Judge rules Christie's pension cut unconstitutional
TRENTON - A New Jersey judge ruled Monday that Gov. Christie violated public workers' contractual rights when he cut the state's payment to their pension system in June and ordered him to work with the Legislature to find a solution.
TRENTON — A New Jersey judge ruled Monday that Gov. Christie violated public workers' contractual rights when he cut the state's payment to their pension system in June, and ordered him to work with the Legislature to find a solution.
"The court cannot allow the state to simply turn its back on its obligations to New Jersey's public employees," Superior Court Judge Mary C. Jacobson wrote in her 130-page decision.
The ruling came a day before Christie, a Republican considering running for president in 2016, was to deliver his annual budget address to the Legislature.
In his speech, Christie will propose "specific, far-reaching solutions" for the pension system, according to his office, which did not release details.
A spokesman for Christie said the governor would appeal Jacobson's decision and was confident "the judgment of New Jersey's elected officials will be vindicated."
"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," spokesman Michael Drewniak wrote in an e-mail.
It was not immediately clear how lawmakers would find nearly $1.6 billion in revenue to make the full pension payment for the fiscal year that ends June 30 and also budget for next year's payment, which is scheduled to be bigger.
"You have to find the money somewhere," Assembly Majority Leader Louis D. Greenwald (D., Camden) said. "You either have to grow the economy in the next four months by $1.6 billion, or you have to find other programs with which to fund it."
Hetty Rosenstein, state director of the Communications Workers of America, said she was not confident Christie would comply with the judge's order.
"The governor is more interested in how he appears to people in Iowa and New Hampshire than he is to protecting the retirement security of one in 12 people in New Jersey," she said.
The $80 billion pension system covers more than 750,000 active and retired teachers, police, firefighters, and other public workers.
The New Jersey Education Association said it had been working with a Christie-appointed commission "to basically look at a road map for moving forward," including a plan-freeze proposal, said Ed Richardson, executive director of the union.
He said that retirees would not be affected, but that benefits for current employees would change, possibly on July 1, 2016, Richardson said. That would require a constitutional amendment to go before voters in November, he said.
Christie will propose a $1.3 billion pension payment for next year, the largest ever, according to his office. Democratic lawmakers say about $1 billion more is needed to keep the system on track.
Facing a revenue shortfall, Christie in June slashed the state's payment to the pension system from $2.25 billion to $681 million as part of the annual appropriations act.
The Democratic-controlled Legislature had passed a budget that called for funding the payment by raising taxes on New Jersey's highest earners and businesses. Christie vetoed the tax increases, saying they would make the state less affordable.
Public-sector unions sued, alleging that Christie had violated a 2011 law that established a contractual right to bigger pension payments, to be phased in over seven years.
The law was put in place after years of skipped payments by governors of both parties and was meant to shore up the pension system, which now has an unfunded liability between $37 billion and $82 billion, depending on the accounting method used to calculate it.
The law, along with another enacted in 2010, required public workers to contribute more toward their pensions; raised the retirement age; and suspended cost-of-living adjustments.
Jacobson, who was appointed to the bench in 2001 by Gov. Christine Whitman, a Republican, ruled Monday that Christie's cut "substantially impaired" the workers' contractual rights, enshrined in both the New Jersey and U.S. Constitutions.
The Legislature's intent "was to insulate the state contributions into the pension funds from the vicissitudes of the political process that had placed the integrity of the funds in significant jeopardy in the past," the Mercer County judge wrote.
She noted that a Christie-appointed commission issued a September report describing the pension system as in "dire" condition, with a "grievous" unfunded liability.
The administration argued that the law Christie signed in 2011, which he cites frequently as proof of his bipartisan leadership, violated the state constitution's debt limit and appropriation clauses.
The debt limit clause prohibits the Legislature from incurring debts greater than 1 percent of the budget without voter approval, but Jacobson said the clause applied only to bonded obligations, not pensions, which are deferred compensation.
Jacobson wrote that "even the City of Detroit continued to make payments into the city employees' pension systems despite dire financial distress, with the result that the health of Detroit's pension system while the city went through bankruptcy was better than the fiscal condition of New Jersey's pension funds."
"This state's employees deserve no less," she wrote.
The state also argued that under the appropriations clause of the New Jersey Constitution, which gives the Legislature the sole authority to make appropriations, Jacobson could not order Christie to make the full payment.
But Jacobson said her role was to determine "whether the plaintiff has a right to satisfaction of the contract and, if so, to give the other branches an opportunity to act in accordance with the court's decree."
She also rejected the state's argument that compelling the pension payment would undermine the governor's constitutionally protected line-item veto power.
Jacobson addressed the difficulty of finding $1.6 billion in revenue more than halfway through the fiscal year.
"The court cannot conclude that plaintiffs' requested relief should be delayed further simply because it may be inconvenient for the Legislature and the governor to go back to the drawing board in the middle of a budget cycle," she wrote.
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