I will protect your pensions. Nothing about your pension is going to change when I am governor. - Chris Christie, "An Open Letter to the Teachers of NJ" October, 2009

Tuesday, June 9, 2015

NJ Supreme Court to NJ Public Workers: Screw You

I think I'll call Comcast later today and tell them I'm not paying my cable bill any more: I just can't afford it. Same with Verizon and my cell phone. Oh, and my mortgage company, too.

I mean, why should I? Sure, I may have signed contracts with all of them, and I may have already used their services, but the NJ Supreme Court today just confirmed that contracts in New Jersey don't mean squat:
The state Supreme Court ruled on Tuesday that Gov. Chris Christie can slash billions of dollars in contributions from New Jersey's troubled public employee pension system.
The court's ruling caps an intense fight for pension funding and deals a major blow to the state's labor unions, who challenged Christie's spending cuts. Christie had sought to dismantle the pension law, which he argued was unconstitutional.

READ: Key excerpts of decision

Judges split 5-2 reversing the lower court's ruling that ordered Christie had broken his own landmark pension law and had to work with the Legislature to comply with it. 
"That the state must get its financial house in order is plain. The need is compelling in respect of the state's ability to honor its compensation commitment to retired employees," the court said. "But this court cannot resolve that need in place of the political branches. They will have to deal with one another to forge a solution to the tenuous financial status of New Jersey's pension funding in a way that comports with the strictures of our constitution."
See, all you have to do is have a governor who is running for the Republican presidential nomination, and -- POOF! -- any worries about actually following the law are magically wiped away!

Of course, we public employees still have to meet our obligations under the law; we're not allowed, apparently, to say that we can't afford to make the increased pension payments that were the tradeoff for the state to enter into a contractual obligation regarding our pensions. At least, that's what Democrats like Senate President Steve Sweeney told us when they went around the state with Christie, telling us what a great deal they had brokered for us...

How's that working out now, Senator?

BTW, this paragraph from nj.com's article is total crap:
The administration's hope for a robust economic recovery didn't shake out, and the state didn't take in enough tax revenue to meet the payment schedule in the 2014, 2015 and so far, 2016 budgets.
Oh, please: there was never a plan to make these payments. The notion that pension payments would have been made if economic growth had been better is a fantasy. And, as I've pointed out numerous times, the press didn't seem to give a damn about where the money was going to come from back in 2013, when the issue should have been the core of the gubernatorial campaign.

The media and centrist Democrats failed to demand that Chris Christie come up with a plan to pay for pension reform; now, public employees are getting the shaft.

And now the Supreme Court plays along with the charade, pretending as if no one could have ever possibly foreseen that New Jersey would need to raise taxes to pay for this bill. Understand that the last budget the Legislature presented to Christie had the required payments included -- along with a tax increase. But, according to the court, Christie's political ambitions trump the state's need to meet its obligations.

The ruling, which I admit I've only scanned, is truly bizarre. Is the court really suggesting the state can default on its pension obligations if the public votes to do so? That the state can simply get out of their debts through an act of popular will? That the contracts clause of the federal Constitution can be freely ignored? That a teacher or a cop enters into an agreement with the state fully aware that the state can default on its retirement obligations to them at any moment?

If that's true, what's to stop the state from reneging on any of its debts? And why, then, would Wall Street ever think of doing business with us ever again? The implications of this argument are truly frightening.

From the decision:
Applying those principles here, the Legislature and Governor were without power, acting without voter approval, to transgress the Debt Limitation Clause and the corresponding Appropriations and other budget clauses of the State Constitution. The Legislature and Governor, as well as the many interested parties involved in the legislative process, may have included contractual words in Chapter 78, but those words, no matter their clarity, could not create an enforceable contract of the type asserted. Voter approval is required to render this a legally enforceable contractual agreement compelling appropriations of this size covering succeeding fiscal years; otherwise, this agreement is enforceable only as an agreement that is subject to appropriation, which under the Appropriations Clause renders it subject to the annual budgetary appropriations process. In that process, the payment may not be compelled by the Judiciary. The Legislature’s strong expression of intent remains clear in Chapter 78, but it does not bind future legislatures or governors in a manner that strips discretionary functions concerning appropriations that the State Constitution leaves to the legislative and executive branches. (pp. 49-53) [emphasis mine]
Again: if that's true, why should the state compel me to pay more and more into a pension system the court says can go into default anyway? Apparently, the court's answer is: "Because it's the law!"
In closing, to be clear, we are not declaring Chapter 78 unconstitutional, contrary to the dissent’s suggestion that the majority is “striking down,” “voiding,” or “invalidating” that statute. Chapter 78 remains in effect, as interpreted, unless the Legislature chooses to modify it. There is no need to address severability or the mutuality of obligations. Those considerations are for the political branches.
Oh, I see: we public employees still have to pay up, even if the state doesn't! 

Let's skip down to the dissent, written by Justice Barry Albin with concurrence from Chief Justice Stuart Rabner, two courageous and logical jurists:
Today, the majority strikes down a law -- Chapter 78, L.
2011, c. 78 -- vaunted by the Governor and Legislature as the solution to the State’s pension crisis. The decision strikes down the promise made to hundreds of thousands of public workers by the political branches of government that deferred wages earned for years of service would be funded during their retirement. The decision unfairly requires public workers to uphold their end of the law’s bargain -- increased weekly deductions from their paychecks to fund their future pensions -- while allowing the State to slip from its binding commitment to make commensurate contributions. Thus, public workers continue to pay into a system on its way to insolvency.

