We previously discussed the dire financial situation in New Jersey where some lower courts had essentially fabricated a constitutional right to union pension payments out of thin air. Those efforts largely sagged in the weeks that followed, but the public worker unions have never been ones to give up without a fight in their efforts to kill the goose that lays the golden eggs. This week they were back with a vengeance, filing lawsuits against the state government yet again which seek to drain blood from a stone. Their new approach is one which relies on some waterboard level torture of the English language, but they still might get away with it. (Yahoo News)
Three public workers’ pension funds are suing New Jersey for billions in damages, claiming the state government breached contracts when it contributed less than planned.
The filing Friday is the latest volley in a more than yearlong dispute over pension contributions. They stem from Gov. Chris Christie’s decision last year amid a budget shortfall to veer from a pension funding plan he signed into law in 2011…
Last year, New Jersey had a surprise revenue shortfall and Christie balanced the books almost entirely by reducing pension contributions. Unions sued, arguing the state had a contract with them to pay up. In June, the state Supreme Court ruled on the issue. It found that it could not order the administration to make the full pension payments, largely because doing so would violate a provision of the state constitution that blocks the current Legislature from saddling future ones with debt.
So here’s the new approach the union lawyers are taking. The amount of money they are seeking from the state to be paid into the pension funds amounts to more than $3B. That adds up to roughly 10% of the state’s entire state budget. As you can imagine, that’s a mountain of debt which the state government has no capacity to absorb at present. But even more important is a provision in the state constitution which prevents the government from taking on debt in excess of 1% of the state budget (that’s an important clause here) without approval of the citizens by referendum.
Since ten percent is considerably higher than one percent (even in Common Core math) the courts had to strike down the proposal. But in a stroke of genius, the unions have decided to claim that that pension payments actually get paid out to multiple funds, and at least some of them would be soaking the taxpayers individually for a payday which would be less than 1% of the budget. In that way, they claim, the courts can still force Trenton to pony up a significant amount of the cash.
The funds argue that the promise to each fund should be seen as separate deals each year. That way, some of the funds would come in at less than 1 percent of the state budget.
If the argument sounds ridiculous, that’s because it is.. but it all comes down to the wording in question and which judges will hear it. The intent of the amendment doesn’t sound particularly vague on that score if you read the actual wording of the constitution.
The Legislature shall not, in any manner, create in any fiscal year a debt or debts, liability or liabilities of the State, which together with any previous debts or liabilities shall exceed at any time one per centum of the total amount appropriated by the general appropriation law for that fiscal year, unless the same shall be authorized by a law for some single object or work distinctly specified therein. Regardless of any limitation relating to taxation in this Constitution, such law shall provide the ways and means, exclusive of loans, to pay the interest of such debt or liability as it falls due, and also to pay and discharge the principal thereof within thirty-five years from the time it is contracted; and the law shall not be repealed until such debt or liability and the interest thereon are fully paid and discharged. Except as hereinafter provided, no such law shall take effect until it shall have been submitted to the people at a general election and approved by a majority of the legally qualified voters of the State voting thereon.
I would imagine that Chris Christie’s attorneys will be focusing on the very first sentence when they fight this. Going back to the “intent” question of the clause, it seems fairly clear that the wording a debt or debts, liability or liabilities of the State when combined with the qualifier of the total amount appropriated for that fiscal year shows that they were talking about taking on total debt. If a court were to entertain the unions’ bizarre objections, that would mean that the state could take on 100 separate burdens of debt, each equal to one dollar less than one percent of the budget at the end of the year and essentially give away the entire farm. Obviously that wasn’t the intent woven into their state constitution.
But the unions likely don’t care about that. As the spokesman for the Public Employees’ Retirement System said when commenting for this report…
“We want a judgment answered so we are to the front of the line getting our money before anyone else gets it, because it is our money,”
And that’s the bottom line for the unions in a single sentence. Just make sure they get their money even if they burn the entire house down in their wake. In the end, that’s all that matters.