Red Bank Borough Hall. (Click to enlarge)
By DUSTIN RACIOPPI
Since Governor Chris Christie enacted sweeping pension reforms this summer, two-week notices have filed into Red Bank Borough Hall. Now as is the case in many municipalities across the state it’s time for town officials to figure out a payment plan.
Red Bank is on the hook for $750,000 in payouts for unused sick days and other perks as a result of 11 employee retirements, officials say. And on Monday night the council passed the first reading of an ordinance to borrow over the next five years to pay them.
The cost to cover the payouts, financed by a bond, will have “no effect” on next year’s tax bills, Mayor Pasquale Menna said, because a recent change in state regulations allows for municipalities to borrow and spread out payments rather than pay for them all in one year.
The borough’s payment to departing workers might have been less had they started working in or after 1994, when the borough implemented its own system to cap benefit payments at 15 percent a year of what they’re owed for each employee. Prior to then, there was no cap. And it wasn’t until this year that the state imposed a cap on benefits.
“We have actually been in the forefront of capping payments,” Menna said. “Unfortunately, most of the employees that are retiring have been working since before 1994.”
Red Bank is not the only town to have to bond for retirement payouts. Middletown owes about $960,000 to cover the cost of some 20 exiting employees a number that continues to rise and last week passed a similar ordinance.
Middletown Chief Financial Officer said with the recent change to state law, town coffers aren’t as strained because they get to pay the money over the five years. In Middletown’s case, it can either borrow money and pay it back in annual installments, or incorporate the payouts into its budget.
