Christie appeal: Pension ruling used 'fabricated' right

AP News
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Posted: Mar 31, 2015 5:37 PM

A ruling that demanded the New Jersey state government contribute another $1.6 billion to public employees' retirement funds came from a judge who "fabricated a constitutional right to pension funding," Gov. Chris Christie's administration told an appeals court on Tuesday.

Christie, a possible 2016 Republican presidential candidate, is trying to get a higher court to overturn a February order that he and the Legislature contribute the money to pension funds for the fiscal year that ends June 30.

The judge who made that order said that a 2011 law that Christie signed to try to make good on retirement promises to public workers could be enforced like a contract.

In the lower court, the state attorney general's office argued that the law was unconstitutional. In a brief for the appeals court, the office contends largely that it's Judge Mary Jacobson's ruling that is defying the state constitution.

"The court not only created an immutable, constitutional right to annual pension funding in the amount of ever-increasing billions, but also gave the Legislature the blue print for permanently locking down ever-increasing fractions of the state budget," the state said in its filing.

The state also said there's no place for a judge in the state budget process.

How to pay for the promised pensions for government employees has long been a vexing problem. Governors often have skipped or skimped on the required contributions, leaving doubts about the long-term viability of the funds.

In 2011, Christie and lawmakers agreed to a fix. Workers would not be able to retire as early and would increase their contributions, and retirees would lose automatic cost-of-living increases and medical coverage. In exchange, the state would ramp up payments over seven years to catch up on the missed funding.

But last April, state tax revenue came in below expectations, and a scramble was on to balance the budget for fiscal years 2014 and 2015.

Christie responded by reducing promised pension payments for both years, even though lawmakers gave him a fiscal 2015 budget that called for funding the pension largely by raising the tax rates on high earners.

Using a line item veto, he decided to contribute $681 million rather than the planned $2.25 billion for the fiscal year that ends June 30.

The judge agreed with unions that sued, ordering nearly $1.6 billion more be paid this year.

Christie and the nonpartisan Office of Legislative Services agree that doing so would mean major havoc for the state budget. And Christie's budget plan for fiscal 2016 calls for $1.3 billion in payments, less than half the roughly $3 billion called for under the 2011 deal.

In town hall meetings, Christie has been making the argument that the benefits are irresponsibly generous. He's calling for scaling back employee health plans and using the savings to pay for existing pension costs, while switching workers to 401(k)-style pensions rather than those that guarantee a certain level of benefits.

In Tuesday's appeal, the Christie administration also argued that raising taxes would not have brought in the revenue that lawmakers projected and that other options, including cutting aid to schools and towns, furloughing government workers, defaulting on bonds or even shutting down the government would have been bad options.

The unions have until April 13 to respond to Christie's brief. It's unclear when the case may be decided.