New Jersey's public worker unions and Gov. Chris
Christie's administration fought over billions of dollars in pension funding
before the state Supreme Court on Wednesday in a case with far-reaching
implications for hundreds of thousands of workers and state budgets this year
and beyond.
More than a dozen labor unions are asking the high court
to establish their right to pension funding under a 2011 pension reform law
that lawyers for the state argue is unconstitutional.
Justice Barry Albin called the dispute unprecedented,
saying the state's position is that "the law that was passed, now that it
doesn't seem to work to my advantage, I'd like to declare it
unconstitutional."
In arguments that lasted more than three hours, the
justices peppered lawyers with questions on whether the law created a
contractual right for public workers — and how that should be balanced against
the state's other spending priorities.
Justice Anne Patterson worried that the issue could put
the court in the thorny position of having to get involved in the state budget
every year. She seemed to cringe at the idea of the courts having to weigh
competing funding priorities such as education and Medicaid to make room for
pensions payments.
"We would in essence be stepping on the proverbial
toes of the Legislature," Patterson said.
Confronted with mounting unfunded liabilities, Christie
and the state Legislature pushed through a series of reforms in 2011 that
suspended cost-of-living adjustments, raised the retirement age, increased
workers' contributions into the fund and required the state to ramp up to the
full payment recommended by actuaries.
The state paid up for two years but slashed payments last
year when revenues slowed. The unions argue Christie broke the law by
withholding $1.57 billion in pension payments from the current budget. A lower
court judge agreed.
"The state accepted the labor of the employees ...
and now all they want is their wages," said said Robert Klausner, who
represents pension funds' boards of trustees.
But Jean Reilly, an assistant attorney general, told the
court that unions' claims to pension funding not only "subverts the
constitution, but also has several disastrous practical consequences."
The promise under the 2011 law conflicts with a
constitutional clause barring the state from taking on new debt without the
voters' approval and another barring the state from telling future Legislatures
how to spend its money, Reilly said.
Steven Weissman, a lawyer for the state branches of
Communications Workers of America and the AFL-CIO, argued that "Every
single year (the state doesn't) pay it, the state, not (the law), the state of
New Jersey, creates an obligation that has to be paid in the future."
While they've asked the court to force the state to
restore the $1.57 billion cut, some union leaders are increasingly skeptical
the court will order the state to scrape it together before the end of the
fiscal year in June.
But a ruling that the workers have a constitutionally
protected contractual right to pension funding has implications far beyond this
year as the state would face big pension bills every year.
Kenneth Nowak, an attorney for the New Jersey Education
Association, said that even so, it wouldn't be up to the court to dictate where
to cut and when to tax.
"If the political branches of the government cannot
get their constitutional act in harmony, then it's up to the court to tell them
how to do that," Klausner said.
The justices were skeptical of the administration's
contention that striking down the part of the law mandating the state's
payments wouldn't send the rest of the reforms tumbling down.
Ablin, for example, asked: "if you're doing that, is
that some sort of bait and switch?"
Reilly disagreed, noting the Legislature is empowered to
unilaterally increase workers' pension contributions.
"It may have been a political compromise, but
there's nothing in the statute that makes one beholden to the other," she
said.
Source: NJ.com
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