Judge Rules Christie Must Make $1.5B Pension Payment in N.J. Budget
Updated On: Mar 23, 2015
Gov. Chris Christie delivers his state budget address last year. (Tony Kurdzuk | NJ Advance Media for NJ.com)
NJ.com - TRENTON - In a blow to Gov. Chris Christie a day before he introduces his latest state budget proposal, a state judge ruled today that the governor must make a $1.57 billion pension payment into the current budget by the end of June.
State Superior Court Judge Mary Jacobson sided with a group of public worker unions who sued to stop the Republican governor from slashing the payment to New Jersey's retirement fund for hundreds of thousands of government workers to balance the budget for the fiscal year that began last July 1.
That means the state must scramble to find a way to make the payments, which Christie cut after his administration's revenue projections fell far short and left a gaping hole in the budget.
The unions — which represent teachers, police officers, state troopers, firefighters, and office workers — argued that Christie's cuts violated a 2011 law he signed to put the pension system back on sound financial ground. The state promised to make increased annual payments to the fund after years of governors shortchanging it, and in exchange workers agreed to pay more for the pension and health benefits. Christie touted the law — which he worked on with Democratic lawmakers — as a bipartisan achievement and brought him national attention.
Jacobson ruled today that the state constitution protects those payments from being cut.
It's possible Christie will appeal the decision, which could hurt his potential campaign for the 2016 Republican nomination for president.
"Once again, liberal judicial activism rears its head with the court trying to replace its own judgment for the judgment of the people who were elected to make these decisions," Michael Drewniak, a spokesman for Christie's office, said in a statement today. "This budget was passed by the Legislature and signed by the governor with a pension payment. The governor will continue to work on a practical solution to New Jersey's pension and health benefits problems while he appeals this decision to a higher court where we are confident the judgment of New Jersey's elected officials will be vindicated."
The unions' lawsuits dealt with two years of pension payments that Christie cut to balance the budget. Last June, days before the previous fiscal year was set to end, Jacobson ruled that Christie could cut that year's payment from $1.58 billion to $696 million because the revenue shortfall was a fiscal emergency.
She said barring another emergency, the workers were contractually entitled to full $1.57 billion payment this year under the 2011 law.
In January, attorneys for the state argued that Christie could not make full payments because the 2011 law was violated a debt limitation clause and an appropriations clause in the state constitution.
But in today's 130-page ruling, Jacobson noted that "state employees have continued to make increased contributions to the pension funds throughout this (fiscal year), while the state's required contributions to the funds have been severely truncated."
She added that even though he worked on the reforms with the state Legislature and signed them into law, Christie "has done an apparent about-face and now claims that certain provisions in the state constitution ... invalidate the contractual right."
Jacobson also ruled that the state must reimburse the unions for legal costs.
New Jersey's pension system faces $83 billion in unfunded liabilities, and it's estimated the two-year, $2.4 billion cut will cost the state twice as much over the next five years.
Christie has repeatedly said that the 2011 reforms didn't go far enough and another overhaul is needed. He formed a special commission to suggest ways to fix the problem, but it has yet to issue a final report.
How Christie will tackle the issue is one of the top questions heading into his budget address today.