TRENTON, N.J. (AP) — The state Supreme Court delivered a victory Thursday to Republican Gov. Chris Christie and ruled the state does not owe public pensioners cost-of-living payments suspended under a 2011 law.
The ruling effectively keeps the state from having its unfunded liability, which is about $80 billion under new accounting rules, increased by about $17.5 billion. It's the second significant victory for Christie over public unions on the pension issue. Moody's credit rating agency said the ruling eliminated a major fiscal threat to the state.
Christie called the ruling a win for taxpayers.
"State taxpayers have won another huge victory, one that spares them from the burden of unaffordable benefit increases for public employee unions," he said in a statement.
Justice Jaynee LaVecchia, writing for the majority in the 6-1 ruling, reversed an appellate court's ruling and said there isn't enough proof lawmakers intended to create a non-forfeitable right to cost-of-living adjustments, or COLAs.
"We conclude that the Legislature retained its inherent sovereign right to act in its best judgment of the public interest and to pass legislation suspending further COLAs," the justice wrote.
The decision sparked outrage from labor groups that were among the court case's plaintiffs and had sought to have the COLAs reinstated. The head of the state's largest teachers' union called the ruling "despicable" and said teachers counted on the increases as part of their compensation.
"This is theft, plain and simple," New Jersey Education Association President Wendell Steinhauer said. "For 20 years, New Jersey's politicians have failed New Jersey's public servants. Now, for the second time in two years, the Supreme Court has done the same thing."
Pat Provnick, 71, of Hammonton, retired in 2000 after 33 years as a teacher and said the suspension of adjustments has led her to little changes, such as buying generic instead of name brand items at the grocery store. But it could mean having to move out of her home, which she said is more difficult to afford because of the suspension.
"Apparently we had a forfeitable promise in this," she said. "I was told this wasn't going to happen."
How much the adjustment would have been worth depended on inflation. Union officials estimate the adjustment was worth about 60 percent of inflation as measured by the consumer price index. In 2015, the index was flat in New Jersey, and it was about 1.6 percent in 2014.
Hetty Rosenstein, director of the Communication Workers of America in New Jersey, which represents about 50,000 state, county and local workers, said an average CWA retiree gets about $26,000 a year.
The court heard oral arguments in March in the case, which reaches back to a nearly 5-year-old law passed by a Democrat-led Legislature and signed by Christie that suspended cost-of-living adjustments.
It's the latest case to go before the court in a battle between the Christie administration and pensioners and unions. Last year, the court declined to require the governor to make specific payments to the pension as required under the 2011 law.
The ruling comes as Christie and the Legislature face a roughly $600 million budget deficit in the current fiscal year and spares the state from having to find potentially billions of dollars to fund the payments.
It also comes as the Legislature advances a constitutional amendment, which voters could decide on as soon as November, to require quarterly pension payments. Christie opposes it and has instead called for cutting retirees' health benefits, which he describes as platinum and out of step with the private sector. Steinhauer, the union official, said the ruling reinforces the need for the amendment that lawmakers are considering.
A group of retired prosecutors brought the case, arguing the law violated contractual rights to the pay raises. Public unions also supported their effort.
The state argued a 1997 law establishing the right applies to pensions, not the adjustments, setting a high bar for what's considered a right. Assistant Attorney General Jean Reilly, though, argued that the plaintiffs' interpretation of the 1997 law incorrectly applied the Legislature's intent.