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Christie’s Call For Pension Concessions Sets Up Budget Battle With Sweeney

By cutting or threatening to cut the required pension payment, Christie could then negotiate with Democratic legislative leaders the new concessions he wanted them to impose on the public employee unions -- including such options as increased pension contributions or changes in retirement age or eligibility, or even unrelated initiatives like zero payments for sick leave.

Christie could lay out a budget, for example, that uses $600 million that would have gone into pensions to provide $250 million to pay for the first year of a phased-in income-tax deduction for property taxes up to $1,000 -- the tax cut he and Sweeney agreed upon two years ago, but abandoned because of insufficient revenues -- and another $350 million in increased school aid or property tax rebates. He could then dare Democrats to eliminate these popular programs to fully fund pensions for “a select few,” as he put it.

Democrats could pass a budget that put the full pension payment back in, but Christie could then use his line-item veto power to eliminate it. Democrats do not have enough votes in either house to override the governor’s veto, and Republicans are unlikely to provide any votes for an override because Christie’s efforts to get further pension concessions will be popular with their constituents.

Assembly Minority Budget Officer Declan O’Scanlon said Christie’s implicit suggestion that the state consider further public employee pension reductions “was worthy of pursuing, if our friends on the other side of the aisle are willing to do that. Within reason -- you also have to be fair to the pensioners that are involved. But we do need to have it on the table, because he’s right. This is huge -- until we get up to the full pension (funding), which is the next three years, the additional pension payments are going to suck all the air out of the room, and the revenue out of the vault.”

For the embattled Christie, who is facing months of investigations into the Bridgegate scandal, a public battle with Democrats and the public employee unions over the high cost of pensions for government workers is a fight he would welcome, and it certainly would not hurt his standing as he travels around the country as chairman of the Republican Governors Association and aims to keep alive his hopes of winning the Republican presidential nomination in 2016.

A National Concern

The threat to state and local governments posed by large unfunded pension obligations has drawn increasing national attention. The City of Detroit filed bankruptcy last year in part to attempt to persuade judges to allow it to renegotiate its punishing pension obligations, and new accounting rules adopted last year forced state and local governments to acknowledge higher pension liabilities in their bond offerings. Moody’s lowered the credit ratings of Chicago and a half dozen other major cities in response.

New Jersey’s 2011 pension overhaul, which Sweeney, an Ironworkers Union leader, pushed through over the protests of the state’s public employee unions, was designed to ensure that New Jersey’s pension system would be placed on a sound fiscal footing after almost 15 years in which Democratic and Republican governors and Legislatures had skipped making billions of dollars in required pension payments to pay for other priorities.

“It wasn’t public employees who stopped making pension payments,” Weinberg noted. “It’s the state that didn’t pay its portion.”

New Jersey State AFL-CIO President Charles Wowkanech, who opposed the 2011 pension overhaul, criticized Christie’s inference that the state might reduce its required pension payments or ask public employees to pay more.

“Any efforts to further change pensions must be done in partnership with the men and women who contribute and would be directly impacted,” Wowkanech said in a press statement. “The state must understand its need to live up to its obligations and not require workers to shoulder the burden of returning to solvency by themselves. With all of the ideas and legislation unveiled today, working families must be provided a seat at the table.”

Sen. Linda Greenstein (D-Middlesex), whose 14th District is home to the largest concentration of public employees in the state, also emphasized that the issues Christie raised -- from pensions and sick leave to Civil Service and longer school days -- should be negotiated in collective bargaining with the affected public employee unions, not imposed legislatively.

But Christie is not going to want to negotiate future pension changes with the unions any more than he was willing to collectively bargain the 2011 pension and health benefits overhaul.

It was that bill’s four-year suspension of public employee union rights to collectively bargain on health benefits that was the worst provision of the legislation for organized labor to swallow because it echoed similar anti-labor legislation that was enacted that year in Wisconsin by Republican Gov. Scott Walker, despite the occupation of the Wisconsin Statehouse by union and pro-labor protesters.

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