Politics

Chris Christie To Propose More Steep Cuts To New Jersey’s Imploding Pension System

CREDIT: AP Photo/Mel Evans

A group of union members gather in front of the Statehouse in Trenton, N.J., Thursday, June 12, 2014. Hundreds of union members marched in Trenton to protest Gov. Chris Christie's proposed cuts to mandated state pension contributions.

New Jersey Governor Chris Christie (R) on Tuesday will announce additional cuts to the state’s struggling pension fund system, according to reports, even after a state judge ruled on Monday that his administration is on the hook for payments he promised earlier in his term but then cut. Even with a one-time payment of $1.3 billion planned for this year, Christie’s repeated cuts are driving the system toward bankruptcy.

The governor and likely 2016 presidential candidate will present his budget address to the state legislature just one day after a New Jersey judge ruled that Christie and his administration must come up with almost $1.6 billion in delayed pension payments for state employees by the end of June. The order came less than a year after fourteen of the state’s largest public employee unions, including the New Jersey Education Association teachers union and the Communications Workers of America, filed the massive lawsuit against the state for withholding payments from the failing pension system.

“The impact is real,” Hetty Rosenstein, the CWA’s New Jersey director, told ThinkProgress. “One in 12 people in New Jersey rely upon these plans and if the governor does not make these payments, the pension plan will go bankrupt in a fairly short period of time.”

Christie’s attempts to shrink the state’s $80 billion public employee retirement system have been called a “mess” in the past. In 2014, he canceled payments of close to $900 million to close a budget gap and this year, the cut payments amount to almost $1.6 billion. A state bond sale disclosure last year reported that the state’s unfunded liability had increased by almost $30 billion since 2011 and projected that six of New Jersey’s seven pension funds will go broke by 2027.

Christie’s proposal on Tuesday to allocate $1.3 billion into the state pension fund would be the largest payment in history but still falls short of the close to $3 billion mandated by the state judge on Monday. In her ruling, Superior Court Judge Mary Jacobson sided with the public employees, saying “the court cannot allow the state to ‘simply walk away from its financial obligations,’ especially when those obligations were the state’s own creation.”

The Christie administration had been strongly fighting such a ruling, arguing that the governor’s own pension reform law was unenforceable even though Christie vowed to fully fund the state system when he signed the landmark legislation in 2011.

The governor’s administration blasted the state court’s Monday ruling, calling the decision “liberal judicial activism” in a statement. “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,” the statement said.

State Democrats and union leaders hailed the judge’s decision. State Senate President Stephen Sweeney (D) told the New York Times that Christie’s failures to make the payments contributed to the state’s credit rating downgrades. “If the governor had signed the budget we presented to him last June, we would not be confronted with this massive fiscal crisis,” Sweeney said.

Rosenstein agreed, saying the state judge’s ruling means Christie must abide by the law. “The law requires that he pay the amount that is in the law that he signed that he said was his greatest accomplishment.”