NJ judge rules that Gov. Christie should not restore $1 billion in pension cuts
By Hilary Russ
TRENTON N.J (Reuters) – A New Jersey judge on Wednesday refused to force Governor Chris Christie to restore almost a billion dollars in funds that he cut from the state’s 2014 pension contribution.
The state’s fiscal crisis trumped public workers’ contractual rights, granted under the state’s 2011 pension reform law, to the full contribution, according to Judge Mary Jacobson’s ruling.
Public sector unions sued the Christie administration after he slashed $904 million from this year’s pension contribution and directed the legislature to cut $1.57 billion from next year’s budget, too.
Because the legislature is still crafting the budget for next fiscal year, which begins in just five days on July 1, the judge declined to rule on any of the legal challenges regarding the fiscal 2015 contributions.
Christopher Burgos, president of the State Troopers Fraternal Organization of New Jersey, said troopers and other plaintiffs would likely appeal. Though the judge did not grant the unions’ request for a preliminary injunction, the lawsuits themselves remain alive.
The case tests a component of New Jersey’s pension reforms that gives public pension participants the contractual right to sue if the state doesn’t meet its funding obligation.
“A contractual right exists and deserves constitutional protection,” Steven P. Weissman, an attorney for some of the unions, told the judge.
For years, some U.S. states, in particular New Jersey, failed to put enough money into their retirement systems. Nationwide, there is an estimated $1 trillion gap in public pension funds.
New Jersey’s Democratic legislative leaders worked with Christie, a possible 2016 Republican presidential candidate, to craft the 2011 pension reform. It mandated annual increases in the state’s pension contribution to make up for years of skimping, with a target for reaching the full actuarially required contribution of $4.8 billion in fiscal 2018.
The state had been on track to meet the new requirements even as revenue projections proved to be overly optimistic for three years. But the challenge became more acute this year after April personal income tax collections fell far short of the mark. Christie’s administration had to lower expected revenues by $2.75 billion through fiscal 2015.
“My sense is that there’s a real fiscal emergency, and they invoked emergency powers,” Jacobson said from the bench.
While she did not grant the unions’ request for immediate relief, Jacobson did say they had a valid cause of action.
“It’s not just the money. It’s the lives of these hundreds of thousands of public employees who are depending on the funds for pension allowances when they retire,” she said.
“There seems to be an immediate impact on the fiscal health of the fund if the payments are not made.”
Democrats want tax hikes on the wealthy to pay for pension contributions next year, a measure Christie has said he would not support.
“I am pleased the court recognized the necessity and urgency of this decision so that we can provide key funding for our schools, our colleges, our hospitals and other essential services,” Christie said in a statement.
(Reporting by Hilary Russ; Editing by David Gregorio)
[Image via Agence France-Presse]