NJPP3 – US Trust New Jersey?

There was a lot of discussion last week on United States Trust Co. v. New Jersey 431 U.S. 1 (1977) and not only in New Jersey:

Last week the Illinois State Supreme Court ruled unconstitutional a 2013 law that eliminated automatic pay increases and reduced future benefits and in a PBS story the link to New Jersey was made:
.

.
The Illinois decision cited US Trust:

Moreover, the United States Supreme Court has held that particular scrutiny of legislative action is warranted when, as here, a state seeks to impair a contract to which it is itself a party and its interest in avoiding the contract or changing its terms is financial. Committing to a contract does implicate the state’s sovereign power, but:

“[w]hatever the propriety of a State’s binding itself to a future course of conduct in other contexts, the power to enter into effective financial contracts cannot be questioned. Any financial obligation could be regarded in theory as a relinquishment of the State’s spending power, since money spent to repay debts is not available for other purposes. Similarly, the taxing power may have to be exercised if debts are to be repaid. Notwithstanding these effects, the Court has regularly held that the States are bound by their debt contracts.” United States Trust Co. of New York v. New Jersey, 431 U.S. 1, 24 (1977).

In addition, because the state’s self-interest is at stake whenever it seeks to modify its own financial obligations, the United States Supreme Court has made clear that it is not appropriate to give the state’s legislature the same deference it would otherwise be afforded with regard to whether the impairment is reasonable and necessary to serve an important public purpose. “A governmental entity can always find a use for extra money,” the Court observed, “especially when taxes do not have to be raised. If a State could reduce its financial obligations whenever it wanted to spend the money for what it regarded as an important public purpose, the Contract Clause would provide no protection at all.”

What seemed clear in Illinois was being muddied in New Jersey:
.

.

PS: We were supposed to be having oral arguments at this hour on the fate of the New Jersey pension payment for the 7/1/15-6/30/16 year but that was postponed until the NJ Supreme Court comes out with something on the 7/1/14-6/30/15 payment they are mulling over.

.

.

PS2: For those of you eagerly awaiting Chris Christie’s economic plan for the country today  is your day.