The Governor and Legislature cannot walk away from the contractual commitments they signed into law in Chapter 78. Their failure to make the required payments into the pension fund constitutes an impairment of their contract with public workers.
Never before, until today, has the Debt Limitation Clause been applied to the ordinary operating expenses of government, such as deferred compensation earned by public workers and payable as pension benefits. Indeed, this Court previously held that a statute requiring the State to make annual contributions to a pension fund is not a debt within the intendment of the Debt Limitation Clause. See City of Passaic v. Consol. Police & Firemen’s Pension Fund Comm’n, 18 N.J. 137, 147 (1955). Moreover, this Court has held that the Appropriations Clause cannot stand as a barrier to the enforcement of constitutional rights. In short, the majority’s contention that the Governor and Legislature’s contract with public workers is unenforceable under state law has no contemporary legal support.
I'm no lawyer, so I can't give an informed opinion on how precedent fails to uphold this decision. All I do know is that today, the NJ Supreme Court told every teacher, every cop, every firefighter, every clerk, every social worker, every secretary working in a state building, every analyst, every medical professional employed by the state, and all other New Jersey public workers:

Screw you.

And that begs a question: given today's ruling, what bright, talented young person would ever consider a career of public service in New Jersey?

h/t the excellent Drew Sheneman.

ADDING: The dissent is really worth reading:
The State knows how to draft a contract to limit its financial obligation. Many state contracts include language that the contractual terms are subject to appropriation by the Legislature. On the other hand, the State knows how to draft a binding public contract. In Spina, this Court set forth the conditions for the making of an enforceable legislative contract. The majority’s reading of the Appropriations Clause renders Spina a nullity. It also runs afoul of the Federal Contracts Clause. If the enforceability of a contract depends on the willingness of the Legislature to appropriate money in any particular year, then, by the majority’s logic, no contract is enforceable. That conclusion will come as a great surprise to many who count on the good faith and credit of the State in honoring its contractual commitments. The Appropriations Clause cannot stand as a barrier to the enforcement of federal or state constitutional rights, including contractual rights. See Brand, supra, 303 U.S. at 97-104, 58 S. Ct. at 444-48, 82 L. Ed. at 689-93; see also Abbott v. Burke (Abbott XXI), 206 N.J. 332, 363-64 (2011); N.J. Div. of Youth & Family Servs. v. D.C., 118 N.J. 388, 399-400 (1990).


Deciminyan said...

Keep in mind that had Christie not vetoed the millionaire's surcharge, there would be about $4 billion available for the pension fund over the course of his reign so far. Those who oppose this surcharge argue that it would have crippled New Jersey's economy. Well, Christie has done a good job of crippling it without the surcharge.

David Milboer said...

Please understand that the State Supreme Court just made a purely political decision. They wren afraid that the governor would simply ignore the supreme court for his own political gain. It would be the ultimate in neocon bravado and the the governor was looking forward to it. Unfortunately, the branch of government responsible for protecting our rights defaulted on their obligation and backed down from the fight.

walt sautter said...
This comment has been removed by the author.
walt sautter said...

Not one of Christie's vetoes has been overridden. From where does he get these Svengali-like powers? It can't be his personality that's for sure!http://teachersdontsuck.blogspot.com/ - See more at: http://jerseyjazzman.blogspot.com/2015/06/nj-supreme-court-to-nj-public-workers.html?spref=fb#sthash.rtX5et87.dpuf

Giuseppe said...

An absolutely horrible decision under the aegis of the absolute worst governor as regards education, teachers (all public employees) and their union. No other governor for 75 plus years has been this destructive to teachers and education in NJ. No other governor in recent memory would have precipitated this toxic waste tsunami. Christie has done so much damage, he's competing with Scott Walker and John Kasich to see who can do the most harm to public schools, public school teachers and their unions. This decision represents selective persecution, you can be sure the government won't renege on the contracts with the billionaires and the big corporations.

Unknown said...

It is worth pointing out that partisan politics has destroyed the credibility of the judicial system. As a long time advocate, I didn't mind when others disagreed. We would debate and facts would stand on their merit. Now, the decorum I have always believed in is gone. For those who don't know, the five judges responsible are all the result of Republican appointments. (Whitman & Christie) The two who recognized the need to uphold the law happen to be Democratic appointments (McGreevey & Corzine).
Now, it is time for the Democratic Legislators to stand up for the rules of decorum that allows for factual debate and decisions based on merit. With the entire Assembly up for election this fall, the opportunity to stand tall will be present. Will any show the fortitude and character we should expect?

Unknown said...

"If that's true, what's to stop the state from reneging on any of its debts? And why, then, would Wall Street ever think of doing business with us ever again? The implications of this argument are truly frightening. - See more at: http://jerseyjazzman.blogspot.com/#sthash.GcpYL8ga.dpuf"

See Steven M. Lonegan v. State of New Jersey (A-23-01) decided August 21, 2002

From the case, "independent state authorities issuing bonds or other debt obligations that are not backed by the State's full faith and credit are not debts of the State for purposes of the Debt Limitation Clause." Lonegan argued that regardless of them being CONTRACT BONDS the state is still obligated to pay, and the bonds are rated on the state's ability to pay. But the court decided, it is the independent authority who technically takes on the obligation. This was a trick used to issue school construction bonds and the like.

So in short, Wall Street can still do business with us through independent authorities, and the state will pay. But if you are a citizen, taxpayer, public servant, you can go screw.