Christie to detail new pension, benefits changes today

TRENTON – A day after losing a pivotal court case to unions on pension funding, Gov. Chris Christie today will propose new changes to public workers' pensions that his administration says it has developed in conjunction with the New Jersey Education Association.

In guidance provided by Christie's office ahead of today's 2 p.m. budget address, the administration indicated it plans to propose a $1.3 billion payment to the pension funds in 2016. That would be the largest in state history but falls far short of the roughly $3 billion that appears to be required under a ruling issued Monday by Superior Court Judge Mary Jacobson. In fact, it's smaller than the additional $1.57 billion Jacobson said must be added to the current budget.

Christie's office indicated the governor will make specific proposals related to pensions and health benefits. It says the NJEA — which has spent more than $35 million battling Christie in two elections and during policy debates in between — has been working with Christie's Pension and Health Benefit Study Commission on the pension issue and has "signed on to and endorsed a roadmap for reform."

"I know we can get this done," Christie says in an excerpt from his prepared speech. "We have proven time and again that even when we look like we're not going to make it work and that politics and partisan interests have won, we flip the script. We do it differently. We get it done. I am committed to working with each and every one of you in good faith to make a promise to the people of this state that we will not push this off, we will not leave it for another day, for another year, for another generation."

Today's speech comes on the heels of a court decision reversing cuts Christie made to state's pension payment in the current budget, in violation of a 2011 law Christie signed that requires contributions to be gradually ramped up.

"The court is unwilling to rely on what has now become a succession of empty promises," Jacobson said in the ruling.

The 2011 pension reforms signed by Christie were vindicated in the ruling, said Hetty Rosenstein, New Jersey area director for the Communications Workers of America. She said public workers' pension costs went up by 25 percent while the value of their pensions was cut by 30 percent in exchange for a contractual right to stepped-up pension payments.

"He said, 'The public employees will thank me. I've saved the pension plan.' He went all over the country and said this was his greatest accomplishment. And now he expects to completely repudiate it?" said Rosenstein, who said the funds would go bankrupt in 10 years if Christie's reduced payments continue.

"I think the judge made the only decision you could make under the law," Rosenstein said. "But, oh my goodness, it's certainly the only decision you can make morally."

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Christie spokesman Michael Drewniak said the administration will appeal.

"Once again liberal judicial activism rears its head with the court trying to replace its own judgment for the judgment of the people who were elected to make these decisions," Drewniak said. "This budget was passed by the Legislature and signed by the governor with a pension payment. The governor will continue to work on a practical solution to New Jersey's pension and health benefits problems while he appeals this decision to a higher court where we are confident the judgment of New Jersey's elected officials will be vindicated."

When state revenues fell short of forecast last spring, Christie cut contributions to public workers' pension funds for 2014 and 2015. Jacobson upheld the 2014 cut last June, saying it was allowed under a governor's emergency powers. But she left open the possibility of ruling in favor of the unions for the 2015 budget.

The budget the Legislature passed last June appropriated an additional $1.57 billion toward the pension payment. Christie reduced the contribution through his line-item veto power and vetoed an increase in taxes on income over $1 million and a 15 percent surcharge on corporate tax. Lawmakers said the tax increases would have raised $1.1 billion.

Under a law Christie signed early in his tenure, the state agreed to ramp up its contributions to the pension funds gradually over seven years. Public employees were also required to make larger payments toward their pensions.

This year's budget was supposed to have a payment equal to four-sevenths of the full amount recommended by actuaries, or $2.25 billion. Christie instead plans to put in $681 million. That amount makes no payments toward an unfunded liability that stood at $37 billion as of mid-2013.

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Jacobson said that the four-sevenths payment must be made in the current budget and that a five-sevenths payment, around $3.1 billion, is required for 2016. She said in her ruling that the Legislature "left no doubt about its intent" to make pension contributions a contractual right protected by the state constitution.

"The court cannot allow the state to simply turn its back on its obligations to New Jersey's public employees — especially in light of the fact that the state's failure to make its full payment constitutes a substantial blow to the solvency of the pension funds," she wrote.

In his speech, Christie will say it would require a 10 percent sales tax or increasing the income tax by 29 percent to generate the funds needed to afford pensions and health benefits without additional changes. He'll say that's not feasible and that the spending obligated for workers' benefits crowds out other priorities and hurts the state economy.

"This is the cost of inaction. This is the cost of doing nothing. This is the cost of pushing this off to somebody else. There is no one else. There is no one else but us," Christie says in a speech excerpt.

Assembly Majority Leader Louis Greenwald, D-Camden, said labor leaders have been proactive about discussing their benefits. Two weeks ago, unions threw their support behind a "patient-centered health care" alternative pitched by Senate President Stephen Sweeney. But Greenwald said "the court decision is very clear" about the contributions currently required by Christie.

"The union leadership recognized and, in a role to truly protect the retirements for the public workers, have been at the table having significant conversations about how should the pension be structured in order to sustain it, to make it sustainable, reliable, dependable going forward," Greenwald said.

Michael Symons: (609) 984-4336; msymons@app.com

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We'll live stream Christie's budget address and offer analysis via live commentary starting 2 p.m. Tuesday at APP.com/ChristieBudget2015.