With two major government worker pension court battles concluded, the next front in public workers' fight for retirement benefits is a ballot question considering a constitutional amendment forcing the state to make annual contributions in the pension system.
The high court ruled last week that workers in the New Jersey Pension Fund are not entitled to cost-of-living adjustments to their pensions. And almost a year ago, the court ruled the state couldn't be forced to put money into the fund, prompting Democratic lawmakers and public worker advocates to pursue the amendment (A109).
In a statement following the COLA decision, Wendell Steinhauer, president of the New Jersey Education Association, said: "This despicable ruling reinforces the need to pass a constitutional amendment to require responsible pension funding. If the state is allowed to simply walk away from its obligations, it could leave hundreds of thousands of New Jersey retirees destitute and cripple the state's economy. We refuse to allow that to happen."
The Legislature approved the ballot question last year and must pass it again this year with a simple majority in order to qualify for the fall election. Democrats have enough votes, and Gov. Chris Christie has no say in whether referendums make it to the ballot.
But Christie on Monday urged the Morris County Chamber of Commerce to marshal its resources to combat the amendment, which he has called a $3 billion tax increase on the people of New Jersey.
"If you don't spend some money now to defeat it, you will be spending a lot more money later to pay for the results of your inaction," Christie said.
Other opponents, including Republican lawmakers and business lobbyists, often warn such an amendment would create a "super priority" likely to force severe spending cuts or tax hikes if the state economy doesn't drum up enough cash to cover the payments.
Proponents contend that what is a hefty bill now will grow unmanageable later if payments are put off.
The amendment would constitutionally obligate the state to make increasing contributions into the fund, reaching the roughly $5 billion full payment recommended by actuaries by 2021. The state would have to make those contributions quarterly, rather than waiting until the end of the year.
Hetty Rosenstein, state director of the Communications Workers of America, said that without the constitutional amendment, "the plan will go under altogether."
"We need to save it," she said of the system that covers an estimated 770,000 current and retired workers and is $43.8 billion in debt. "We need to make sure basic benefits are covered."
A recent poll found 71 percent of New Jerseyans would vote in favor of the amendment this fall, but support falls if it jeopardizes funding for schools, roads or safety net programs.
Assemblyman Declan O'Scanlon (R-Monmouth), who earlier this month introduced legislation overhauling employee health benefits, has said the constitutional amendment should be regarded as leverage for additional reforms.
Rolling back benefits would save the state $2.2 billion a year, including $1.42 billion through lower-cost benefits and $810 million by shifting the cost of retired teachers' benefits to their employers (this assumes that will be offset by benefit changes at the local level).
Active employees would be moved onto health care plans equivalent to gold plans under the Affordable Care Act, and retirees would be given retiree reimbursement accounts to cover the cost of purchasing coverage through a private exchange.
Active employees would pay lower annual premiums, because the total cost of the plan is lower, but higher out-of-pocket expenses.
"To choose not to do this is to choose one of two deaths: either massive reductions in services or massive tax increases, or both," he said.