The Legislature is expediting a bill that would give state police and fire unions the power to reward themselves and their members at the expense of municipalities and taxpayers. Such fast-tracking of a law without public comment is an almost infallible sign state Senate and Assembly members know they’re serving their own interests and not those of their constituents.
The bill would remove management of the state Police and Firemen’s Retirement System from the Treasury Department’s Division of Investment and the State Investment Council, and give it to a new union-controlled board. That board would not only decide where to invest the system’s $26 billion in assets, it would be able to increase benefits to retirees. But if the return on investments was poor or the board handed out too much in benefits, the unions controlling it wouldn’t be responsible -- the shortfalls would be made up by taxpayers and towns.
As the N.J. State League of Municipalities puts it, “The bill will allow public safety union members and retirees to enhance their own benefits, while forcing their public employers and New Jersey taxpayers to assume the risk.”
Why would the elected representatives of citizens and taxpayers hand such a blank check to these unions? Simple. This is an election year for state government, and the police and fire unions are the second most powerful political force in the state (after another public union, for teachers, that also partners with politicians in self-serving agreements). The public unions will shower candidates who do what they want with campaign funding and manpower, and politicians would rather sell out citizens and taxpayers than disobey.
The new board would be made up of seven labor representatives and five management representatives. That is exactly backward. The contributions to the pension fund overwhelmingly (70 percent) come from the “managers,” the municipalities and their taxpayers. The union members contribute just 30 percent of the funding, the league says.
The League of Municipalities proposes the board be changed to an equal number of labor and management representatives, with one independent member. We don’t think that goes nearly far enough, leaving the system too easily influenced by obviously susceptible politicians.
We like the league’s other alternative -- changing the pension system from one based on defined benefits to one based on defined contributions. That way, the public unions would be free to manage or mismanage their investments and benefits as they saw fit. The contributions by taxpayers and towns would remain the same.
Frankly, it’s hard to imagine legislators who already have completely capitulated to their public union masters would make such a change. Therefore we urge Gov. Chris Christie to make a switch to defined contributions part of a conditional veto of the bill, or just veto the legislation outright.
Sure, the co-opted legislators might override the veto anyway, but at least it would give taxpayers and voters more time to see who doesn’t care about them.