Friday, December 26, 2014

Christie's $2.4 Billion Cut Triggers Battle Over Future of NJ Pension System

Facing yet another budget shortfall, Gov. Chris Christie yesterday said he would slash pension payments by $2.4 billion, abandoning the pension-funding plan that was the signature achievement of his governorship and triggering a major confrontation with the Democratic Legislature and the public employee unions over the future of the state's pension system.

Christie’s $2.4 Billion Cut Triggers Battle Over Future of NJ Pension System

Facing yet another budget shortfall, Gov. Chris Christie yesterday said he would slash pension payments by $2.4 billion, abandoning the pension-funding plan that was the signature achievement of his governorship and triggering a major confrontation with the Democratic Legislature and the public employee unions over the future of the state’s pension system.

The New Jersey Education Association immediately announced it would file suit to block the $900 million cut in this year’s pension contribution that Christie is implementing by executive order and the $1.5 billion reduction that Christie plans to make in next year’s budget.

Analysts for Moody’s Investors Service and Fitch Ratings, Inc., which this month joined Standard and Poor’s in lowering the state’s bond rating, condemned the move as adding to the state’s future fiscal problems.

While Senate President Stephen Sweeney (D-Gloucester) previously threatened to shut down the state government if Christie failed to make the required pension payments, Democratic legislative leaders yesterday signaled their intention to push for a millionaire’s tax to help balance the budget -- a vain effort that Christie has already pledged to veto.

Christie’s actions directly violate the provisions of the 2011 pension law he and Sweeney championed that obligated the state to bail out the deficit-ridden pension system by a seven-year ramp-up to full actuarially required funding by Fiscal Year 2018, which would have required a final-year payment estimated at $4.8 billion in last Christie’s budget.

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