Breaking: Jacobson rules against labor groups in pension suit case

By Chase Brush

TRENTON – In a courtroom here this afternoon, Superior Court Judge Mary Jacobson ruled against the labor groups in their suit against Gov. Chris Christie and Treasurer Andrew Sidamin-Eristoff.

Jacobson said the certifications provided to her court by the defendants showed that the governor properly acted within his executive purview when he decided to cut $878 million from a pension contribution slated for fiscal year 2014 to help plug a state budget hole.

The judge was convinced that such an action was permissible in light of a “staggering budget shortfall,” which nows stand in excess of $1 billion. Jacobson said the defendants showed that Christie made his decision in order to protect the welfare of the citizens of New Jersey.

In his argument before the judge, labor group attorney Stephen Weissmann made the case for the state to put $300 million currently maintained in surplus back into the pension system.

“We are here asking for relief. It is relief where the court would say to the Governor: you need to put every last dime in the form of unspent and unencumbered funds that the state has not designated in essential funds for the safety health and welfare of the state’s residents … into the state’s pension system and the required annual contribution,” he said.

With the support of other union lawyers, Weissmann argued that workers have a “contractual right” to a well-funded pension system following the passage of Chapter 78 — the pension reform legislation Chrisite signed back in 2011 promising annual payments to the state’s pension system through 2018. He added that Executive Order 156 — Chrisitie’s decision to cut from that pension system — reneges on that promise and thus constitutes an impairment of the workers’ right. 

“We can talk about what is the nature of this contractual right .. But here’s what I would suggest,” Weissmann said. “Given the language in Chapter 78 and given the appropriate of money pursuant to Chapter 78, a contractual right exists and deserves constitutional protection.”

Jacobson acknowledged that that contractual right exists, and even went so far as to admit the plantiff’s point that there is a strong likelihood of irreparable harm to the state if no action is taken to fix its ailing pension system. But she ultimately concluded that Chrisitie’s cuts this year are appropriate, given the circumstances. 

She added that maintaining the $300 million surplus – already very low, in the judge’s opinion – is necessary for the fiscal health of the state, in part in the interest of preserving the state’s credit rating.

“I don’t think it was an easy decision for the governor to make,” the judge said. “It’s not up to the courts to decide on discretionary spending.”

Jacobson ultimately denied the unions’ appeal for a preliminary injunction, but she was quick to stress the decision applies only to the pension payments for fiscal year 2014, which ends June 30. Chrisite has proposed grabbing a total of $2.43 billion from the pension fund over the next two years.

Jacobson issued her full 100-plus page decision shortly following the hearing, noting that the excessive length of the decision “underscores the complexity of the arguments” presented by both parties. 

Breaking: Jacobson rules against labor groups in pension suit case