Senate Speaker Stephen Sweeney discusses the Path to Progress initiative at a previous Meet the Decision Makers event hosted by the New Jersey Business & Industry Association and the New Jersey Chamber of Commerce.
Senate Speaker Stephen Sweeney discusses the achievements of the recommendations of the Financial Reform Initiative.
May 4, 2021
In April 2019, Senate Speaker Stephen Sweeney presented the Path to Progress (PTP) report, highlighting recommendations made by a legislative task force on economic and fiscal policy that it assembled to reduce taxes and make the state more competitive by reforming its income structure.
The report recommended reforms in five areas: reform of pensions and benefits; lpermanent assets to stabilize the retirement system; educational reform at the administrative level; county and municipal government reform and shared services; and the tax structure of states and local authorities.
In the following questions and answers, Sweeney provides an update on thThe progress made so far in meeting the report’s targets which we hope will put the state on the âpathâ to sound fiscal policies.
Q: What progress has been made by the Legislature and with the Murphy administration in implementing the tax reforms thaWas this the focal point of the Path to Progress report?
A: We’ve made major progress on a wide range of initiatives – from pensions and health benefits to school regionalization and asset infrastructure – that are generating billions of dollars in savings.s and will fundamentally change the government of New Jersey.
Q: One of the most important recommendations of the task force was pension reform. Can you describe some of the main recommendations and cost savings in this area?
A: The most important thing we needed to do was to start paying the full actuarial contribution required on our state pension payment, and we get to 100% in the next fiscal year 2022 budget. That’s a year ahead of schedule to get there until the 10-year ramp-up launched as part of the last administration. Once I realized how much the income was coming in, I urged the governor to do so. We will save billions by paying the full contribution one year earlier, just like we save $ 13 billion over 30 years legislation we succeededng quarterly pension payments. We still need to make reforms to our pension system, including the implementation of a hybrid pension plan for new hires that combines a traditional defined benefit pension on the first $ 40,000 of income and a cash balance of type 401KThis relies on more than $ 40,000 in income that workers can take with them if they leave.
Q: What progress has been made in controlling the cost of health services?
A: Reducing the cost of health care for public sector employees is essential, and I am proud to have been able toe to negotiate a new health benefit package with the New Jersey Education Association that will significantly reduce costs to districts, both in the school employee health benefit plan and in private plans. We are already collecting $ 2 billion in savingsr three years in the state budget of the Pharmacy Benefits Manager program that we have enacted which uses technology to ensure that we are paying the lowest possible cost for prescriptions. This program, which is like an E-Bay for prescription drugs, is copied by theawmakers in other states.
Q: Can you discuss the details and cost savings that can be achieved in the education reform arena?
A: The main recommendation was to revive the effort to create K-12 regional and county school districts in order to improve both the quality and cost-effectiveness of education. Small districts with fewer than 500 students spend 17% more per student than districts with more than 1000 students and cannot provide the breadth of educational experience that students in large districts gain allowed. The bill I sponsored, S3488, passed the Senate unanimously with the support of all major education groups, including the NJEA. Regionalization is voluntary, and districts are already lining up by the dozen to take advantage of the studies and the financial incentives we offer to districts with declining enrollment and losing adjustment assistance.
Q: What progress has been made in setting up shared services in local government?
A: We worked with the Governor’s Shared Tsar Services, and we have resumed efforts to advance my Bill, S1, which would revitalize the Commission for Alignment, Reorganization and Consolidation of Local Units to push for shared services in municipalities that have no shared service agreements withloss of state aid for those who do not participate. Shared services save money and improve the quality of service as proven by the county-wide tax assessment and the county-wide ambulance service I put in. in place as Director of Landowners for Gloucester County.
Q: can you also comment on the initiatives and cost savings that could result from the use of assets to stabilize the pension system?
A: We introduced new legislation at the end of March to create the New Jersey Retirement Infrastructure Collagenized Holdings Fund (RICH), which will allow state and local governments to transfer assets into the pension system. This will not only diversify the assets of the pension system and make it less vulnerable to the ups and downs of Wall Street – such as the transfer of the State Lottery to the pension fund did it – but also provided the funding needed to make improvements to municipal water systems, for example. We could use legislation to build and operate HOT (High Occupancy Toll) lanes in New Jersey, like those in Maryland and Virginia., which would provide additional income to the pension system. This effort parallels our push at the federal level for the enactment of a law on funding and improving pension infrastructure that would provide both low-cost federal loans to stabilize pensions.n systems and earmark some of that money to fund infrastructure improvements that would generate income for pension plans across the country.
Q: What do you think of the governor borrowing over $ 4 billion to balance thed budget of the previous year? If all or part of the TPP had been implemented, would the state have had to borrow the $ 4 billion?
A: I wish we had waited until January to borrow to see how the state revenues came in, how much we actually had to borrow, ad what were the prospects for a new round of federal aid from the Biden administration. In retrospect, as I have said publicly, we don’t need to borrow at all. Now we need to make sure that the more than $ 6 billion in federal aid we will receive is well spent on improvements that will make the state stronger and more competitive, and that we budget responsibly to avoid a huge fiscal cliff in the years to come when federal aid runs out.
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