June 28, 2011 / 3:26 AM / in 7 years

Christie to sign New Jersey benefits overhaul Tuesday

NEW YORK (Reuters) - New Jersey Governor Chris Christie plans to sign into law on Tuesday a major overhaul of pension and health benefits, a spokesman for the Republican governor said.

A provision in last week’s accord on out-of-state health coverage proved controversial. But now that the state senate controlled by Democrats repealed that section, the bill can be sent to Christie for his signature, the spokesman said in a telephone interview.

“Tomorrow is the bill signing on health and pension reform,” the spokesman said.

Christie won a national reputation last year for closing a huge deficit without raising taxes though fiscal analysts faulted him for skipping a required pension contribution.

Christie has said the bill he will sign on Tuesday is expected to save $120 billion over 30 years. It is seen as a major step in compressing the state’s large, unfunded pension shortfall.

To the dismay of some unions, the Christie legislation won approval of both houses of the Democratic-led legislature.

Wall Street rating agencies and investors in the $2.9 trillion U.S. municipal bond market are increasingly focused on unfunded pension liabilities as they weigh the credit-worthiness of state and local government debt.

Reining in the state’s costs for its 500,000 public workers has been a top priority for Christie since he took office in 2010. The issue has helped vault him to national prominence, where he is seen as a possible future presidential candidate.

Critics say Christie hurt the state’s fiscal standing by skipping a $3 billion payment to the pension fund last year. He pledged to make a $506 million payment to the fund only if the Legislature approved his pension reform plan.

Pension costs are ballooning in states across the country, and promised payments have not been funded. New Jersey has one of the largest unfunded pension liabilities of any state.

Reporting by Joan Gralla; Editing by Jerry Norton and Peter Bohan

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