Public employee unions in New Jersey have filed suit against Gov. Chris Christie to prevent him from diverting $2.47 billion in State contributions away from public workers’ pension funds and into the state’s treasury.
In 2010, Gov. Christie agreed to a schedule of state pension contributions designed to shore up the state’s public pension plans whose unfunded liability had increased because past governors and legislatures had diverted money away from the plans.
At the time, public employees were required to increase their pension contributions.
Since then, public employees have made all their required payments, but Gov. Christie wants to back out of his commitment and use the dedicated pension money to reduce a state budget shortfall.
One reason that New Jersey is facing a budget shortfall is that Gov. Christie has increased corporate subsidies and tax breaks.
“Governor Chris Christie has broken New Jersey’s economy,” said Hetty Rosenstein, state director for CWA New Jersey, which represents 55,000 state and local government workers. “Now, not only has he broken his word by failing to make promised pension payments, he’s breaking the law in the process. Workers have done their part and are paying more. Governor Christie needs to do his part by following the very law he touted and signed.”
In 2000, New Jersey’s three main public pension funds PERS for state employees, TPAF for teachers, and PFRS for police and firefighters had a combined unfunded liability of 111 percent, which means that the funds had assets that exceeded their liabilities by 11 percent.
Today, the combined unfunded liability is 57 percent.
According to the unions’ complaint, “the increase in the unfunded liabilities is attributable, in significant part, to the State’s failure to make its statutorily required pension contributions.”
During the last 17 years, the State has failed every year to make its full annual required pension contributions.
Like other governors who preceded him, Gov. Christie in 2011 skipped a required pension contribution. The amount of Gov. Christie’s skipped pension contribution was $3 billion.
The practice of skipping pension payments was supposed to stop when the governor and lawmakers agreed to a deal that was supposed to ensure that the State would contribute its fair share to make the pension funds sound again.
As part of that deal, workers were required to contribute more of their pay to the pension funds, the retirement age was raised to 65, and cost of living adjustments for those already retired were frozen.
Gov. Christie, however, now appears to be backing out of that deal by proposing that $887 million in pension contributions be withheld in 2014 and another $1.57 billion in 2015.
Gov. Christie’s decision to withhold pension payments he says is the result of a budget shortfall caused by lower than projected State revenue collections
State Treasurer Andrew Sidamon-Eristoff in May told lawmakers that the budget shortfall is the result of $2.7 billion in less than expected revenue from income, sales, and corporate taxes.
A month after Gov. Christie announced that he would be withholding pension contributions because of the revenue shortfall, the New Jersey Policy Perspective, a liberal leaning policy and research organization, issued a report finding that Gov. Christie has been much more generous with corporations than he has with the State’s public employees.
According to the report, during Gov. Christie’s four-year tenure as governor, corporations have received $4 billion in tax subsidies and credits, or three times the amount of subsidies and tax credits awarded in the 13 previous years.
The purpose of the subsidies and credits was to stimulate the economy and create more jobs, which in turn was supposed to have created higher revenue for the State.
According to the report, Gov. Christie’s corporate largess has done little to grow the economy and provide the revenue that the State needs to meet its obligations.
“The unprecedented growth in subsidies. . . has so far done little to significantly improve the state’s economy,” said John Whiten NJPP policy director. “Four and a half years into the surge, New Jersey’s economic recovery remains far behind that of its neighboring states and the nation.”
The lawsuit filed by CWA, the Professional Firefighters Association of NJ (PFANJ), the American Federation of Teachers (AFT), the Fraternal Order of Police (FOP), the International Federation of Professional & Technical Engineers (IFTPE), and Service Employees International Union (SEIU) is aimed at stopping the practice of raiding public employees pensions when the policies of the governor and leading lawmakers fail to produce their promised results.
“Gov. Christie said (that) record-breaking tax cuts for corporations and the wealthy would create jobs,” said Rosenstein. “It’s time Christie realizes what everyone else knows: cutting taxes for the super-rich while stealing pensions (is wrong).”