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Policy: Labor

New Jersey unions sue to stop Chris Christie from reducing pension payments

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Beltway Confidential,Opinion,Sean Higgins,Labor unions,Labor,New Jersey,Entitlements,Chris Christie,Pensions

At least 12 labor unions have sued New Jersey Gov. Chris Christie over his plan to reduce payments into the state public pension system, arguing it is in direct violation of earlier pension reform legislation he signed. Christie says the state just doesn't have the money.

What's interesting here is that there doesn't appear to be any real dispute over the underlying facts. Christie concedes he was supposed to make the payments under 2011 legislation but says the legislation was signed when state expected to have higher tax revenues.

"This is not something I want to do, but when revenues fall as far short as they have, you have little or no choice," Christie told reporters Monday. The state faces a $2.7 billion budget gap through next June. Christie's plan involves cutting planned pension payments from $3.8 billion to $1.4 billion over two years.

State union leaders aren't disputing the sad state of the pension. In a Monday op-ed for the New Jersey Star-Ledger, New Jersey Education Association President Wendell Steinhauer conceded: "We all agree New Jersey's public employee pension funds are terribly underfunded" -- a result of years of neglect under previous Republican and Democratic governors. Overall, it is underfunded by $52 billion.

Steinhauer's wants the state to raise revenue further. He is angry that Christie "stubbornly refuses" to agree to a millionaires' tax since the rich "have done quite well in recent years."

The tax proposed by state Democratic lawmakers would bring in $800 million annually under the most optimistic scenario. That would still leave at least a $800 million gap in the current two-year budget.

“Since I’ve announced what the plan was, you have not heard boo, nothing, from anybody else in a position of leadership in this state saying they have a different plan that’s able to fill the size of the gap that we have,” Christie said Monday.

Nevertheless, NJEA and at least 11 other unions — several opted to join in Monday — have sued to force the state to pay into the pension fund.

"If the governor's actions, both immediate and future, are permitted to stand, the systems will become insolvent within a few years: The pension as an actuarial reserve system will collapse," the NJEA lawsuit warns.

Christie believes the state will prevail in court. A similar effort by unions to prevent cuts to state pensions in Detroit failed last year, though in that case the city was in bankruptcy.

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Sean Higgins

Senior Writer
The Washington Examiner