the borough would make every effort to avoid taking advantage of the $440,000 deferment offer, if it were presented.
“We feel that we’ll be able to meet our budget needs without having to take advantage of that,” Hubeny said. “The current council has worked hard over the past few years in keeping our budget in line.”
Some of the other small municipalities continue to wait on the state for extraordinary aid as larger towns brace for the long line of bills to infiltrate their mailboxes come budget time.
The borough of Keyport should look for a deferral of more than $343,000, reports stated. The town would be mandated to levy a payment of about $382,000.
A town with some known fiscal issues, Matawan would only be required to budget about $300,000, rather than almost $600,000 for the 2009 payment. Matawan CFO Monica Antista did not return a call for comment.
Perhaps charged with one of the largest pension bills of them all is Middletown Township.
Reports stated that the township’s previous municipal pension bill would have been approximately $3.2 million. Under the governor’s new plan, Middletown would experience a deferral of more than $1.5 million and be required to pay about $1.7 million.
The township’s chief financial officer, Richard Wright, said it all comes down to a policy issue: whether or not to reserve funds from 2009 that would otherwise have been used for pension payments. “Whether we accept it or not, the [2009] bill will be less,” Wright said.
The CFO said it would be the difference between about 6.5 cents on the tax dollar with the current bill or approximately 3.2 cents with the pension deferral. “These are all policy decisions,” he said.
Wright said he would be examining the plan to see how the phased-in payments would affect Middletown over the course of the next two years, as the town’s debt service payment will drop by $2 million during 2010.
Corzine described this plan as a way to lessen the burden on municipalities, despite his recent stripping of state aid to those same towns.
“My intent is to help local government get through these tough economic times without having to resort to the double-digit increases in property taxes that some towns have planned,” Corzine explained during a recent video address.
However, earlier this year, the governor criticized previous administrations for avoiding pension payments, and labeled such as “tricks and gimmicks.”
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