Lawyers Argue over State Pension Increases
Lawyers for retired New Jersey public employees made their pitch to a three-judge appeals panel Tuesday that the state government broke the law when it took away pensioners' automatic cost-of-living increases in 2011.
The legal issue is lingering from one of Gov. Chris Christie's signature policy accomplishments of his first term. In 2011, the Republican governor forged a deal with the Democrat-controlled Legislature to overhaul pension and health benefits for public workers and retirees.
The state, which in the past has often skimped on making its required pension fund contributions, agreed to gradually boost what it put into the system. In return, retirees would have their annual cost-of-living increases suspended and employees would have to contribute more for their benefits.
Lawyers for the plaintiffs told judges that his clients complied with their obligations to pay into the pension system over their careers and that the state is bound by contract law to do what it agreed. They were asking the judges to overturn a ruling from a lower-court ruling in favor of the state.
"It's simply not fair to change the rules in the middle of the game," said Charles Ouslander, a retired state government lawyer representing himself in the case. "For the people who had already retired before the law took effect, they changed the score after the game."
Dozens of retirees, many wearing red union shirts, made the hearing an unusual appeals court event with a standing-room-only audience.
Their advocates argued that it's a matter of legislative law and economic law: Each year they don't get a cost-of-living increase, their real income goes down. Since the pension changes were adopted, inflation has been modest but certainly present. According to federal data, $100 last year had the same buying power as $96.56 two years earlier.
The lawyers referred to a 1997 law that said that retirees' pension benefits could not be cut. They pointed to the one exception laid out in the law — health insurance coverage — to make the case that the cost-of-living hikes, in place for more than 50 years, were among the items that could not be reduced.
Robert Lougy, a state assistant attorney general, said told judges that the retirees' lawyers were reading the law wrong, and that the annual increases were not untouchable.
The three-judge panel asked lawyers for additional briefs on Internal Revenue Service rules that were a factor in creating the 1997 state pension law.
They also heard a second, related case. In it, lawyer Robert Brown, a former Old Bridge police officer who retired on disability after he was shot in the line of duty, argued that disabled officers like him should receive cost-of-living hikes even if other public employees are denied them.
He said the officers are entitled to the payments because they are excluded from compensation available to other victims of violent crime.
Deputy attorney General Diane Weeden said that's not the case.
The 2011 pension deal itself may be at a crossroads. In his State of the State address this month, Christie said the state cannot afford to make the rising payments. Democratic lawmakers said the state should not alter the deal they struck.
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