Christie Broke Law With Pension Move, New Jersey Judge Says
In a major blow to Gov. Chris Christie, a New Jersey judge ruled on Monday that he violated state law when he declined to make the full payment into the state’s pension system for public employees last year and ordered him to find a way to fund it now.
The decision further complicates Mr. Christie’s hopes of reviving his presidential ambitions, which have suffered in recent weeks as his approval ratings in New Jersey have sunk to the lowest point of his tenure, and Republican donors have moved to other contenders for the party’s nomination.
It came on the eve of his annual budget proposal to the Legislature, which already presented him with the challenge of finding $2.9 billion to make next year’s pension payment. The challenge is steep, with the state’s economy lagging well behind its neighbors’ and the nation’s, the state surplus dried up, and the governor loath to raise taxes.
Mr. Christie will now be scrambling also to find the $1.57 billion the judge ordered him to pay.
In an indication of the rebuke contained in her opinion, Judge Mary C. Jacobson of State Superior Court also ordered the administration to pay the legal fees of the several public sector unions that sued to force the payments.
Mr. Christie’s office vowed to appeal.
“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,” a spokesman, Kevin Roberts, said.
Mr. Christie rose to national prominence after declaring that he had “fixed” the pension problem in laws he signed in 2010 and 2011. Those laws, reached in a bipartisan compromise with a Legislature led by Democrats, required public employees to contribute more toward their pensions.
In return, the state promised to increase the amount it paid toward the annual pension obligations gradually over seven years, until it met its fully required contribution in 2018.
Republican and Democratic governors alike had skipped those annual payments for decades.
In 2014, faced with an unbalanced budget for that year and the prospect of another one for 2015, Mr. Christie announced he would not make the full payments for the next two years. For the 2014 fiscal year, he said he would pay $696 million, rather than the $1.58 billion the law called for; for the 2015 fiscal year, he would pay $681 million rather than $2.25 billion.
The governor blamed an “unanticipated” revenue shortfall for the cuts. But legislative budget analysts and ratings agencies had warned that the budget he signed was based on overly optimistic projections.
His move prompted the lawsuit from the unions, representing hundreds of thousands of teachers, law enforcement workers and state employees. Judge Jacobson ruled in June 2014 that the governor could skip the payments for that year, but only because the state was facing a financial disaster with five days left to balance the $33 billion budget, as the State Constitution requires.
But she warned then that the law gave state employees a constitutionally protected contractual right to the payments. She withheld her ruling on the 2015 payments until a budget was signed for that fiscal year.
The Legislature proposed a budget that would have made the full pension payments for 2015 by imposing a three-year tax increase on income exceeding $1 million and a one-year corporation tax surcharge.
Mr. Christie used his line-item veto to strike those proposals from the budget and included only the partial payment. (That budget funds state operations until June 30, 2015; he is to propose a 2016 budget on Tuesday.)
Judge Jacobson, who was appointed by another Republican governor, Christie Whitman, noted in her decision on Monday that the unions had continued to make their higher payments even as the governor cut the state’s contributions. She called the governor’s move “an apparent about-face” to the laws he signed — laws, she noted, he had called his “biggest governmental victory” and a “bold” bipartisan effort to “save” the pension systems while also “providing real, long-term fiscal stability for future generations of New Jerseyans.”
“The governor,” she wrote, “now takes the unusual position in this court of claiming that this legislative contractual guarantee, which embodied significant reforms for which he took substantial credit with great national fanfare, violates the New Jersey Constitution.”
Judge Jacobson’s opinion found that the “clear intent” of the statutes “was to insulate the state contributions into the pension funds from the vicissitudes of the political process.”
Union leaders and Democrats hailed the decision for forcing the governor to meet his obligation. The State Senate president, Stephen M. Sweeney, a Democrat from Gloucester County who lent critical support in passing the pension legislation, noted that as a result of the governor’s decision not to make the payments, the state’s credit rating had suffered further downgrades.
“If the governor had signed the budget we presented to him last June,” he said, “we would not be confronted with this massive fiscal crisis.”