Steep hikes in pension costs near for towns Local, county governments face steep hikes in pension costs as well as health coverage

Local governments are facing double-digit state pension contribution rate increases for 2023, based on information published earlier this month by the Division of Pension and Benefits, according to the New Jersey Association of Counties.

The increases will be in addition to the unprecedented 23% increase in health benefit insurance rates for local governments and their employees participating in the State Health Benefits Program, the county group said Friday in a news release.

The county group and the New Jersey State League of Municipalities are urging Gov. Phil Murphy to use American Rescue Plan Act money and other unrestricted reserve or surplus funds to temporarily offset the increases in health benefit expenses.

The Murphy administration and public sector labor unions representing most state employees reached an agreement that caps increases for state employees' portion of costs at just 3% with state taxpayers absorbing the additional costs.

But employees of county and local governments will see their share of the costs go up much higher.

The county group and League of Municipalities are also urging the administration to extend for an additional 30 days the open enrollment period set to expire at the end of the month, to allow counties and municipalities additional time to educate employees on the pending increases and the opportunity for employees to choose less expensive plans.

"Importantly, any immediate relief must be accompanied by long-term structural reforms such as adopting reference-based pricing to effectively manage costs, incentivizing employees to select lower-cost plan designs, and modifying co-pays for specialists and urgent care to further reduce long-term expenses," the county group said.

The groups support S-3033, a bill to appoint county and municipal officials to the State Health Benefits Commission, which decides on rates.

Atlantic County government is facing a $4.2 million increase in health insurance costs for its workers in its next budget, County Executive Dennis Levinson has said.

The increase will translate to a county tax increase of about 1.17 cents per $100 valuation to cover current employees, and about 1.77 cents per $100 if all open positions are filled, according to Levinson.

For a house valued at $300,000, the tax increase just to cover the rising health insurance costs would be $35 to $53.

School districts in the state plan are also facing double-digit percentage increases in health plan costs, Atlantic County Commissioner Amy Gatto, of Hamilton Township, said at a recent board meeting.

Costs for active Atlantic County employees will increase from $27.7 million in 2022 to $31.7 million in 2023 ($33.7 million if all job vacancies are filled); while costs for retired members will increase to $2.8 million in 2023 from $2.6 million in 2022, according to Levinson.

The State Health Benefits Commission based the increases on actual usage of medical care by participants in 2021, according to information on its website.

New Jersey's costs are going up at more than twice the rate of other states, according to an analysis by nj.com.

Levinson projected an overall increase of $4.2 million in health benefit costs for Atlantic County in 2023 based on existing employees, and an additional $2 million should vacancies be filled.

"The contributions of active members will also increase from $4.7 million to $5.1 million," Levinson said.

Atlantic County commissioners passed a $236.8 million 2022 budget in April that allowed for a small property tax decrease.

The county joined the State Health Benefits Commission in 2003.

REPORTER: Michelle Brunetti [email protected]