NJ Judge rules that Gov. broke the law by not fully funding public pensions

A New Jersey judge has ruled that Gov. Chris Christie broke the law when he used his veto powers to withhold payments appropriated by the state legislature to the state’s public pension funds.

Gov. Christie’s veto is the second time that he has ignored a 2011 agreement with public employee unions to get the state’s public pension funds, which have been under funded for at least a decade, back on track toward being fully funded.

In 2011, unions agreed to benefit reductions and increased employee contributions in order to make the pensions sound again. In turn, state leaders agreed to make state contributions to the pensions that would cover current costs and estimated future liabilities.

The agreement if carried out would have led to full funding of the pensions by 2018.

The governor signed off on the agreement.

However, in 2014 Gov. Christie withheld $2.4 billion from the state’s four public pension funds in order to meet a shortfall in the state’s budget.

Judge Mary Jacobson in 2014 upheld Gov. Christie’s decision by ruling that Gov. Christie had the authority to divert pension money to avoid a budget shortfall.

When she made her 2014 ruling, she also noted that the 2011 agreement between the state and the unions was a contractual obligation.

When the New Jersey Legislature passed a budget for 2015, the budget included the full amount required by the 2011 agreement.

Gov. Christie, however, vetoed the line of the budget that provided $1.57 billion in pension contributions.

Unions representing public workers, filed suit.

In a hearing, Gov. Christie’s attorneys tried to justify the governor’s actions, but this time Judge Jacobson said no.

“The court cannot allow the state to simply walk away from its financial obligation to teachers, firefighters, and other public servants,” said Judge Jacobson in her ruling.

The suit to force Gov. Christie to make the agreed upon pension payment was initiated by New Jersey public employee unions including the Communications Workers of America (CWA), AFSCME, American Federation of Teachers, New Jersey Education Association, the firefighters union, public safety unions, and a host of other organizations.

After Judge Jacobson made her ruling, Hettie Rosenstein, CWA New Jersey state director, said that the ruling was good for public servants who have kept up their end of the deal to save New Jersey’s public pensions and  criticized Gov. Christie for not doing the same.

“It’s unconscionable that these hard-earned pensions are in peril, and we can’t let that happen,” said Rosenstein. “It’s not only a legal requirement for Gov. Christie to make the pension payments, it’s also a moral requirement. Will another three hundred thousand seniors live in poverty simply because Christie cares more about what plays to right-wing audiences in Iowa than doing right by New Jerseyans?”

Gov. Christie vetoed the pension contributions because he didn’t like the fact that the Legislature had implemented a tax on millionaires and added a temporary surcharge to the corporate business tax to fully fund the pensions.

Gov. Christie denounced the judge’s ruling and said that he would appeal the decision.

Some of Gov. Christie’s predecessors had gotten into the bad habit of raiding the state’s pension funds and using the money for other purposes, which resulted in the pensions being severely under underfunded.

Gov. Christie in 2011 appeared to be breaking this bad habit when he signed off on the pension deal.

But in 2014 he reverted to old ways when he used pension money to close the budget gap.

That action caused Fitch, a credit rating agency, to downgrade New Jersey’s debt rating.

To cover himself, Gov. Christie began negotiating with the New Jersey Education Association (NJEA) on a new agreement for saving one of the state’s pension funds.

Shortly after Judge Jacobson ruled against Gov. Christi, he announced that he had reached an agreement with NJEA. The deal, which likely contains more benefit cuts, would put, said Christie, the pension fund back on the path toward being fully funded.

But New Jersey public employee unions, including NJEA, said that Gov. Christie’s announcement of a pension-saving deal was premature.

NJ.com reports that Wendell Steinhauer , president of the New Jersey Education Association, responded to the governor’s announcement by saying that Gov. Christie had “overstated the nature of the understanding” with NJEA.

Other public employee unions blasted the announcement as well.

In a message to members Rosenstein and CWA District 1 Vice President Chris Shelton said that the union would contest Gov. Christie’s appeal and continue fighting for full pension funding.

“We will never abandon our commitment to protect our members’ pension plan,” said Rosenstein and Shelton. “We will always talk – to both Legislators and to the Governor. We do want a permanent solution to the never ending under funding of the pension. But fundamentally, the Governor must agree that law must be obeyed. Our message to the Governor is clear: Obey the law – put the money in.”


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