New Jersey’s highest court ruled on Tuesday that Gov. Chris Christie could skip the pension payments he promised to make in the signature law of his tenure, averting a huge fiscal crisis just weeks before the state closes its books for the year.
While the 5-to-2 decision by the Supreme Court of New Jersey handed Mr. Christie a victory, it also underscored how much his fortunes have changed as he takes steps to run for president.
Mr. Christie rose to stardom in the national Republican Party largely on the overhaul of public employee pensions that he signed in 2011. He used the law as evidence that he could reach across the aisle to take on tough problems — not to mention powerful unions. He boasted in his keynote speech to the Republican National Convention in 2012 that he had “fixed” the problem of underfunded pensions, one shared by many states.
But as the “Jersey Comeback” the governor promoted has failed to materialize — the state economy has lagged behind his forecasts, and behind neighboring states and the nation — Mr. Christie said the state could not afford to make the payments he had promised in the law. That has left New Jersey with one of the nation’s largest pension liabilities, and a record nine credit downgrades from Wall Street ratings agencies.
“The loss of public trust due to the broken promises” in the law, the court wrote in its decision Tuesday, “is staggering.”
The court said that the governor and the Legislature violated the debt limitation clause in the State Constitution when they signed the law requiring the state to make large payments over a series of years.
But the court did not so much agree with Mr. Christie’s budget policies as it did express a reluctance to wade into the “unseemly” business of deciding which programs to fund.
“That the state must get its financial house in order is plain,” Justice Jaynee LaVecchia, who was appointed in 2000 by the Republican governorChristine Todd Whitman, wrote in the opinion. Still, the decision added, “the responsibility for the budget process remains squarely where the framers placed it: on the Legislature and executive, accountable to the voters through the electoral process. Ultimately, it is the people’s responsibility to hold the elective branches of government responsible for their judgment and for their exercise of constitutional powers. This is not an occasion for us to act on the other branches’ behalf.”
The 2011 law and a companion signed in 2010 required public employees to pay more toward their benefits, and in exchange, the state agreed to make the annual pension payments that several governors had ignored.
Mr. Christie made the payments for two years, but cut them back beginning with his budget for 2014, saying he could not balance the budget if he made them. The payment in 2014 was $696 million instead of the $1.58 billion the law required; the 2015 payment was $681 million instead of the $2.25 billion owed.
The unions sued, and a trial court ruled in February that the law had given public employees a constitutionally protected right to those payments. The Supreme Court’s decision reversed that.
Unions called the ruling “devastating” and “indefensible,” saying it was unfair that they had held up their end of the deal, while the Supreme Court allowed the governor to abandon his.
“The only beneficiary of this ruling is Gov. Christie, who can continue to deceive New Jersey residents into believing that his budgets have been balanced,” the president of the New Jersey Education Association, Wendell Steinhauer, said in a statement.
In a dissent, Justice Barry T. Albin, who was appointed by a Democratic governor, said that under the logic of the majority opinion, the entire law should be invalidated.
“The decision unfairly requires public workers to uphold their end of the law’s bargain — increased weekly deductions from their paychecks to fund their future pensions — while allowing the state to slip from its binding commitment to make commensurate contributions,” Justice Albin wrote. Chief Justice Stuart Rabner, who was appointed by a Democratic governor but reappointed last year by Mr. Christie, joined that dissent.
The Senate president, Stephen M. Sweeney, a Democrat who lost support among unions by working with the governor to sign the overhaul, said he was “deeply disappointed.”
“The continued refusal by the administration to meet the state’s financial obligations does not make the problem go away,” he said. “It only pushes it down the road and allows it to grow worse and cost more. Each dollar in deferred payment will cost three dollars in the future. The governor is exacerbating the problem.”
Democrats vowed that they would send Mr. Christie a budget that makes the required pension payment in the next fiscal year, which begins in July.
But the governor is almost certain to strike the payment with his line-item veto. In recent months he has said that the 2011 law was only one step toward fixing the pension problem, and has called on unions to give up more benefits.
In a statement after the ruling, Mr. Christie urged unions to return to the table “to finally solve this problem once and for all.”
But unions and Democrats who lent him crucial support in 2011 said Mr. Christie had to guarantee that the state would finally make its payments.
“The real issue here is trust,” Mr. Sweeney said. “How can we ask workers to come to the table when the governor will not honor his commitments?”
Source: The New York Times