Christie had held the money hostage until public labor representatives agreed to health benefits cuts.
TRENTON -- New Jersey's distressed cities will have $54 million coming their way following Gov. Chris Christie's announcement Monday that he will release the aid he'd frozen because he wanted to force public worker health care cuts.
Christie had sequestered more than $100 million in transitional aid to municipalities and funding for social programs until the joint-employer-employee benefits committees agreed to benefits changes saving the state $250 million this fiscal year.
The committee for state and local workers approved the cuts 7-3 with one abstention Monday afternoon.
"I am pleased the State Health Benefits Plan Design Committee voted to approve common-sense health plan savings that begin to address the $250 million budget deficit resulting from growing state health care costs," Christie said in a statement Monday.
The freeze affected half of the total appropriation for transitional aid, which typically goes to such low-income cities as Atlantic City, Camden, Paterson, Asbury Park, Harrison and Trenton.
Christie could slash millions in municipal aid
The governor will still hold in reserve the $55 million for such social programs as Holocaust survivor assistance, domestic violence prevention and court-appointed special advocates for foster children.
Only one of the two committees overseeing public worker benefits has adopted the proposals. Union representatives on a commission for school employees' benefits have boycotted the meetings to block the administration from pushing through its recommendations.
The governor first raised the challenge to cut $250 million in health benefits costs in his February budget address. His proposed budget assumed those savings but left it to the committees to find the money.
The administration later asked the Legislature to add language to the proposed budget giving the plan design committees a deadline to approve $250 million in health benefits savings or state officials would find those cuts for them. But Democrats who control the Legislature didn't comply with Christie's request.
Christie responded with an executive order placing the funds in reserve, which he said was necessary to ensure the budget stays in balance and is able to respond to emergencies.
He said in his message that the "permissive nature of the Legislature's budget language" and the "historical reluctance of some members of the plan design committees to embrace even the most modest of common-sense reforms, calls into question whether the Fiscal Year 2017 health benefits savings embedded in the Legislature's budget is realistically likely to be achieved."
The State Health Benefits Plan Design Committee on Monday approved seven proposals that would move retirees onto Medicare Advantage, reduce out-of-network reimbursement rates for physical therapy, extend the state contract with its pharmacy benefits manager, offer financial incentives for employees to migrate to lower-cost, tiered plans, and prioritize less expensive and generic drugs, among other changes.
Kevin Lyons, a committee member representing the Policemen's Benevolent Association, said the state could save $100 million to $130 million a year. Local employers will save money, as well.
Lyons broke with the union representatives, voting with the six administration members to approve the changes. Without the cuts, he said, state employees and local employees faced 9 percent and 6 percent increases in their own costs, respectively.
Law enforcement jobs were also at risk if the governor refused to free up the transitional aid to municipalities, he noted.
"My members were in a position that I couldn't turn my back on," he said. "Releasing the transitional aid is huge to a lot of cops and firemen in this state that we're trying to look out for to make sure they don't have mass layoffs again."
Workers can also now expect their costs to stay the same or decrease slightly, he said.
While the State Health Benefits Plan Design Committee approved those changes Monday, the School Employees' Health Benefits Commission was forced to cancel its meeting because it didn't have a quorum of its members.
The New Jersey Education Association has refused to attend to prevent the commission from meeting while the administration has a one-member advantage and can push through the move to Medicare Advantage.
Wendell Steinhauer, president of the NJEA and a commission member who was not in attendance Monday, said Christie has stalled appointing a new union member to the panel, which otherwise has equal numbers of labor and administration representatives.
"We are not going to let the governor play games with the security of our retirees' benefits," Steinhauer said. "He is exploiting the death of a longtime union leader to further his own political agenda. He wants to circumvent the process for benefits review while the state has majority representation on the commission."
Before adjourning the meeting, Treasurer Ford Scudder chastised the NJEA for snubbing the meeting, saying the Medicare Advantage switch could save $25 million this year.
"In addition to violating both the public trust and their legal obligations, their unwillingness to walk down the street, or even pick up the telephone, to attend a meeting is harming the citizens of New Jersey," he said.
Samantha Marcus may be reached at smarcus@njadvancemedia.com. Follow her on Twitter @samanthamarcus. Find NJ.com Politics on Facebook.