Budget pain on the horizon if towns not allowed to defer pension payments, Hudson County officials say

by Paul Koepp/The Jersey Journal
Wednesday December 17, 2008

Hudson County Thomas DeGise predicts cutbacks if state Legislature doesn't go along with proposal to defer pension payments

Officials across Hudson County predict cutbacks and layoffs if Gov. Jon Corzine's plan to let local governments put off paying half of their pension fund obligations doesn't pass Legislative muster.

At Monday's Jersey City City Council caucus, Business Administrator Brian O'Reilly warned that if the city is not allowed to defer its $15 million contribution due in April, there will be a "tremendously big impact" on the budget. The city has already paid half of its $30 million obligation for the 2009 fiscal year.

"This means we will delay introduction (of the municipal budget) until we come up with a couple more revenue items to plug the gap," O'Reilly said in a phone interview.

The governor's proposal did not make it to the floor of the state Senate on Monday after a few Democrats sided with Republicans against it. It is expected to be considered again next month.

If it fails to move forward at that time, Hudson County may have to cut services and an unspecified number of jobs, according to County Executive Tom DeGise.

"The tax levy will go up $6.8 million, which is considerable," DeGise said. "We would have to start to consider some pretty draconian measures, which would be very painful."

Without cuts, county taxes would increase about 3 percent, he added.

In Bayonne, Finance Director Terrence Malloy said the city did not count on deferring its nearly $10 million pension payment due in April when the city introduced its budget in September.

"Assuming the legislation (to delay payment) passes in January or February, then we would have to take a look to see if it would be in the city's best interest," Malloy said.

Officials in Union City and Hoboken did not return phone calls to comment.

Union City Mayor Brian Stack, who is also a state senator, supported Corzine's bill along with state Sen. Sandra B. Cunningham, D-Jersey City, when it passed the Senate Budget and Appropriations Committee 8-6 earlier this month.

Jersey City Superintendent of Schools Charles Epps Jr. said the school district could defer up to $10 million in pension payments if the measure passes.

Under Corzine's plan, local governments would have to pay at least 60 percent of their normal pension contribution in the 2010 fiscal year, and then 80 percent the following year, before resuming full contributions.

Opponents fear that deferments could create a $28 billion shortfall in the state's pension funds