Christie asks judge to dismiss case on pension funding cuts
Updated On: Nov 26, 2014
Gov. Christie disavows a pension overhaul the governor helped design
nj.com - Gov. Chris Christie is asking a state judge to dismiss a flurry of lawsuits challenging a budget veto that reduced funding for public worker pensions from a once-promised $2.25 billion to $681 million.
Lawyers for the Republican governor filed documents today asking Superior Court Judge Mary Jacobson to dismiss lawsuits brought by more than a dozen public-worker unions in New Jersey representing teachers, police officers, state troopers, firefighters and office workers. Christie had to cut the pension payment to avert a budget crisis that surprised him in the spring, the state argues, when state tax collections came in far short of the governor's estimates.
In an ironic twist, the Christie administration's 77-page legal brief repeatedly disavows a pension overhaul the governor helped design and signed into law during his first term — what Christie once hailed as the cornerstone of his plan to repair New Jersey's crumbling pension system.
The 2011 law shifted more pension costs to public workers, but it also gave them a contract right to full payments from the state budget into their underfunded retirement plans every year. Now, lawyers for Christie are calling that budget obligation unconstitutional, "void and unenforceable" and economically reckless.
"The Constitution forbids the Legislature from placing an unwilling populace in an eternal fiscal stranglehold," the state argues. Christie's lawyers also describe the union plaintiffs as "special interest groups that seek satisfaction of their own wants at the expense of the common good."
New Jersey's retirement system, which has nearly 800,000 beneficiaries, faces roughly $40 billion in unfunded liabilities at the state level, one of the largest funding gaps of any pension system in the country. The gap is projected to grow to $46 billion by 2019, with Christie's recent funding cuts adding an extra $4.2 billion in long-term debt over the next five years.
The governor has convened a special study commission of pension experts to come up with a new fix this year. Some options Christie has mentioned include reducing benefits for current workers and raising their retirement age, as he did in 2011.
State Democrats in control of the Legislature passed a budget this year that made the full $2.25 billion pension payment by raising taxes on millionaires and businesses. Christie, who says he is thinking about running for president in 2016, vetoed the tax increases and lowered the pension payment before signing the budget.
For the budget year that ended June 30, Jacobson allowed Christie to cut a $1.58 billion pension payment to $696 million. But it was a split ruling, and Jacobson found that those cuts violated public workers' contractual rights. The judge allowed them to go through citing the governor's emergency powers and the short amount of time that was left then — five days — to end the budget year in balance.
"It's not just money, it's the lives of hundreds of thousands of public employees who depend on the pension funds," Jacobson told Christie's lawyers at the June hearing, adding that slashing pension payments one year makes future contributions grow "exponentially."
Lawyers for the unions argue that contract rights enjoy special protections under the state and federal constitutions, and that Christie in his 2011 pension overhaul waived the state's right to legal immunity in any pension-funding cases brought in New Jersey courts.