A Billion Dollar Boondoggle 

HOLMDEL, NJ - During the public meeting of the Holmdel Township Committee, I shared printed copies with the Holmdel Township Committee of new legislation, a 'massive tax hike' for the township to review. Key point:

Our newsletter delivers the local news that you can trust.

Taxes can skyrocket if this 'Trojan Tax Horse' bill is signed into law.

I'm asking all legislators to publicly oppose it. 

The bill is called A1137. There is a Senate version as well. A1137 is sponsored by Assemblyman Craig Coughlin. It requires certain healthcare plans to be offered by all local boards of education in New Jersey. One of the major aspects of Coughlin's bill is eliminating Chapter 78 employee contributions to health insurance and replacing them with a percentage contribution of salary. Sounds simple and benign yet the math will shock you.

The teachers union, NJEA, feels that legislators like Democrat Coughlin are on the right track. Even the Governor is aligned with the cause of the  NJEA. According to their website:

“He (Governor Murphy) understands that keeping our public schools strong requires treating school employees with respect. He restated his commitment to working with the Legislature and public employees to provide relief from the unfair and unsustainable burden of Ch. 78. Achieving that relief for school employees this year, while also lowering health care costs for employers, is a win-win solution that is good for everyone in New Jersey."

Fair enough, if it was fair. 

As written, the taxpayers will get slammed. The quick fix is the Assembly and Senate removing the percentage mandate language. Then, it is what it ought to be - a refresh of the benefit structure and related options in plan design.

Historically, all public unions were upset with Chapter 78 because the financial consequences were not negotiated. This is the same, not negotiated

Here's a financial example of this Trojan Tax Horse. "A typical $100,000 salaried teacher currently choosing a top plan would contribute pre-tax approximately $12,000 a year as a contribution if former Chapter 78 contribution levels are in effect. This is 35% at what is known as Tier 4. If Coughlin gets this passed, the contribution would change from a percentage of premium to a percentage of salary of between 2% to 8% which, for a teacher at $100,000, the contribution plummets to $8,000 or less. The difference in this example, is $4,000. Unless an employee chooses zero.

A 'zero' example - if the employee chooses a High Deductible Health Plan with a $1500 deductible, their contribution in this legislation goes down to zero. So, if a member takes the HDHP with a $1500 deductible, they pay nothing at all except a potential deductible of $1500.00.

A Billion Dollars over 5 Years

According to the State of New Jersey, there are 116,351 full time teachers. This doesn't begin to cover all full time non teaching staff. However, it is good for the math. The family difference above is $4,000 per family unit. As a very rough estimate of the tax shift you can split that in half to account for single, employee/spouse, parent/child and family coverage. Averaging $2,000 reduction for each employee on average will cost about $232,000,000 a year. Over five years, that is over a billion dollars. A bona fide actuarial review must be done to calculate and properly audit and certify real numbers with the actual real life information in the state databases.

The result, ultimately, are higher taxes and cuts to services. The conversation on benefits and costs to employees and taxpayers is a really important one. Reading the legislation is the first step to understanding its impacts and judging for yourself. You can read it HERE

You can view the Holmdel meeting video HERE at 54.30. 


Note: The comments here are as a resident and not in any official capacity.    Editor's Note: Terence Wall is the husband of TAPinto Holmdel/Colts Neck publisher, Jeanne Wall.