It’s the Constitution, Stupid

The state’s two-page preliminary statement in their latest brief in the pension payment case used versions of the word ‘constitution’ twelve times. There is a Machiavellian reason for that:


On the basis of a mere statute, the trial court has fabricated a constitutional right to pension funding and effected a
wholesale reordering of the State’s constitutionally-enshrined fiscal process.

The trial court’s contrivance of a constitutional right to billions of dollars in annual appropriations impermissibly trespasses on the Legislature’s plenary, discretionary, and exclusive power to appropriate; the Governor’s constitutional veto power to line-item appropriations; and the constitutional right, under the Debt Limitation Clause, of the citizens of this State to ratify or reject all legislative decisions that purport to bind future legislatures – and future taxpayers – with regard to appropriations.
But it gets worse. The Constitution makes no provision for judicial participation in the annual budget process, and the Supreme Court has repeatedly warned that that the Judiciary lacks power to direct the Legislature to make an appropriation or the Governor to recommend or approve one. The trial court, however, departed from this historical practice and precedent and impermissibly thrust itself into the annual budget process as a super-referee and permanent player. Indeed, the trial court has already set a hearing date for Plaintiffs’ FY 2016 series of pension funding claims. Under the trial court’s ruling, the plenary and discretionary authority that the Constitution gave to the elected Branches in budget matters will henceforth and forever be filtered through the lens of the Contracts Clause and have to pass judicial muster as being “reasonable and necessary.” In elevating a statute to constitutional status and then allowing the Contracts Clause to trump all of t_he fiscal provisions of the Constitution, the trial court has. erased the dividing line of separation of powers.
But it gets even worse still. The trial court’s decision threatens to thrust the State back t9 the dysfunctional, pre-1947 era when inflexible earmarking of State revenues for specific programs and purposes crippled the State’s ability to deal with pressing societal needs. The court not only created an immutable, constitutional right to annual pension funding in the amount of ever-increasing billions, but also gave the Legislature the blue print for permanently locking down ever-increasing fractions of the State budget. Now, by the simple expedient of calling a statutory right “contractual,” any given legislature may evade constitutional limits on it power and bind its successors in perpetuity. As time goes by, more and more of the State’s budget will be frozen in this way. The trial court’s decision has begun the unravelling of the 1947 constitutional reforms.

In short, the court’s decision is critically flawed, counter to Supreme Court precedent, and contrary to constitutional design. It cannot stand.

So if we get a constitutional amendment in November to require making pension payments then we are all good as the state would have no issues with obeying the state constitution, as opposed to a state law.

But then there’s that other part of the constitutional amendment that the study commission report recommended.  The one that never gets mentioned in town hall meetings about being able to “modify some benefits”.  If that part gets through then the state should have no problem with making payments to fund benefits that they would be able to modify as necessary.

21 responses to this post.

  1. Posted by Anonymous on April 2, 2015 at 8:28 am

    Only the parts you don’t like or agree with. Same logic Gov Christie’s uses to break his own law and not make the required ARC payment. Keep up the dialogue, abolish all laws and constitution, no selective trampling of our rights!


    • Posted by skip3house on April 2, 2015 at 7:03 pm

      Like NJ Tax Systems……
      You can’t outsmart old doctors

      And old geezer, who had been a retired farmer for a long time,
      became very bored and decided to open a medical clinic.
      He put a sign up outside that said:Dr. Geezer’s clinic.
      “Get your treatment for $500, if not cured get back $1,000.”

      Doctor “Young,” who was positive that this old geezer didn’t
      know beans about medicine, thought this would be a great
      opportunity to get $1,000.

      So he went to Dr. Geezer’ss clinic.This is what transpired.

      Dr. Young: — “Dr. Geezer, I have lost all taste in my mouth.
      ” can you please help me ??

      Dr. Geezer: — “Nurse, please bring medicine from
      box 22 and put 3 drops in Dr. Young’s mouth.”

      Dr. Young: — Aaagh !! — “This is Gasoline!”

      Dr. Geezer: “Congratulations! You’ve got your taste back.
      That will be $500.”

      Dr. Young gets annoyed and goes back after a couple
      of days figuring to recover his money.

      Dr Young: “I have lost my memory, I cannot remember anything.”

      Dr. Geezer: “Nurse, please bring medicine from box 22
      and put 3 drops in the patient’s mouth.”

      Doctor Young: “Oh no you don’t, — that is Gasoline!”

      Dr. Geezer: “Congratulations! You’ve got your memory back.
      That will be $500.”

      Dr. Young (after having lost $1000) leaves angrily
      and comes back after several more days.

      Dr. Young: “My eyesight has become weak
      — I can hardly see !!!!

      Dr. Geezer: “Well, I don’t have any medicine for that so —
      ” Here’s your $1000 back.”

      Dr. Young: “But this is only $500…”

      Dr. Geezer: “Congratulations! You got your vision back!
      That will be $500.”

      Moral of story — Just because you’re
      “Young” doesn’t mean that you can outsmart an old “Geezer ” !!!!


