Updated Christie focuses on pensions as he unveils 33.8B budget and ‘Roadmap for Reform’

Jessica Perry//February 24, 2015

Updated Christie focuses on pensions as he unveils 33.8B budget and ‘Roadmap for Reform’

Jessica Perry//February 24, 2015

Pensions must have been on a lot of minds Tuesday as Gov. Chris Christie stepped to the podium in the Statehouse to deliver his Fiscal 2016 budget address.They were certainly on the governor’s mind, if his speech is any indication.

He devoted more than half of his words to the topic of pensions, based on the prepared remarks issued by the Governor’s Office.

Pensions are simply “the problem eating away the state,” he said as he rolled out a $33.8 billion proposal before lawmakers and guests gathered in Trenton.

A court ruling Monday said the governor broke the law when his administration failed to make the full promised payments into the state employee pension fund. The ruling demanded Christie restore nearly $1.6 billion in payments as a result.

“We don’t need any court to tell us we have a problem,” the governor said Tuesday.

Christie was candid about the future of budgets if the system is not changed, according to his prepared remarks: “If we do not reform, next year we would be asked to spend nearly $8 billion on pension and health benefits. Health costs alone consume nearly 10 percent of the budget. If we continue to do nothing, spending on pension and health benefits will make up 23 percent of New Jersey’s budget.”

Christie’s budget proposal instead includes a $1.3 billion pension payment for Fiscal 2016.

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The governor’s answer to this seeming contradiction? A reform proposal he dubbed “Roadmap for Reform.” Christie said the independent, bipartisan New Jersey Pension and Health Benefits Study Commission he appointed last year had “reached an unprecedented accord” with the state teachers union, the New Jersey Education Association, on the plan.

The news appeared to catch many in the audience by surprise.

Changes would include freezing the existing pension plan and replacing it with a new one, both overseen via a trust under the auspices of the NJEA.  They would also include aligning public employee retirement and health benefits with private-sector levels.

However, the state would continue to make contributions to that trust, in order to pay off the existing plan’s unfunded liability, Christie said. An amendment to the state constitution would ensure the state meets that requirement, he added.

In addition, the state would work with unions to achieve health care savings, Christie said, touching on the other major issue taking a big bite out of annual spending plans.

“Imagine, after years of disagreement and, at times, acrimony — we have come together on a negotiated and signed ‘Roadmap’ to fix the largest hurdle to New Jersey’s long-term fiscal stability,” Christie said in his remarks. “After months of hard work behind the scenes, and with months more to come, we are on the verge of proving to our citizens once again that we can make government work for them — the people who pay the bills.”

Anthony M. Bucco (R-Randolph), the deputy Assembly Republican leader, spoke highly of the governor’s plans in a prepared statement after the speech: “Every legislator, every hard-working resident, every job creator can be excited today that productive negotiations and compromise are once again happening in Trenton to ensure that state health and pension benefit systems can become affordable, sustainable and solvent for taxpayers and beneficiaries.”

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However, not everyone was convinced that the focus on the pension issue was the right one.

“New Jerseyans hoping to hear an accurate assessment of the state’s financial situation today would surely be disappointed, as the governor devoted his entire budget address to public-employee pensions and health benefits,” Gordon MacInnes, president of New Jersey Policy Perspective, said in a prepared statement. “Granted, this is a crucial challenge facing the state, but it is not the only or most immediate problem — not by a long shot.”

The teachers union, according to an NJ Advance Media report, had disputed that any agreement was reached.

“I think what’s been described as an agreement is really a roadmap and a path forward,” the parent of NJ.com quoted Edward Richardson, executive director of the NJEA, as saying.

Another union leader was even more perturbed.

“The pension plan’s long-term problem has always been the state refusing to put the money in,” Hetty Rosenstein, New Jersey state director of the Communications Workers of America, said in a prepared statement. “Gov. Christie said as much when he signed his much-touted Chapter 78 in 2011, claiming his law would fix this. Now, here we go again. No matter how many back-room meetings transpire, there won’t be a solution until we address the problem by putting the legally required money into the pension.

“If Christie continues to break the law — which was upheld yesterday in court — New Jersey’s pension funds could go bankrupt in 10 years.”

Despite the emphasis on pensions, Christie discussed other issues, as well.

In fact, he started off by touting a sixth straight budget with “no new taxes on the people of New Jersey.”

Christie also pointed out that his proposed budget holds the line on spending with its $33.8 billion figure, which is $2.3 billion less in discretionary spending than in Fiscal 2008, shortly before he took over as governor.

“When we arrived here, spending had risen 58 percent in the previous eight years,” he said in his remarks. “Taxes were increased 115 times. Jobs and people were leaving the state. Unemployment was too high. We had to change direction. And we got it done.”

Christie’s version of “no new taxes” was greeted with applause by the state’s business community.

“We appreciate that many aspects of the governor’s budget plan remain business friendly,” New Jersey Chamber of Commerce CEO and President Thomas Bracken said in a prepared statement after the speech. “The budget contains no business tax increases and no business tax policy changes, and it contains the final year of phased-in business tax cuts that were initiated several years ago.”

One issue that did not make the cut for Christie’s remarks, however, was the beleaguered Transportation Trust Fund. On Tuesday, Christie’s laments about “the cost of inaction” were directed elsewhere.

That omission did not go over well with some interested parties, either.

 “The governor … did not talk about our transportation networks, even though in less than five months the fund that pays for maintaining and improving these vital economic assets will have zero money for new projects,” New Jersey Policy Perspective’s MacInnes said. “For New Jersey to grow its laggard economy, it is essential that the Transportation Trust Fund be replenished with significant and stable new funding. This is an emergency that the governor failed to even recognize, never mind suggesting a pathway to a solution.”

And, as might be expected, Democrats were simply not impressed with the budget or remarks.

“Chris Christie’s consistent focus on self-promotion instead of what’s best for his state has resulted in a lagging New Jersey economy and a disastrous budget crisis,” Democratic National Committee press secretary Holly Shulman said in a prepared statement. “And in today’s address, Christie only offered more of the same. The facts are clear: Chris Christie has led New Jersey off a fiscal cliff. … Just imagine what (he) would do to America.”

After all the details and debate, however, the governor’s bottom line was characteristically blunt:

“I will never stop coming into this chamber and giving hard truths, and I will never give up on New Jersey.”


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