WATCH: Christie to Cut Pension Payments by $2.5B [POLL/VIDEO/AUDIO]
To keep the current year's budget and next year's spending plan in balance, Gov. Chris Christie plans to slash the state's contribution to the public workers' pension system by almost $2.5 billion for the combined fiscal years.
For the fiscal year that ends June 30, the state was supposed to contribute $1.6 billion, but Christie now plans to pay $696 million. Next fiscal year's payment was to be $2.25 billion, but the governor said he'll contribute $681 million.
"As to Fiscal Year '14, I am doing it through executive order," Christie said. "We only have a brief period of time left in the fiscal year, so I will be executing an order. As to Fiscal Year '15, obviously there's a budget that still needs to be passed. This is how I am adjusting."
The governor said he's meeting the state's true obligations by paying into the system only for active employees.
While it doesn't declare a fiscal state of emergency, the Executive Order states:
I reserve the right to take such actions and issue such orders or directives as may be necessary to meet the various problems presented by this situation, to protect the health, safety, and welfare of the people of this state, and to ensure the continued provision of essential state services."
Three years ago, Christie signed a bill into law requiring the state to incrementally pay one-seventh more of the state's total pension obligation every year for seven years. Had it been paid, this year's $1.6 billion would have meant the state was contributing three-sevenths of its obligation. The Democrat-controlled legislature has every right to offer alternatives to reducing next year's pension payment, according to the governor.
"If the legislature wants to try to do something else, that's obviously in their provenance to try to do," Christie said. "I believe this is the best and most responsible way to do it. If they have other ideas, as always I'm willing to discuss it with them, but I don't think they're going to find a whole lot of appealing options to deal with this."
A top Democrat in the General Assembly does not seem willing to work with Christie.
"It's going to be very hard, I think, to do bipartisan deals in the future because how do you trust?" asked Assembly Majority Leader Lou Greenwald (D-Voorhees). "The failure to make those payments is a breach of his word. It's a breach of his contract with the people of New Jersey."
Public employees' union representatives are also speaking out against Christie's plans, and they seem ready to do battle.
"This is just another broken promise from the Christie administration," said Seth Hahn, state legislative and political director with the Communications Workers of America (AFL-CIO). "We're going to take a look at all of our options and pursue all avenues at our disposal, including legal action if necessary."
After making his announcement, Christie said he wasn't concerned about possible lawsuits. He said his decision was necessary because the budget shortfall for this year is now expected to be about $1 billion, and revenues will come in roughly $1.75 billion less than originally expected for next year. Fiscal Year 2015's total budget is estimated to be $32.7 billion, roughly 5 percent less than the budget plan Christie announced earlier this year.