  2. Posted by Tough Love on April 2, 2015 at 10:46 am

    Other than being repetitive, the State’s position appears to have considerable merit.

    I just hope …. should this REQUIREMENT to fully fund becomes a Constitutional provision …. that the pension benefits being funded are reduced to a level fair to the Taxpayer (meaning EQUAL, but not better than what THEY typically get from their employers), permanently protected from rising above that level, and the Christie doesn’t let his Presidential ambitions get in the way of making SURE that NJ’s Taxpayers are protected from the combination of insatiable greed of the Public Sector Unions/workers and the willingness of Elected Officials to betray the Taxpayers for their own self-interest.


    • Posted by Charles on April 2, 2015 at 8:47 pm

      Why equal? The pay for the last 40 years wasn’t equal.


      • Posted by Tough Love on April 3, 2015 at 12:57 am

        The pay for the last 20 was, and in last 10, many Public Sector jobs now pay MORE (in wages alone) than their counterparts in the Private Sector.


      • Posted by S Moderation Douglas on April 3, 2015 at 6:27 pm

        Correct. 12% less on average, and much more difference than that at the higher levels.


        • Posted by Tough Love on April 3, 2015 at 10:31 pm

          The 12% quoted above is not correct for NJ. In NJ that 12% Private Sector “wage” advantage is 4%.

          And in when comparing Public/Private Sector “Total Compensation” (wages + pensions + benefits), in NJ the PUBLIC Sector has a 23% advantage (which increases to 34% when the much greater Public Sector job security is included).


    • Posted by MJ on April 3, 2015 at 7:58 am

      I’m not so sure having a Constitutional provision to fund pensions is such a great idea. Once written into the NJ State Constitution, there will be no way out of this pension mess. Just like other states that are crying that this is their constitutional entitlement to generous pensions and benefits. What if they are not substantially reduced? How will it be paid? What am I missing?


      • Posted by Tough Love on April 3, 2015 at 10:40 pm

        I agree. Having a Constitutional provision to fund pensions will ONLY work if the current pension structure is sufficiently reduced now, AND Taxpayers are protected from the politicians AGAIN increasing the pension & benefits in the future.

        Hard freezing the DB Plans (and replacing them with a cash balance Plan for the future service of all CURRENT workers) is a MINIMUM prerequisite to obtaining that protection.

        CLEARLY a 401K-style DC Plan would provide even GREATER protection for the taxpayers. While the Cash Balance Plan still allows “some” game-playing, there is almost zero opportunity for such in a 401K-style DC Plan.


        • Posted by Tough Love on April 3, 2015 at 10:45 pm

          Follow-up ….

          One way that the Taxpayers CAN gain the protection (form a Constitutional funding requirement), is to:

          (a) Make certain that the current Plasn are sufficiently reduced to an affordable level FIRST, and
          (b) write that Constitutional provision such that it ONLY applies to the benefits in (a) above …. i.e., the funding of any later pension increases does NOT fall under that Constitutional guarantee.


  3. Posted by Anonymous on April 2, 2015 at 10:56 am

    If you actually read the entire brief and those written by all of the other parties (including those written down below in the trial court), the State’s position has no legal merit. Essentially, the State’s argument is that NO CONTRACT can be binding upon it, unless the Legislature appropriates monies to pay. That’s right TL – the State of New Jersey cannot enter into legally binding contracts. This same issue was argued by the State in the Berg case (i.e. COLA case), at the trial level, before Judge Hurd.

    The problem is that the US Supreme Court, the NJ Supreme Court and NJ State statutes fully permit the State to enter into legally binding contracts. No modern state could afford to be immune from such binding agreements – no one would loan them money, no vendors would do business with them, no bonds or other debt instruments could be issued.

    NJ like other states has expressly waived its immunity from contract liability. If the State’s argument is accepted, watch NJ become a bankrupt state long before any other fiscal crisis it faces.


    • Posted by Tough Love on April 2, 2015 at 11:04 am

      I was just expressing my (non-attorney) opinion. Do you have legal degree ?

      How about we just let this work out through the Courts, and wherever within the legal system (and beyond) it may go if that does not resolve the issue.


    • Posted by Anonymous on April 2, 2015 at 3:14 pm

      Should that happen (bankruptcy), watch out Gov & politicians because State’s spending decision will be scrutinized and to some degree dictated by the courts. Private sector trickle down doomsday economic will be more severe than this country’s “Great Recession”!


    • Posted by Tough Love on April 3, 2015 at 10:47 pm

      Yada, yada, yada,

      Neither you nor I will have any impact on the final outcome …………


  4. Posted by skip3house on April 2, 2015 at 12:49 pm

    NJ citizens should not have to hock their bathrooms and kitchen, already part of a cruel regressive property tax system that we pay continually, to make good on politicians actions (since about 1995?) to bribe, and benefit themselves, the NJ employees, at the future expense (about now) of you, me and all we know, or will know.


