SENATE BUDGET AND APPROPRIATIONS COMMITTEE

STATEMENT TO

SENATE, No. 2297

STATE OF NEW JERSEY

DATED: JANUARY 6, 2000

The Senate Budget and Appropriations Committee reports favorably Senate Bill No. 2297.

This bill increases various annual salaries in the Executive, Judicial and Legislative Branches of State government and for county prosecutors and members of the county boards of taxation. It also establishes a mandatory retirement age of 70 for judges of the Office of Administrative Law and the Division of Workers' Compensation.

The annual salary of the Governor is increased from $130,000 to $175,000, beginning with the commencement of the term of office of the Governor inaugurated in January of 2002. (Pursuant to the State Constitution, the salary of the current Governor cannot be increased or diminished during her term of office.) This salary was last increased in 1991. (Section 1)

The annual maximum salary of the commissioners of the various State departments and the members of the Board of Public Utilities is increased from $115,000 to $133,330 in calendar year 2000, $137,165 in calendar year 2001 and $141,000 in calendar year 2002 and thereafter. This maximum salary was last increased in 1991. (Section 2)

The annual salary of the members of the Casino Control Commission is increased from $90,000 to an amount to be established by the Governor not to exceed for each member $133,330 in calendar year 2000, $137,165 in calendar year 2001 and $141,000 in calendar year 2002 and thereafter. The extra $5,000 in annual compensation for the chairman of the commission is eliminated. This salary was last increased in 1993. (Section 3)

The annual salary of the members of the State Commission of Investigation is increased from $25,000 to $35,000. This salary was last increased in 1985. (Section 4)

The annual salary of the county prosecutors is increased from $115,000 to $133,330 in calendar year 2000, $137,165 in calendar year 2001 and $141,000 in calendar year 2002 and thereafter. This salary was last increased in 1996. (Section 5)

The annual salaries of the Supreme Court Justices and Superior Court and Tax Court judges are increased as follows: Chief Justice of the Supreme Court, $138,000 to $164,250 by 2002; Associate Justices of the Supreme Court, $132,250 to $158,500 by 2002; Judges of the Superior Court (Appellate Division), $124,200 to $150,000 by 2002; Judges of the Superior Court (Assignment Judge), $120,750 to $146,750 by 2002; and all other Superior Court and Tax Court judges, $115,000 to $141,000 by 2002. These salaries were last increased in 1996. (Section 6)

The annual salaries of the judges of the Division of Workers' Compensation currently are calculated as certain percentages (by the fourth year of service as 90%) of the annual salary of a Judge of the Superior Court. This bill reduces these percentages so that the percentage for the fourth year of service and thereafter will be 85%. The annual salary of the Director of the division, who is also the Chief Judge of Compensation, currently is calculated as 94% of the annual salary of a Judge of the Superior Court. This bill reduces the percentage to 89%. (The actual salaries of these judges will increase, nevertheless, as a result of the increase, provided in this bill, in the annual salary of Judges of the Superior Court). The current percentages were established in 1991. The salaries of the director and the judges were last increased in 1996, as a result of the increase in the annual salary of the Judges of the Superior Court. (Section 7)

The annual salaries for the Director of the Office of Administrative Law, who is also the Chief Administrative Law Judge, and the various administrative law judges are provided for in statute but not specified as to an amount. This bill amends several sections of law to make the method for calculating the salaries for these positions the same as that used to calculate the salaries of the Chief Judge/Director of the Division of Workers' Compensation and the judges of the division, i.e., as certain percentages of the annual salary of a Judge of the Superior Court. (Sections 8, 9, 10 and 11)

The annual salary for the members of the Senate and General Assembly is increased from $35,000 to $49,000, beginning with the 2002 legislative year. (Pursuant to the State Constitution, an increase or decrease in the legislative salary cannot take effect until the legislative year following the next general election for members of the General Assembly.) This salary was last increased in 1990. (Section 12)

The bill establishes a permanent Public Officers Salary Review Commission to review salaries and make recommendations to the Governor and Legislature beginning on December 1, 2003 and every four years thereafter. (Section 13)

The above provisions of the bill arise from the recommendations of the Public Officers Salary Review Commission, set forth in a report dated December 7, 1999. This seven-member commission was created by Joint Resolution No. 1 of 1999 (approved March 5, 1999) for the purpose of reviewing the salaries of the Governor, cabinet officers, Board of Public Utilities members, Casino Control Commission members, Workers' Compensation judges, members of the Legislature, State Commission of Investigation members, Supreme Court Justices, Superior Court judges, Tax Court judges, administrative law judges and county prosecutors. The joint resolution required the commission to propose to the Governor and Legislature recommendations concerning changes in these salaries.

The bill increases the minimum annual salary of members of the county boards of taxation from certain minimum levels (depending on the population of a county) by $5,000 for each level. These levels were last increased in 1988. (Section 14)

Finally, this bill would provide that judges of the Office of Administrative Law and the Division of Workers' Compensation be required to retire at age 70. Under current law, justices of the Supreme Court and judges of the Superior Court and Tax Court are required to retire at age 70, but there is no such requirement for workers' compensation or administrative law judges. (Section 7 and 9, 15 and 16)

The bill gives judges of the Office of Administrative Law and of the Division of Workers' Compensation in service on the effective date of this act three additional years to serve before the mandatory retirement provision will affect them, and permits any judge who is 60 years of age or older on the date of enactment but who does not have 10 years of service credit to continue until attaining 10 years of service in the Public Employees' Retirement System (PERS). Ten years is the period required for vesting in PERS. (Sections 17 through 20)

FISCAL IMPACT

The Office of Legislative Services (OLS) notes that the full cost impact of this bill will be phased in in accordance with the timetables and graduated salary increases specified therein. Because the bill in some instances creates maximum or minimum salaries for certain positions, leaving the actual establishment of salary scales to Executive or governing body discretion, OLS has had to make assumptions as to the cost factors in a given year.

Based on those assumptions, the OLS estimates that the additional cost to the State, which will be responsible for the increased salary costs for county prosecutors and county tax board members as well as for State employees, will be approximately $4.8 million in FY 2000 (one-half year implementation); $10.8 million in FY 2001 (full year) and $14.1 million in FY 2002 (full year).

The OLS also notes that, with particular respect to the Judicial Retirement System and to a lesser extent, the Public Employees' Retirement System, there will be additional employer pension contributions required to finance the higher liabilities stemming from the impact of the pay increases on final average salaries of those judges and officials affected. Finally, the employer will be required to contribute an additional 1.45 percent of the salary increases for the Medicare portion of FICA payroll taxes.