Greater Morristown mayors warn of economic chaos from surging state health premiums

Morris Township welcomes area mayors to press conference about skyrocketing health costs, Nov. 29, 2022. Screenshot by Kevin Coughlin
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One called it a “gut punch.” Another, “devastating.”

On Tuesday six local mayors–five Democrats and one Republican–gathered in Morris Township to warn of economic havoc if Trenton does not provide relief from state health premiums estimated to spike by up to 24 percent.

Such hikes for employees enrolled in the State Health Benefits Plan could mean some of the nation’s highest local property taxes will shoot even higher. Local services will be cut, and the public employees who provide them will take home less pay even with raises, as their insurance contributions climb, the mayors said.

All at a time when towns still are digging out from the pandemic and everyone is struggling with inflation.

“This is a gut punch,” said Morris Township Mayor Mark Gyorfy, who organized the 23-minute press conference on the steps of the municipal building.

Gyorfy and mayors from the neighboring southeastern Morris County municipalities of Morristown, Morris Plains, Madison and Chatham Borough and Chatham Township urged the state to tap a nearly $7 billion surplus to rescue them.

Video: Joint Press Conference, Nov. 29, 2022:

Their voices joined a bipartisan chorus of state lawmakers; union leaders; and the New Jersey Association of Counties, the New Jersey League of Municipalities and the state School Boards Association, all questioning the projected premium increases.

The mayors, who together represent more than 80,000 residents and 700 public employees, said the situation has pushed them to consider such drastic measures as pulling out of the state plan to establish their own insurance consortium, and relaxing home rule to share other services or even –gasp!–merge to shave costs.

In “desperation,” Chatham Borough Mayor Thad Kobylarz said his administration has beseeched employees to switch to cheaper options among the state’s 12 health plans. The borough offered to split its premium savings with those workers.

Eight of 40 employees enrolled in the state system have agreed to go along, saving Chatham Borough about $25,000, Kobylarz said. Even so, he expects the borough’s health costs to jump by $145,000, a 12- to 15 percent increase that probably will be passed along to homeowners “already stretched pretty thin.”

Citing “out of control inflation,” Chatham Township Mayor Ashley Felice, the lone Republican who spoke on Tuesday, warned of a “snowball effect” in which residents soon may face hard decisions about their monthly essentials.

Health care costs already represent 10 percent of her municipal budget, Felice said, and higher premiums will deal a tough blow to 49 Township employees and 62 retirees, she said.

UTTERING THE ‘M’ WORD

Statewide, the increases are expected to impact thousands of state, county and local government workers enrolled in the State Health Benefits Program and teachers and others enrolled in the School Employees’ Health Benefits Program.

State officials have blamed surging premiums on the rising cost of health care, the COVID-19 pandemic and inflation.

A state Treasury spokesperson has said the hikes are similar to those experienced in the private sector, and across the nation, and may be temporary.

“We believe that these circumstances are an anomaly, rather than the norm, and we believe that it is more likely than not that utilization and costs will normalize,” spokeswoman Jennifer Sciortino told NJ Spotlight News in July.

Public workers thronged to Trenton over the summer to protest these premiums.

Morristown Mayor Tim Dougherty noted that Gov. Phil Murphy struck a deal in September to lower state employees’ increases from 18 percent down to 3 percent, with the state absorbing the difference. No such relief has been offered to county, municipal and school employees, however.

A spokesperson for Murphy said the governor shares the mayors’ concerns.

“Unfortunately, rising health care costs are an issue across the nation at this time, which is one of the reasons why the Governor is focused on making life more affordable for New Jerseyans,” Christi Peace said in a statement.

“The Administration is always looking to work with our partners in government and labor to seek solutions that will help us deliver quality health care at an affordable price to every New Jerseyan,” Peace said.

Aid for towns would require state legislation. State Sen. Anthony M. Bucco (R-25th Dist.) said that could have come with the state budget in June–if Murphy had been transparent about premium increases he had known about for months.

Bucco also contends the Governor has failed to hold Horizon accountable, or tap unused COVID relief funds to ease the premium burden on municipalities.

“Gov. Murphy seems to be the only person in New Jersey who doesn’t think this is a problem that needs to be fixed,” Bucco said in a statement. His colleague, Assemblywoman Aura Dunn (R-25th Dist.), has proposed an overhaul of the state commission that approved the increases.

Unlike the other towns represented on Tuesday, Morristown is self-insured. Yet its insurance bill still could skyrocket by at least 16 percent, an increase of $1 million, Dougherty said.

“What’s coming next year, and the year after? Are we looking at another double-digit increase?…What are we going to be dealing with 20 years from now?” asked Dougherty.

Hard-working town employees earning less despite pay raises is “devastating,” he added, suggesting it’s time to get serious about the M word.

“Eventually we’re going to have to talk about how communities can merge together in ways to save tax dollars, whether it’s through fire, whether it’s through DPW, whether it’s through municipalities merging,” Dougherty said.

“You know, that’s something that never seems to get talked about. And I think there’s going to come a time where, you know, you can only raise your taxes so much to your residents, and it starts to become such a burden that they’re no longer going to live in your community.”

PARTY LIKE IT’S 1999?

Morris Plains Mayor Jason Karr shared Dougherty’s longterm concerns. Seven hundred residential units are coming soon in the borough, and they will require more cops, public works people and town hall staff– who will need health insurance.

“This is problem not just for now, but for years to come,” Karr said.

Madison Mayor Robert Conley endorsed shared services; his borough shares its municipal court with the Chathams and Morris Township.

Municipal budgets cannot deal with fluctuating costs, “especially extraordinary fluctuations,” Conley said. “And then you throw on top of that the challenge of dealing with inflation.”

At almost $2 million, healthcare costs already account for 6 percent of Madison’s $33 million operating budget, said Conley, whose borough live-streamed the event.

Morris Township could be facing a $1 million budget increase to cover ballooning premiums, Gyorfy said. Even if the Township ups its spending by the maximum 2 percent allowed by state law, he asserted, it won’t cover half that amount.

“How’s that for a Happy New Year?” Gyorfy said.

This story has been updated with comments from Gov. Murphy’s office and state Sen. Anthony M. Bucco (R-25th Dist.).

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3 COMMENTS

  1. Seems like the employees need to pony up. Small numbers of workers shouldn’t equate for 10 percent of a budget just for health benefits.

  2. This is the first time I have read where elected officials are openly talking about municipal consolidation. Shared Services has worked in some locations and that is a good start, but the real savings can only be achieved through municipal and school district consolidation.

  3. 49 current township employees and 62 retirees will cause a 1 million dollar increase? Obviously what needs to be done is cut the retirees health benefits. Are they not Medicare eligible yet? Why should the township foot the bill for these 111 former and current workers?

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