N.J. Says Required State Pension Contribution Is Unconstitutional

September 8, 2014 (PLANSPONSOR.com) – New Jersey is asking a court to dismiss lawsuits brought by unions challenging Governor Chris Christie’s decision to reduce the state’s contribution to its pension fund this year.

According to a court filing by Acting Attorney General of New Jersey John J. Hoffman, the 2011 pension reform that Governor Christie signed into law violated the state’s constitution by mandating certain contribution amounts by the state. Hoffman says the contractual right in the pension reform violates the debt limitation and appropriation clauses of the state’s constitution and detracts the governor’s constitutional veto power.

The court document claims the constitution “forbids the Legislature from placing an unwilling populace in an eternal fiscal stranglehold.” Hoffman argues that long-term financial obligations that create an enforceable right to an appropriation must first be approved by voters.

In addition, the court filing states that “because the economy ebbs and flows,… the Constitution mandates that the Legislature and Executive annually assess both what items to appropriate monies for and the amount of each appropriation.” Hoffman says the state’s constitution protects all the state’s citizens and not just special interest groups seeking their own interests at the expense of the common good. According to Hoffman, final word on appropriation levels vests with the governor, “the sole elective representative who is answerable to all the people.”

The state already cut its pension fund payment for last fiscal year, a move which was approved by the courts, according to news reports. In addition to employee unions, the New Jersey’s Public Employees’ Retirement System (PERS) decided to take Governor Christie to court to stop the reductions in pension payments. The lawsuit is meant to compel Christie to make $3.8 billion in payments to the pension system over two years, instead of the $1.38 billion Christie is proposing as way of dealing with the state’s budget crisis.