Christie's Pension Cuts Ruled Unconstitutional

by | February 24, 2015

By Andrew Seidman

A New Jersey judge ruled Monday that Gov. Christie violated public-sector unions' contractual rights when he cut the state's payment to the pension system for public workers in June, and she ordered him to work with the Legislature to find a solution.

The ruling comes a day before Christie, a Republican considering running for president in 2016, is to deliver his annual budget address to the Legislature.

A spokesman for Christie said the governor would appeal the 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 said in an e-mail.

New Jersey State AFL-CIO President Charles Wowkanech said in a statement that his union was "elated" with the decision.

"By refusing to make the required payments, the governor has exacerbated the chronic underfunding of the entire retirement system to the point of crisis," he said.

Facing a revenue shortfall, Christie in June slashed the state's payment to the $80 billion pension system from $2.25 billion to $681 million as part of the annual appropriations act.

The Democrat-controlled Legislature had passed a budget that funded the payment by raising taxes on New Jersey's highest earners and businesses. Christie vetoed the tax hikes, 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.

The law was implemented after years of skipped payments by governors of both parties and was meant to shore up the underfunded 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 required public workers to contribute more toward their pensions; raised the retirement age; and suspended cost-of-living adjustments.

Mercer County Superior Court Judge ruled Monday that Christie's cut violated the workers' contractual rights, enshrined in both the New Jersey and U.S. Constitutions.

"Notably, the language chosen by the Legislature unmistakably invokes the contract clause of the state and federal constitutions when it provides unequivocally that 'the failure of the state or any other public employer to make the annually required contribution shall be deemed to be an impairment of the contractual right of each employee,' " Jacobson wrote.

She added, "The clear intent of this language 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."

(c)2015 The Philadelphia Inquirer