The New Jersey Supreme Court on Tuesday supported Gov. Chris Christie's withholding of payments to the New Jersey Pension Fund for the fiscal year ending June 30, saying the governor's reneging on a promise didn't violate the state constitution.
In a 5-2 vote, the court reversed a February ruling by state Superior Court Judge Mary Jacobson in Trenton, who said the governor had violated the law when he announced he would withhold $1.57 billion in promised payments to the $79.2 billion Trenton-based pension fund. Mr. Christie was sued by more than a dozen unions, seeking to restore the full payment.
If the Supreme Court had ruled against Mr. Christie, the state Legislature and the governor would have been hard-pressed to come up with the extra money quickly. Mr. Christie has repeatedly said he wouldn't raise taxes to help finance the pension fund.
“This decision is an important victory not only for our taxpayers who simply cannot afford these unsustainably high costs, but for limited, constitutional government that recognizes the proper role of the executive and legislative branches of government,” Mr. Christie said in a prepared statement.
“This is a disappointing decision for the teachers, firefighters, police officers and thousands of other public workers in New Jersey who have devoted their lives to serving others and don't ask for much in return, just the modest retirement promised to them,” said Bailey Childers, executive director of the National Public Pension Coalition, in a prepared statement. Coalition members include public-sector unions.
The Supreme Court's ruling “is a double-edged sword,” said a statement from Standard & Poor's “While it averts a potential liquidity crunch, it may do so at the expense of the state's liability position, which has steadily deteriorated over several years.”
The state Supreme Court's ruling focused on Mr. Christie's withholding the money for the pension fund based on a law he signed in 2011. This law represented an agreement with the state Legislature, offering guaranteed state payments to the pension fund in return for changes in the pension system. These changes included raising the retirement age for certain public employees and requiring employees to contribute more to the pension fund.