New Jersey faces steep tax hikes if healthcare costs aren’t cut, officials and unions warn

With a 22.8 percent increase in healthcare costs for a large number of state, county and municipal employees statewide scheduled to take effect Jan. 1, a bipartisan group of elected public sector officials and union leaders says a Crisis looms that could have some “political ramifications” including bigger tax hikes in 2023.

“Cities would pay a heavy price,” said East Windsor Mayor Janice Mironov, who chairs the New Jersey Mayors’ Conference. “Workers will be harmed and taxes will increase at all local levels.”

Mironov said negotiations with Gov. Phil Murphy and lawmakers included a request for a one-time allocation of $350 million “to offset the huge increase.”

“The state has a surplus of about $6 billion and about a billion and a half between COVID funds and funds they receive after their recent Blue Cross Blue Shield transition,” she said.
“This is an appropriate use of COVID funds.”

New Jersey is the only state in the US facing a 20% increase, according to Fran Ehrlich, state director of the Communications Workers of America. Other states are at six to nine percent, Ehrlicht said.

“It’s going to have a huge impact on dedicated public workers who have been working throughout the COVID pandemic and have been our first responders, and by and large we have been ill and looking after their families and facing pay cuts in the midst of a recession will be extremely difficult for them,” said Ehrlich. “Honestly, public workers would be hit twice because they’re also taxpayers.”

Paterson Mayor Andre Sayegh said his “financially strapped city” was dependent on the transition state and said increased healthcare costs could potentially necessitate the closure of a fire station or library.

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“I also have to protect taxpayers,” he said. “They’ve had increases every year and honestly can’t take another increase.”

But none of the elected officials or labor leaders were ready to go into the details of the political ramifications that could materialize over the next year as local taxpayers begin to feel the impact of increased costs.

“What I would say is simply that we are trying to express the urgency of the situation at hand. This is not a question, at least from our perspective, from the AFL-CIO’s policy perspective,” said Michael Cerra, executive director of the New Jersey League of Municipalities. This is about local government tax increases in a very difficult economy that we’re going to be entering next year, so I don’t feel comfortable talking to politicians about this other than saying we want to work with both parties.”

The increase in health insurance premiums comes at the same time that the state will increase pension costs by 18%.

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