  5. Posted by Anonymous on April 2, 2015 at 3:10 pm

    Under the pro CC assumption, let’s not stop with NJ and take this approach National – Federal pensions including members of our Armed Forces. All due respect to them and our first responders we all, hopefully, willingly chose our careers for various reasons so IF CC gets the GOP nod, which we all know he won’t, watch out because NJ PWs know what his word is worth.


  6. Posted by Anonymous on April 2, 2015 at 4:03 pm

    Political grandstanding aside the situation is not as dire as presented for the following reasons:

    1. GASB requires the unfunded liability be amortized over 30 years but hypothetically why not 40 years? Some homeowners are permitted to take out 40 year mortgage.

    2. Assuming 1. above, anticipated unfunded pension & benefit unfunded liability @6/30/15 is ~$90B SLM amortization of $2.25B@40yrs=$90B, eliminate SAVER ~$1.1B proposed FY16 plus the budgeted ARC payment and the short term budget crisis is resolved.

    3. TTFA funding, some will dislike this but, millionaires tax to leverage TTFA’s financing ability to create jobs, improve infrastructure, and eventually rev up the economy – even the Gov s/b able to swallow this bitter pill IF he has all of NJ’s best interest at hand.

    4. Medicare retirees health care costs not the issue as State’s coverage is secondary so implement a sliding scale premium share for so called “early” retirees only.

    5. Analyze the feasibility of reimplementing COLA by including “drop down” menu option selections whereby the retirees base allowance would be reduced based on the option selected and beneficary’s age, if applicable.

    6. Analyze potential savings of tweaking retirement age and service eligibility, compared to a DCP for new or non vested workers – this s/b the most heated of all the suggestions, except for a Rep Gov and Presidential hopeful to raise taxes, even though it’s on the wealthiest a minority for the benefit of NJ’s majority.

    7. Must have a dedicated revenue stream to keep this issue out of the political arena and ensure the State’s willingness and ability to

    8. New Jersey needs certainty for economic growth, legislators and the Governor need to amend P.L.2011 c.78 incorporating the above suggestions and requesting AG opinion prior to enactment to minimize legal challenges going forward.

    We can choose the road of deviseness, which keeps us stuck in our own worlds, or we can choose to come together and give a little to get a lot, a better NJ!


    • Posted by Anonymous on April 2, 2015 at 4:06 pm

      Sorry clicked post w/o finishing #7. So here goes, ….State’s willingness and ability to fund the ARC going forward.


  7. Posted by Anonymous on April 10, 2015 at 7:25 pm

    the public refuse to see that the public workers have been paying into their pensions twice a month since the pension fund began. since the whitman administration the state has barely paid into the pension which means the public workers have been funding their own pension fund. the amount of money wasted and mismanaged by this state should have every citizen up in arms! that money alone would fully fund the state”s part of the pension fund and fund many other programs that would benefit new jersey citizens. instead it has gone to friends, family and corporations of political donors to certain politicians war chests….


    • Posted by Tough Love on April 11, 2015 at 2:11 am

      Quoting …”the public refuse to see that the public workers have been paying into their pensions twice a month since the pension fund began.”

      Oh we see it, and yes you have………… but if you accumulate EACH of your own pension contributions to the date of your retirement, the accumulated sum (INCLUDING all of the investment earnings thereon) will rarely be sufficient to buy more than 10-20% of your grossly excessive promised pension.

      W also see that 80-90% balance is being UNJUSTLY foisted upon Taxpayers …….. but be assured, we haven’t so far, and have ZERO intention of paying for these absurdly generous pension promises granted by our Elected Officials BOUGHT with your Unions’ campaign contributions and election support.

      And all your BS is fooling nobody.


  8. Posted by Anonymous on May 24, 2015 at 9:01 am

    TL and devout followers; individuals presenting a right wing conservative perspective based on half-truths and lies.

    TL continual posts repetitive misinformation citing sources with extreme ideology. Yet sumarial dismisses other posts with conflicting opinions and sources.

    Specifically, purposely misstated the tax status of public pensions in the following post; When called to task tried to double talk their way out of it. Standard operating procedure for most of their commentary.

    Fair and equal for all is the mantra. Fair enough, but not when I suggest Federal workers and members of our beloved Armed Forces be part of the bigger conversation. The response, they’re different. But why, because they risk their lives like first responders at home. Their DBP are paid with Federal tax dollars as opposed to State or Local. Everyone knew the job risks when they accepted employment. But they also knew what their salary, pension, and benefits were supposed to be.

    To blame and demonize public workers for the current situation is unfair and untrue. Do politicians make “deals” with unions that don’t always have the taxpayers best interest? I think everyone knows the answer to that is yes. But politicians are always making “deals” it’s what they do. Just ask the various segment market corporations; defense spending (lucrative contracts), farming (subsidies) and the list goes on and on.

    Your bully tactics and demeaning attitude only motivate me more to push back your parties ridiculous vision for NJ and America. Yes I’m sure John knows all of our IP address, so you and your business name can be exposed as well.

    The purpose of continually posting this comment is to allow the counterpoint perspective to be heard. I will no longer personally engage your comments tit for tat.


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