New Jersey Governor Chris Christie kicked off a month-long reform blitz Tuesday in which he promised "serious reform" to the state's broken pension system.
By Jonathan Miltimore
Gov. Chris Christie does not appear to be steering from his transformative agenda — or flinching from a fight.
The New Jersey Governor kicked off a month-long policy blitz with the release of a
campaign-style video [1] and a tour on the major cable networks Tuesday, where he vowed to continued his government restructuring.
“I am not going to back off what I promised to do,” Christie says in the video. “This is the fight we have to win for our kids. The day of reckoning is here.”
While the Governor and his staff were mum on details, which are scheduled to be unveiled early next week, Christie did offer a hint about what his overhaul would entail.
“It’s going to be
serious (pension) reform [2] for current employees and retirees,” Christie told Joe Scarborough on MSNBC’s “Scarborough in the Morning.”
New Jersey’s fiscal situation is well known. The state faces a $10.5 billion budget shortfall next year and scholars have said its pension plan, which went under funded for decades, could
go bankrupt [3] as early as 2018.
While many states have passed legislation in recent years reducing pension benefits, only a few —Minnesota, Colorado and South Dakota — curtailed benefits (cost of living increases) of current retirees. Lawsuits appealing those cuts are currently pending in each state.
If New Jersey attempted to reduce benefits it would likely find itself in a similar legal battle, but it’s a fight Christie seems willing to have, and some say the depth the state’s fiscal plight provides the legality for such a pension overhaul.
Cantrell said during a state of emergency governors have a broader range of powers under state law than he or she otherwise would normally have, and Christie could use these powers to make New Jersey’s system solvent.
“The fact is the system is built on an unsustainable framework,” Cantrell said.
Steven Baker, spokesman for the New Jersey Education Association, said the pension fund is depleted because lawmakers, including Christie in the last two budgets, have regularly skipped contributions. The Annual Required Contributions, such as the $3 billion one this budget year, must be made up plus 8 percent interest. And another additional payment is required every year.
“It is the abject failure of the state and now this administration that has led to this,” Baker said. “There is no solution to the pension that does not begin with the state stepping up funding.”
Baker said there are significant legal limitations in New Jersey regarding changes in benefits to current employees and retirees.
“We heard a lot of talk last year (about pension reform) and nothing came of it,” Baker said. “I think they probably looked at it and saw what they were up against.”
Any attempt to cuts the benefits of current retirees would violate state vesting laws, Baker said, and the union would use legal tools at their disposal to protect members’ interests.
“We would certainly look into the legality of any attempt to reduce benefits,” Baker said. “Pensions are deferred compensation; you can’t go back and change those things after the fact.”
Tensions in the Garden State between Christie and the public sector unions are likely to increase in the weeks ahead, as the first-term Governor unfolds his proposals.
Public sector unions will likely be able to garner sympathy in the traditionally blue-state of New Jersey, experts say, but it would be a mistake to underestimate Christie.
“He is on a winning streak so far,” Cantrell said.