By RICHARD PÉREZ-PEÑA - TRENTON — New Jersey lawmakers on Thursday approved a broad rollback of benefits for 750,000 government workers and retirees, the deepest cut in state and local costs in memory, in a major victory for Gov. Chris Christie and a once-unthinkable setback for the state’s powerful public employee unions.


The Assembly passed the bill 46 to 32, as Republicans and a few Democrats defied raucous protests by thousands of people whose chants, vowing electoral revenge, shook the State House. Leaders in the State Senate said their chamber, which had already passed a slightly different version of the bill, would approve the Assembly version on Monday. Mr. Christie, a Republican, was expected to sign the measure into law quickly.
In a statement released after the vote, Mr. Christie said, “We are putting the people first and daring to touch the third rail of politics in order to bring reform to an unsustainable system.”
The legislation will sharply increase what state and local workers must contribute for their health insurance and pensions, suspend cost-of-living increases to retirees’ pension checks, raise retirement ages and curb the unions’ contract bargaining rights. It will save local and state governments $132 billion over the next 30 years, by the administration’s estimate, and give the troubled benefit systems a sounder financial footing, mostly by shifting costs onto workers.
While states around the country have moved to pare labor costs and limit the power of unions, the move is all the more striking here, in a Democratic-leaning state where Democrats control both houses of the Legislature and union membership is among the highest in the country. Most Democratic legislators opposed the benefits reductions, but their leaders voted in favor of the changes, exposing deep, longstanding rifts in the party that lawmakers say could weaken it in coming elections.
The fight over benefits reflected both Mr. Christie’s ability to exploit the divisions among Democrats, through his alliances with more conservative Democratic party bosses and legislators, and his success at using the public-sector unions as a foil in his drive to shrink government spending. It has also allowed a nationally known but highly polarizing governor to claim the mantle of bipartisan conciliation, telling audiences that New Jersey is setting an example that other states and the federal government should follow.
On Thursday, thousands of people wearing union T-shirts and buttons filled the Assembly visitors’ gallery, the State House corridors and, in a high-decibel protest, the sidewalks, lawns and streets around the building. A procession down State Street included a hearse draped with a banner saying “The Soul of the Democratic Party,” and organizers with bullhorns led the crowd in chants of “We’ll remember in November!” and “Kill the bill!”
Unions have been broadcasting advertisements attacking Democrats who support the bill — particularly Stephen M. Sweeney, the Senate president — and this week union leaders have spoken of the difference between “real Democrats and Christie Democrats,” pointedly including in the latter group Mr. Sweeney, who also is an official of the ironworkers’ union.
“This bill is not about savings; it is about breaking the backs of the hard-working men and women of this state,” Assemblyman Patrick J. Diegnan Jr., a Middlesex County Democrat, said Thursday after the session began. “I challenge everyone in this chamber today: how many have even read the full 124 pages of union-busting activities?”
But Assemblyman Angel Fuentes, a Camden Democrat, said, “These reforms are unquestionably bitter pills for us to swallow, but they are reasonable and they are necessary.” He added: “We now have towns across this state that are struggling to afford health benefits for their employees. This has resulted in cities laying off workers.”
The legislation applies to all state employees and to a much larger number of county, town and school district workers, because most local governments participate in the state-run pension and health care systems. When it is fully phased in, after four years, the average government worker will pay several thousand dollars more into the benefit funds.
But union leaders say the bigger issue is what they call a stealth assault on collective bargaining. With just a week remaining in the contracts for the major state employee unions, the unions are now trying to negotiate new agreements with the state.

Most public employees in the state, other than teachers, police officers and firefighters, have had no guarantee of collective bargaining on any issue except for health benefits.
The legislation will supersede that right, allowing the state to impose health care terms unilaterally. For many workers, this means that if contract talks reach an impasse, the government will be able, at least in theory, to dictate all terms, like wages, time off and work rules.
“This bill cuts away the one issue, health care, that the unions could use to trade off against other things,” said Jeffrey H. Keefe, associate professor at the School of Management and Labor Relations at Rutgers University.
Hetty Rosenstein, state director of the Communications Workers of America, said, “This bill is nothing less than Chris Christie’s frontal assault on organized labor.”
Union leaders said they were exploring the possibility that some provisions of the bill, like the suspension of cost-of-living increases for retirees, could be challenged in court.
In his campaign to rein in the unions and shrink government, Mr. Christie has often been helped by New Jersey’s unique political culture, where local political machines still dominate some areas, and many state legislators also hold local government jobs. That gives striking influence in Trenton to mayors, county executives and local party bosses who struggle with rising labor costs and have repeatedly sided with the governor’s push to cut benefits and wages.
Until recently, the public employee unions were among the most feared forces in state politics. They were a major source of votes, campaign cash and foot soldiers for Democrats, but officials in both parties were eager to please them. For years, governors and legislators from both parties sweetened their pension benefits but did not put any money into the system to pay for them.
As a result, the state’s pension funds are among the most underfunded in the nation — estimated last year at $54 billion short of the amount needed to meet future obligations. Mr. Christie and others have warned that mounting pension and health care costs could eventually bankrupt the state and local governments.
The pendulum has swung back over the last four years, first under Gov. Jon S. Corzine, a Democrat, and then under Mr. Christie, as the state took steps like increasing what workers paid for benefits, raising retirement ages and limiting contract arbitration awards. But the bill now awaiting the Senate’s approval and Mr. Christie’s signature is easily the most far-reaching one yet.