Amending New Jersey's constitution to ensure the state makes its contributions to the public-employee pension system could be "disastrous for the state's financial future over time," the chairman of the State Investment Council said Friday.
Tom Byrne issued that warning a day after the Senate Budget Committee voted along party lines in favor of legislation sponsored by Senate President Stephen Sweeney (D., Gloucester) that would ask voters to approve the amendment.
The Assembly has not taken up the measure.
Sweeney, a likely candidate for governor in 2017, wants to put the question on the ballot next November. He says the amendment is needed because Gov. Christie has reneged on a 2011 law that committed the state to contributing more to the pension system.
In addition to mandating greater state contributions, the law required public employees to contribute more toward their pensions and health benefits, raised the retirement age, and suspended cost-of-living adjustments.
"The state hasn't lived up to its commitments, and that's bad," Byrne, a former chairman of the state Democratic Party, said Friday.
"At the same time," he said, the 2011 deal "was never going to work when they signed it," because it relied on unrealistic revenue projections. "I think they're doing the same thing here," he said.
The amendment would put the state "in a constitutional straitjacket," Byrne added.
"It would have an enormous impact on any discretionary spending and probably the biggest, ironically enough, is aid to education," he said. "I just think that would be eviscerated. That alone would be very, very harmful to the state."
The investment council oversees the state agency that invests New Jersey's $80 billion pension system.
Byrne also served on Christie's pension and health benefits commission, which recommended a different solution to tackling New Jersey's underfunded retiree benefits.
As part of a broad overhaul, the commission said, the state should scale back employees' health benefits and use the savings to pay down the pension system's $40 billion unfunded liability. A constitutional guarantee of pension payments should be passed only if the health benefit savings were realized. Christie, a Republican running for president, has endorsed that plan.
The health benefits system has an unfunded liability of $53 billion, according to the commission's September 2014 report.
Starting in 2018, the Affordable Care Act will impose a 40 percent excise tax on high-benefit, high-cost health plans. That will cost the state nearly $60 million in 2018 and rise to $284 million by 2022, the commission said.
Sweeney's plan, which does not address health benefits, "removes any incentive to deal on that issue," Byrne said.
He added, "I don't think the constitution ought to be a budget document."
Sweeney says his plan would get the pension system on track to fiscal health by 2022. In fiscal 2018, the state would be required to contribute about $3 billion.
To get the question on the ballot in 2016, the Legislature must approve Sweeney's bill with a simple majority in both this legislative session, which ends in mid-January, and the next. Alternatively, the Legislature could approve the amendment next session with a three-fifths majority vote.