Pension Crisis

As reported by, Senate President Stephen Sweeney rejected calling for a crucial vote Monday on a referendum asking voters to constitutionally guarantee state payments into the government worker pension fund, killing its chances of appearing on the November ballot and disappointing public labor unions.  The likelihood that Sweeney, once the prime champion of that amendment, would hold the vote had grown increasingly slim in recent weeks as the pension question became embroiled in an impasse over transportation funding.  Monday was the deadline for the State Senate to vote to place the referendum on the fall ballot.

If approved by voters, the amendment would have required the State to make increasing contributions into the pension system, which is short about $43.8 billion, to reverse decades of underfunding. The State would have needed to drum up an additional $550 to $800 million a year to make the payments.  Sweeney has maintained that the clash over the transportation funding cast doubt over the viability of the pension amendment.  “Without a resolution to the Transportation Trust Fund crisis-and a full accounting of how much future tax cuts will cost-it would have been too easy for opponents to argue that the State could not afford to pass the pension amendment,” he said in a statement Monday afternoon.  “The pension amendment would have been doomed to defeat, and that would have given carte blanche to current and future governors to slash pension payments.”  Sweeney also noted that with a simple majority the Legislature can still put the referendum on next year’s general election ballot at no loss to public workers because the State is already complying with the payments schedule.

But labor unions have made clear they won’t tolerate another “broken promise,” holding yet another protest outside the Statehouse calling on Sweeney to post the measure.  They also cautioned they would harness their votes, manpower, and money come June, when voters are expected to have a crowded pool of Democratic primary candidates for governor, including Sweeney, to choose from.

The pension amendment was expected to spark an expensive summer fight between labor unions, who say the constitutional amendment is the only way to ensure the bill gets paid, and business groups that warned it would spur massive spending cuts or tax hikes.  For his part, Governor Chris Christie argued it would foist a $3 billion tax increase on the people of New Jersey.  Sweeney has argued the State budget could absorb the increased pension costs with modest, 3 percent, growth in State revenues.