Amid Shouts and Protests, Legislators Quietly Work Out Their Budget Plans

John Reitmeyer | June 12, 2015 | Budget, Education
NJEA and teachers make a loud showing in Trenton, demanding that state fully fund their pensions and benefits -- despite Supreme Court ruling letting Christie off hook

Erica Klemens (left), state director of Americans For Prosperity, attempts to speak during a news conference as members of the NJEA converge.
It wasn’t on any committee agenda or the board list for the Assembly’s voting session, but talk of the next state budget — and the size of the pension payment that will be in it — was inescapable in and around the State House yesterday.

Teachers flooded the hallways as part of a planned State House Lobby Day and other special-interest groups held news conferences outside on a steamy June afternoon.

The humidity may have contributed to some of the frayed tempers.

Erica Klemens, head of the state chapter of Americans for Prosperity, spoke over the shouting teachers with the assistance of a microphone as she made the case for a switch to the 401(k)-style retirement plan.

“Do you want to yell at me or do you want to have a discussion?,” asked Assemblyman Declan O’Scanlon (R-Monmouth), one of those attempting to speak during the organization’s news conference — even as the teachers were shouting “Fund our pensions” and “It’s the law.”

Meanwhile, Democrats were talking among themselves about a budget bill they plan to put forward later this month, while Republicans in the Assembly, seeking to grow their ranks with a successful election this November, declared they’re firmly with Gov. Chris Christie when it comes to the pension issue and state spending.

Only Christie, a second-term Republican, was left out of the action, as he spent yesterday in Iowa while continuing prepare for a run for president.
The governor, however, has already made his position clear when it comes to the next state budget, which despite the current discord must be balanced and in place by July 1, according to the state constitution.

For the past year Christie has said the state simply doesn’t have the money to abide by a pension-reform law he signed in 2011 that required employees to pay more toward their retirements but also called on the state to beef up its contributions to help reverse years of underfunding by his administration and others.

And the state Supreme Court on Tuesday backed up the governor’s stance in a 5-2 ruling that found only voters can compel the state to take on the kind of obligations that were called for in the 2011 law. Christie said in response that it’s time for employees to accept new benefit reforms, including a 401(k)-style retirement plan and less generous health coverage.

All parties have to “work together to find a tangible, long-term solution,” Christie said in a statement issued while he was out of state.

But so far, Democratic legislative leaders and public-worker union officials have expressed no interest in enacting more benefit cuts on top of those passed in 2011.

“We did reform,” Assembly Speaker Vince Prieto (D-Hudson) said when asked by reporters about the pension issue following yesterday’s voting session. “We need to grow our economy.”

[related]Prieto said he and Senate President Stephen Sweeney (D-Gloucester) are in the midst of talks right now about a budget bill that Democrats plan to introduce later this month. That comes after Sweeney made it clear on Tuesday that Democrats would not be advancing Christie’s proposed budget, which increases spending to $33.8 billion but includes a $1.3 billion contribution into the pension system instead of the $3.1 billion payment called for in the 2011 law.

The Democrats plan to make the larger payment in their budget, Prieto said, and will also support a measure that hikes the state’s income tax rate on earnings over $1 million to bring in more revenue. The rest of the budget details are still being worked out, Prieto said. When reached later, a spokesman for Sweeney agreed.

The state Communications Workers of America union, meanwhile, is also pushing lawmakers to fund the larger state-pension payment. And according to information that was shared with its members yesterday evening, they believe it can be done by making a series of tax-policy changes, including small tax increases for corporations and individuals earning over $350,000 annually. Changing the way multistate companies are allowed to file their taxes using a system called “combined reporting” would also help bring in the cash needed to fund the larger, $3.1 billion contribution, according to the union’s plan.

The New Jersey Education Association, with its big presence in Trenton yesterday, also made it clear that members still expect lawmakers to abide by the 2011 law even if the court isn’t enforcing it.

Kathy Coulibaly, associate director of public relations for the union, said teachers want “dedicated, sustainable funding for public-employee pensions.” She also took aim at billions of dollars in corporate-tax incentives that have been offered during Christie’s tenure, which began in early 2010.

“The state needs to get its priorities straight: $3 billion in corporate-tax giveaways with negligible job-creation results is not the way to get New Jersey back on firm fiscal footing,” Coulibaly said.

As for crashing the Americans For Prosperity news conference outside the State House yesterday, she said it “seemed like a good opportunity for our members to continue their advocacy for a return to fiscal responsibility.”

After the shouting at the conference ended, Adrian Moore, an economist and vice president of policy at The Reason Foundation, a libertarian think tank based in California, cited changes he’s studied that other states have made in response to pension troubles. The answer for New Jersey will have to come from someone showing enough leadership here to find the “cleanest way out,” he said.

And O’Scanlon, the Republican lawmaker, said massive tax hikes can’t be the only solution.

“The mathematics don’t work here,” he said. “We don’t have the power to change the laws of mathematics.”

He also took the shouting from the teachers in stride, saying they have a right to be upset.

“You’ve just got to be willing to have these conversations, be willing to get yelled at,” O’Scanlon said.