• Governor Corzine recognizes the enormous the financial burden that pension payments pose on local governments, particular during a recessionary period.



• After a gradual phase-in period that ends this year, local governments will be required to meet the full annual employer pension obligations for both the PERS and the Police and Fire Retirement systems beginning next year.



• This obligation requires a total payment of more than $1 billion by April 1, 2009.  This payment puts extraordinary pressure on local property taxpayers and local budgets.



• Governor Corzine has proposed a temporary deferral of next year’s payment as a practical bridge over today’s economic circumstances.



• The deferral would reduce the impact of the pension contribution on the local property taxpayer by a total of $540 million next year.  60% of that deferral will be directed to municipalities.



• After next April, the contributions would be phased up again, from 50 percent of the required contribution in 2009, to 60 percent in 2010, and 80 percent in 2011.



• We will again require 100 percent funding by 2012 – payments that will then be larger so as to compensate for the lowered level of contributions over this three-year period.



• The deferral is not unlike a restructuring of a mortgage obligation during difficult times. 



• Absent this temporary deferral, some communities would have to raise local taxes to unbearably high levels at the precisely wrong time, or make unacceptable sacrifices to the public in the delivery of critical municipal services in such areas as public safety, public health and education.

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