Christie's budget proposes pension overhaul, benefit cuts

AP News
Posted: Feb 24, 2015 8:28 PM
Christie's budget proposes pension overhaul, benefit cuts

TRENTON, N.J. (AP) — New Jersey Gov. Chris Christie, who is considering a run for president in 2016, on Tuesday proposed a massive restructuring of the public employees' pension system as he unveiled a $33.8 billion state budget proposal for the upcoming fiscal year.

The budget for the year that starts July 1 would include no tax increases, keep flat spending for key items such as aid to schools, and barely budges on overall spending.

It proposes paying $1.3 billion into the pension system next year — a number that Christie touted as historic, but is nonetheless far less than the $3 billion the state agreed to pay as part of a 2011 agreement, which a judge ruled Monday was binding for the current year.

But Christie, who is appealing that ruling, did not acknowledge the potential impact.

Instead, he spent much of his budget address touting what he described as a "groundbreaking" and "unprecedented accord" with New Jersey's largest teachers union, with which he had repeatedly sparred.

"Together I know we can get this done. We've proven time and again that even when we look like we're not going to make it work and that politics and partisan interests have won, we flip the script. We do it differently. We get it done," Christie told the Democrat-controlled state Legislature during a speech in which he expressed displeasure with previous governors, the courts and the Legislature regarding the state's pension predicament — and the media for the way it's characterized.

The so-called Roadmap for Reform would freeze the existing pension plan and have the New Jersey Education Association take ownership of a new pension fund for educators. The state would be required by a constitutional amendment to fund its current obligations over the next 40 years. In exchange, the unions would agree to significant health care cost savings to offset the costs.

Christie said the agreement provided a "national model" for solving a problem faced by states across the nation.

But NJEA President Wendell Steinhauer rejected the idea that the union had reached any kind of deal with the administration.

"What we have come to is we have some concepts that we think we can explore further with them and move through," he said, describing the governor's portrayal of health care concessions as "an overreach." The document Steinhauer signed lays out areas for potential savings, including wellness programs and lower cost care.

In a statement, he went further.

"Unfortunately, today politics trumped policy. NJEA is deeply disappointed that Gov. Christie overstated the nature of the understanding we reached with the commission after many months of conversation," he said.

Christie spokesman Kevin Roberts downplayed the disagreement, saying, "We all agree that there is more to be done, but we do agree on a push forward toward the roadmap."

The administration had long touted the deal Christie struck with unions in his first term as his biggest accomplishment. But it has since argued that the concessions, like higher retirement ages, didn't go far enough, and that ballooning pension and health care costs are crowding out other spending.

Late Monday, a judge ruled that the administration was on the hook for $1.57 billion Christie delayed paying into the pension system in the current fiscal year in the face of an unexpected revenue shortfall.

During his speech, Christie dismissed the ruling, saying, "we don't need any court to tell us we have a serious problem."

But State Treasurer Andrew Sidamon-Eristoff told reporters in a briefing before the budget address that if an appeal does not prevail, the decision would have enormous impact.

"Obviously, finding $1.6 billion dollars in the state budget in the remaining months of the current fiscal year would be, to put it mildly, a challenge," he said.

Democratic leaders in the Legislature, meanwhile, panned the address, saying they were disappointed in the governor's lack of detail. They said the court decision earlier this week means the governor needs to come up with more money.

"The plan is, 'I give up. I can't fix it, so we're just going to break our word and not try,'" Steve Sweeney, the Democratic president of the state Senate said, characterizing Christie's approach.

The speech coincided with the release of a long-awaited report from a pension and health benefits study commission appointed by Christie. It concluded that the state would have to take drastic actions to fully fund pension and health benefits at their current level.

"There are no plausible solutions for closing the pension funding gap without comprehensive benefits reform," it reads.

Christie will kick off a town hall tour Wednesday in southern New Jersey to sell his plan.


Associated Press writer Michael Catalini contributed to this report.