As reported on NJ.Com, The State of New Jersey argued before a State Superior Court Judge today that Governor Chris Christie cannot be forced to make full pension payments because the 2011 law committing him to fully fund the state system in exchange for union concessions was unconstitutional.
Interrupting the assistant attorney general, Superior Court Judge Mary Jacobson said the state’s position suggests that the 2011 promise was “a hollow commitment.” “You’re saying it should have been known at the time that it was a false promise,” Jacobson asked. “You’re saying that from the get-go, this statute, the requirement to make these contributions was void.”
The 2011 overhaul was a signature achievement for the Governor, and one he hailed that saved public worker pensions. But when State revenues plummeted last year, plunging deep holes in two years’ budgets, Christie cut $2.4 billion out of the payments to balance the budget. Those cuts triggered lawsuits from more than a dozen unions, saying that Christie is contractually bound to make the full payment determined by actuaries.
The state won the first part of this heated dispute over the summer when Jacobson ruled the budget shortfall created a dire fiscal emergency and Christie could slash the previous fiscal year’s payment to balance the budget. The initial application to the Court that was heard over the summer was heard on an emergent basis. However, Jacobsen left in question the $1.57 billion Christie cut from the current year’s budget.
With the fiscal year more than half over, “any addition to the budget would impermissibly disrupt both the State and the recipient of State funds,” Assistant Attorney General Jean Reilly argued again today. Additionally, the attorneys for the State said that the contract was unlawful from the start because the State cannot be obligated to any spending unless it’s approved by the voters — barriers imposed through the debt limitation clause and appropriations act. The contract would interfere with the Legislature’s discretion over how the state spends its money, lawyers for the State said, and the State can’t be obligated to debt unless it’s approved by the voters.
Jacobson was skeptical of the State’s arguments that the appropriations act and debt limitations clause would trump the contracts clause, which appears in both the state and federal constitutions. However, the State countered that the appropriation and debt limitation measures apply to the formation of contracts, while the contract clause applies to the enforcement of contracts.
Lawyers for the unions drew a distinction between barred future appropriations, like debt and loans, and payments for services rendered. They emphasized the harm skipping full payments does to the system, which they said depends on a continual flow of money. “Those are the ordinary operating expenses of government, and those are not obligations that were intended to be covered by the debt limitations clause,” the attorney said.
Not withstanding the foregoing, it appears that the Christie Administration made a promise with public employees that he never had any intention to keep. One only needs to remember back to 2011 when the Democratic Legislature agreed to the passage of Chapter 78 of Public Law 2011 that required unionized public employees to pay a higher percentage of their healthcare premiums in exchange for the promise that the Christie Administration would fully fund the public employees pension system. Additionally, public employees were also forced to contribute a greater percentage of their gross pay to the pension in exchange for the promise. Based upon the argument that was proffered by Christie’s attorneys yesterday, it is clear that the Administration never had any intention of keeping their word.