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Gov. Chris Christie promised public employees that he would make the required pension payments, but has told investors that the commitment is not ironclad.

(Tony Kurdzuk/The Star-Ledger)

TRENTON — Gov. Chris Christie has warned potential investors there is no guarantee the state will make its required pension payments in future years, an admission that underscores a looming financial crisis he and future governors face as retirement costs are expected to explode before the decade ends.

The disclosure, buried in a 156-page bond prospectus for investors, also casts doubt on one of the key commitments Christie and leading Democrats made to public employees as part of the 2011 health and pension reform: Workers would shoulder a greater share of pension costs in exchange for the state making required payments to the cash-strapped pension fund.

The Christie administration warned potential investors earlier this month that future pension payments — estimated to grow from $1.7 billion next year to about $5.5 billion by 2018 — will drain resources and "create a significant burden on all aspects of the State’s finances."

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"No assurances can be given as to the level of the State’s pension contributions in future fiscal years," the prospectus reads.

Christie spokesman Colin Reed downplayed the importance of the disclosure, describing it as a legally-cautious approach and not a departure from the administration’s public promises.

"This administration is committed to making the full required payments into the pension system, and our budget priorities reflect that fact," Reed said. "All risks, even remote risks, have to be disclosed to investors under federal securities laws."

'BROKEN PROMISES'

Assembly Speaker Sheila Oliver (D-Essex), whose support was critical to enacting the reforms, called the disclosure troubling.

"Gov. Christie has vociferously boasted that he would, in fact, fix the pension and benefits system and halt the practice of skipping payments, but it appears his promise to taxpayers and public workers is now in jeopardy," Oliver said. "The people of New Jersey have had enough with broken promises from Gov. Christie."

State Senate President Stephen Sweeney (D-Gloucester), however, was less worried.

"We passed a law and are going to follow it," he said.

The state’s pension fund had only 57 percent of the money it needs to cover promised benefits as of last Juneâ30, state records show. Governors, including Christie, underfunded the pension fund since the mid-1990s and none tucked any money away to pay for retirees’ health costs. Meanwhile, public employee unions note they had their contributions automatically taken out of their paychecks.

As part of the 2011 deal with Democrats, Christie agreed to begin making required payments, but phased in over seven years. His proposed budget includes $1.7 billion for pensions, which would make good on the phased-in payments for the third consecutive year.

Christie and leading Democrats have boasted the reform will save taxpayers $120 billion over 30 years, a figure that has appeared prominently in Christie re-election campaign ads.

'A REAL CHALLENGE'

But many question whether the state would be able to afford an estimated $5.5 billion payment in 2018 without making deep cuts, raising taxes, or perhaps digging deeper into the pocketbooks of public employees.

"It’s going to be a real challenge," said Rutgers professor Richard Keevey, the lead author of a recent report on the state’s fiscal troubles.

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"When any state or other government talks to potential investors, they have to be cautious. And what New Jersey is saying they can’t absolutely tell you what they’re going to fund."

Christie also agreed to make the pension payments a contractual right, giving public workers the right to sue if the state fails to make the payment.

Hetty Rosenstein, the head of the Communications Workers of America, which strongly opposed the overhaul, said the "contractual right" remains untested and others such as cost-of-living adjustments have not been upheld by the courts.

"The Christie administration’s word on pension plans means nothing," Rosenstein said.

"It didn’t mean anything in 2009 when he told police and fireman that he wouldn’t touch their pensions, and it doesn’t mean anything when he tells the public he’ll make the required payments."

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