Public employees at all levels play an important role in providing needed services to New Jersey residents, but in an era where pressure on taxpayers increases every year and where local property taxes are the highest in the country, we must ask if the level of public employee benefits is affordable and sustainable, especially since it includes substantial benefits not available to most taxpayers who work in the private sector.
The St. Louis Federal Reserve maintains statistics on public employment at federal, state and local levels. Those statistics compiled and published as of fall 2024 show New Jersey with 606,000 public employees. Of those, 191,000 are state employees and 415,000 are employed at the county and local levels, where the burden for their benefits falls largely on the property tax system. The fed further breaks down the numbers to show 260,000 of the New Jersey local public employees work in the public education system. The other 151,000 are municipal and county employees.–CHECK NUMBERS ADDING UP
In the case of many of these workers, local taxpayers are dealing with the burden of double-digit increases in public employee health insurance benefits and an underfunded defined benefit pension system, both of which heavily impact local budget and tax rates. In addition, public employees receive generous paid leave, with more days off than the private sector could possibly offer.
The pension and health payments made by municipalities and school districts sit outside the 2% tax levy cap limitations that were put in place to protect taxpayers from excessive increases in local taxes.
We are not arguing that public employees do not work hard. Many make sacrifices every day to provide service to the citizens. The argument here is that taxpayers should not be expected as a matter of course to compensate public employee benefit programs beyond what they themselves received for their employment in the private sector.
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New Jersey taxpayers shoulder the highest property taxes in the country, while funding public employee benefits that outpace anything offered in the private sector.
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Let’s use an example of one perk that should not exist but does in municipalities across the state and in Cape May County. Various public employees, based on contract language or municipal ordinance, are allowed to bank unused paid leave of various types, including vacation, sick leave, comp time and other forms of paid absences in order to have them paid out at a later date. The private sector “use it or lose it” does not appear to apply. State rules on this are often obviated by including the provision in contract and employment agreements.
It is time to consider the beleaguered taxpayer in this process of benefits for public employees. The fact that state and local governments can tax to cover the benefits given to employees does not mean they should. The taxpayer cannot get similar benefit packages in the private sector and then must pay for them in the public sector.
Pensions are another excellent example. The vast majority of private sector employers have moved from the more costly defined benefit retirement plans to defined contribution plans. In New Jersey the Public Employee Retirement System, along with pension plans for teachers, law enforcement and judicial system employees, are defined benefit plans. In a defined benefit plan, the pension benefit an employee receives after retirement is based on a formula that takes into account their years of service and salary history. There are two defined contribution plans in the state, but they cover a fraction of the number of employees that are in the six defined benefit plans.
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Public employees deserve fair compensation, but offering benefits that far exceed private-sector norms is unsustainable and unfair to New Jersey taxpayers.
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New Jersey has a badly underfunded pension system. It is easier to promise benefits than to actually pay for them. Ultimately this burden sits with the taxpayers.
When a municipality gets hit with a 22% one-year increase in the premiums for employee health benefits, as happened in 2023, or when the decision is made to start actually paying into the pension fund what is an amount that should have been paid for many years and was not, or when a retiring employee is allowed a check for tens of thousands of dollars for accumulated leave that could stretch back years, when any of these things are done the burden falls on the captive taxpayer.
It simply is not sustainable, but no elected official wants to touch the issue.
Public employees deserve decent pay and decent benefits, but they should not be entitled to benefits that are not available to taxpayers in their own employment in the private sector.
Any changes will take time. Contracts will have to run their course, certain groups will need to be grandfathered, legal issues will arise like weeds in an untended garden, powerful public employee unions will pull out all the stops to defeat any diminution of current benefit plans, but it is time to start.
The benefits offered to public employees can no longer be plans that could never be affordable in the private sector.
Quotes from the Bible
“A just balance and scales are the Lord’s; all the weights in the bag are his work.” — Proverbs 16:11 (This verse highlights the need for fairness and equity, suggesting that public employee benefits should not disproportionately tip the scales against taxpayers.)
