Role of government powers at issue in pension case

AP News
|
Posted: May 06, 2015 2:55 PM
Role of government powers at issue in pension case

TRENTON, N.J. (AP) — New Jersey's top court weighed the budget repercussions of ruling on a pension dispute between Gov. Chris Christie and public workers' unions on Wednesday while one justice wondered if the state had engaged in a "bait and switch."

The state Supreme Court probed whether the state has a contractual obligation to pay what it agreed to in a 2011 pension overhaul law and tried to get lawyers from both sides to explore whether such a finding would represent an overstepping of the courts' role and put it in the middle of the state budget process every year.

Pension funding is perhaps the biggest and thorniest home-front issue for Christie, who is considering seeking the 2016 Republican presidential nomination.

One of his signature accomplishments was a 2011 deal with the Democrat-controlled Legislature to overhaul the system. The state promised to make escalating payments intended to restore the funds lost over decades of undersized and skipped contributions. As part of the same law, worker contributions were increased and retirement ages were raised.

But last year, the state government found itself in a new budget crisis when tax revenues were lower than expected. Christie solved that by lowering pension contributions. That's what prompted Justice Barry Albin, the most reliably liberal member of the state's court, to ask if the administration was pulling a "bait and switch" with workers.

Unions sued over the funding reductions, and earlier this year a lower-court judge agreed with them, ordering the governor and lawmakers to put nearly $1.6 billion more into the funds for the fiscal year that ends June 30.

The court on Wednesday was considering Christie's appeal of that case. It's not clear when a ruling may be handed down.

Rule in favor of a certain level of pension funding, and the court will have "bought itself a role in the annual appropriation process, " said Jean Reilly, a lawyer in the attorney general's office, "the sort of policy decisions that the court is not equipped to handle."

Some of what the justices must sort through include whether Christie and lawmakers really meant to make the pension contribution scheduled binding as a contract.

Reilly agreed when a justice asked if that was "aspirational."

State Senate President Steve Sweeney, a Democrat, attended the three-hour hearing. "It wasn't aspirational when we negotiated it," he said outside the courtroom after the arguments.

Justices also focused on how it would work if they got involved in the nitty-gritty of budget decisions, asking lawyers what priority pension funding should get among the state's needs: Would it get precedence over education funding, for instance.

Some of the lawyers said the state need not delve into the exact priorities but rather simply decide whether the state has a rational and necessary reason to reduce pension contributions.

Justice Anne Patterson, a Christie appointee who pushed concerns about overstepping the courts' role, was skeptical of that.

"It appears that there would have to be some form of judicial determination as to competing priorities of the Legislature," she said.

The issue is fast-moving. On Tuesday, Christie announced that this year's tax revenue is ahead of projections and that he wants the entire windfall — about $200 million — to go toward pensions.

In the meantime, a lower court judge is scheduled to hear arguments next week on the unions' lawsuit over Christie's proposed pension funding for the fiscal year that starts July 1. He is proposing contributing $1.3 billion, which would be a record but still less than half the $3.1 billion called for in the 2011 deal.

___

Follow Mulvihill at http://www.twiiter.com/geoffmulvihill