As reported in NJ.Com, Judge Jacobson’s ruling this week that public worker pension contributions are contractually protected will constrict the state’s ability to balance its budget in the future, Moody’s, a Wall Street rating agency, said today. The flexibility of the state’s pension payment has been “a tool essential” to balancing the budget, Moody’s Investors Service said. Putting limitations on that amounts to a “credit negative.”
“Going forward, making the full pension contribution would incrementally improve the pension funding position, but would significantly increase budget pressure by reducing the state’s ability to fund other programs and potentially challenge the state’s liquidity,” Moody’s said.
Judge Jacobson ruled on Monday that Governor Chris Christie broke the law requiring him to ramp up payments into the pension system when he slashed this year’s contribution. Christie signed the 2011 law, which also suspended cost-of-living increases for retirees, raised the retirement age and forced workers to contribute more toward their pension and health benefits. However despite the fact that Christie “championed” this legislation in 2011 as being the “be all–end all” to fix the State’s underfunded and broken pension system, he sent a team of lawyers in to court in 2014 to argue that the very same law that he pushed on public employee labor unions was now “unconstitutional”. Its interesting that Governor Christie argued that the law was unconstitutional only after he failed to make the contractually required pension payment.
Instead of pumping in extra money, Christie gutted $2.4 billion from pension payments in the fiscal years ending last June and beginning last July, a maneuver that triggered rating agencies to downgrade the state’s debt rating and unions to ask the court to force him to pay the full amount.