Anyone who still held out hope that Gov. Chris Christie and the Legislature could reach a compromise on the size of the state’s contribution to the public-pension system was soundly disabused of that notion last week when the governor told a “town hall” audience that funds were not available and he would not raise taxes to produce the money.
While it was highly unlikely Christie would have accepted a tax increase in any event, particularly in the midst of ramping up his pursuit of the Republican presidential nomination, his unqualified rejection drove a stake through the heart of the Democratic proposal to increase the tax rate on incomes above a half-million dollars and allocate the approximately $675 million it would raise to the system.
Despite the severity of the problem — a shortfall of some $3 billion in the current and looming fiscal year — and the uncertainty of a Supreme Court ruling on whether reducing the pension payments violated the law, Christie appears resolute in his insistence that the reform package he has proposed is the only solution he’ll accept.
With six weeks left before the start of the 2016 fiscal year on July 1, a showdown appears inevitable between Christie and Senate President Steve Sweeney who is equally as adamant that increasing the tax on the wealthy is the fairest approach to ease the stress on the pension system.
It wasn’t always thus.
Four years ago, there were smiles all around along with handshakes, high-fives, hugs, kisses on cheeks, and effusive praise for the selflessness of bipartisan compromise as Christie affixed his signature to legislation requiring an increase in public-employee contributions, a freeze on cost-of-living-adjustments for retirees, and a guaranteed seven-year timetable for the state to make its payments.
Christie touted the 2011 legislation as an example of how people of goodwill, despite political differences, could set those differences aside and act in the greater good. He characterized the legislation as one that would rescue the beleaguered pension fund and serve as a model for other states to follow.
In responding to the court challenge, however, the administration executed an abrupt U-turn, arguing the governor was justified in ignoring the law because it was unconstitutional and for the court to order compliance would interfere with the prerogatives of the executive and legislative branches.
While Christie was celebrating his victory, Sweeney was fending off bitter attacks from organized labor for joining forces with Christie — a betrayal, they called it — and muscling the package through the Legislature. He’s spent a good deal of his time since then re-ingratiating himself with union leadership, a group whose support is critical for him if, as expected, he enters the race for the Democratic gubernatorial nomination in 2017.
He cannot afford to fold again. The smallest hint on his part that he’s open to Christie’s proposals to reduce benefits, freeze the current system in place while transitioning to a 401(k)-style system, and scaling back the health-benefits program to a less expensive model will immediately send the labor movement he’s so assiduously courted scurrying into the arms of another candidate.
Just as Christie is locked into an anti-tax posture by political considerations, Sweeney’s political viability depends on his protecting public employees from further concessions by insisting that the wealthiest New Jerseyans ante up their fair share.
There’s little doubt that the two whose once-cozy relationship seems to have cooled under political stresses will continue to engage in this stare down. Sweeney’s stepped up his criticism of Christie over the governor’s frequent out-of-state political trips and has taken harsh swipes at the administration’s failure to pull the state out of its economic malaise.
Christie has ridiculed Democrats for attempting to solve every problem by raising taxes and increasing spending, taking particular aim at Sweeney for continuing to promote the millionaire’s tax (inappropriately named because the proposed increase would start at a half-million dollars).
The governor contends that state taxes are already too onerous and that increasing the rate on the wealthy will result in their fleeing the state in great numbers and taking their money with them. Sweeney argues there is no definite correlation between tax rates and decisions by the wealthy to relocate and, besides, if Christie was more aggressive in reinvigorating the state’s economy and creating jobs, there’d be no need for a discussion of tax increases.
There’s no doubt that Sweeney can win approval of the tax increase and that Assembly Speaker Vincent Prieto could do the same. There’s no doubt as well that Christie would veto it and that his veto would be sustained by Republican minorities in both houses.
Ironically, either or both could be bailed out by the Supreme Court when it rules on the public-employee challenge to Christie’s short-funding of the pension system.
If, for instance, the court rules Christie acted within his right as chief executive, the issue would be put to rest and Sweeney could argue that, while he disagreed with the decision, there was no alternative but to accept it as the final word.
On the other hand, if the court decides the 2011 law bound the state to the payment timetable, it could finesse the issue by directing the two branches to come up with a solution but stop short of mandating a specific amount.
Sweeney could claim victory of a sort while Christie would likely take the opportunity to again berate an activist court for poking its nose into issues where it didn’t belong.
Christie is not about to budge from his no-tax-increase view, but at the same time will be loath to defy a court order, potentially creating a constitutional crisis at a time when he’s working diligently to convince party leaders around the country that his leadership qualities are what they’re searching for in a national candidate.
Sweeney, faced with the certainty of a veto of the millionaire’s tax, may very well make the effort in any event to establish the record. He’ll concentrate on rejecting the governor’s suggested changes — impressing organized labor by doing so — but may ultimately be forced to accept a pension payment somewhat smaller than he’d like but sufficient to restore at least a portion of the cuts made by Christie.
No matter the eventual outcome, it’s virtually certain that both men will strive to convince their respective constituencies he’s bested the other.