<span id="midArticle_start"/><span id="midArticle_0"/> New Jersey's highest court on Tuesdayruled that Gov. Chris Christie can cut $1.6 billion from statepension funding, removing a hurdle for the Republicanpresidential hopeful's national ambitions and giving sometemporary financial relief to the state.
<span id="midArticle_1"/>The stakes were high for Christie, who has trailed in pollsbehind rivals such as Wisconsin Governor Scott Walker, a fellowRepublican. Christie came under fire for his handling of thestate's sluggish recovery as well as a scandal around the 2013George Washington Bridge closure, which saw a former ally pleadguilty to federal charges.
<span id="midArticle_2"/>"This will be a much-celebrated victory after a year and ahalf of bad headlines," said Tim Albrecht, a Des Moines, Iowa,Republican strategist. "The question is, will a lone victory beenough or will Chris Christie be able to parlay this intosomething bigger."
<span id="midArticle_3"/>Christie, who has not announced his candidacy for theRepublican nomination to run for president in November 2016 buthas started a political action committee, said in a statementthe decision was an "important victory" for taxpayers.
<span id="midArticle_4"/>Bill Kilberg, a labor lawyer in Washington and a Christiesupporter said the decision would give donors "renewedconfidence that he's the serious candidate we all knew that hewas."
<span id="midArticle_5"/> <span class="first-article-divide"/>The state Supreme Court, in reversing a lower court ruling,said while it lamented the "staggering" loss of public trustresulting from broken promises, the pension payment was not acontractual obligation entitled to constitutional protection.
<span id="midArticle_6"/>Christie cut a state contribution to the public pensionsystem last year because of a revenue shortfall. The state'spension system has about $83 billion of unfunded liabilities andwas funded at only about 44 percent in fiscal 2014.
<span id="midArticle_7"/>Public-sector unions sued the administration, and inFebruary Superior Court Judge Mary Jacobson sided with them,finding that a 2011 pension reform law, signed by Christie,created a contractual right that the state make itscontribution. The state appealed to New Jersey's highest court,which heard arguments in May.
<span id="midArticle_8"/> <span class="second-article-divide"/>"That the State must get its financial house in order isplain," wrote Justice Jaynee LaVecchia in the opinion. "The needis compelling in respect of the State's ability to honor itscompensation commitment to retired employees. But this Courtcannot resolve that need in place of the political branches."
<span id="midArticle_9"/>New Jersey has seen its credit rating downgraded nine timessince Christie took office in 2010. Standard & Poor's said thestate could be vulnerable to further downgrade if it does notsolve its pension problem. Moody's said long term, the ruling"reinforces the state's ongoing reliance on onetime budgetsolutions."
<span id="midArticle_10"/>Philip Fischer, municipal research strategist at Bank ofAmerica Merrill Lynch, said the court essentially ruled that thecontribution was so large it violated the state constitution'sdebt limitation clause.
<span id="midArticle_11"/> <span class="third-article-divide"/>"It takes the heat off the pension issue at least for alittle while and allows the legislature and the unions to ...figure out a way to fund pensions consistent with the debtlimitation in the constitution," he said.
<span id="midArticle_12"/>All parties are now expected to negotiate a "comprehensivesolution," said State Senate Republican Leader Tom Kean.
<span id="midArticle_13"/>The Supreme Court voted to reverse the lower court ruling byfive votes to two. Justice Barry Albin, one of the dissenters,said the decision "unfairly requires public workers to upholdtheir end of the law's bargain."
<span id="midArticle_14"/>Hetty Rosenstein, New Jersey director of the CommunicationWorkers of America, the largest union representing stateworkers, said they would have to try to change the constitution.
<span id="midArticle_15"/>"It is devastating to all public employees, retirees,taxpayers, and families," said Wendell Steinhauer, president ofthe New Jersey Education Association, a teachers' union.
<span id="midArticle_16"/>
<span id="midArticle_1"/>The stakes were high for Christie, who has trailed in pollsbehind rivals such as Wisconsin Governor Scott Walker, a fellowRepublican. Christie came under fire for his handling of thestate's sluggish recovery as well as a scandal around the 2013George Washington Bridge closure, which saw a former ally pleadguilty to federal charges.
<span id="midArticle_2"/>"This will be a much-celebrated victory after a year and ahalf of bad headlines," said Tim Albrecht, a Des Moines, Iowa,Republican strategist. "The question is, will a lone victory beenough or will Chris Christie be able to parlay this intosomething bigger."
<span id="midArticle_3"/>Christie, who has not announced his candidacy for theRepublican nomination to run for president in November 2016 buthas started a political action committee, said in a statementthe decision was an "important victory" for taxpayers.
<span id="midArticle_4"/>Bill Kilberg, a labor lawyer in Washington and a Christiesupporter said the decision would give donors "renewedconfidence that he's the serious candidate we all knew that hewas."
<span id="midArticle_5"/> <span class="first-article-divide"/>The state Supreme Court, in reversing a lower court ruling,said while it lamented the "staggering" loss of public trustresulting from broken promises, the pension payment was not acontractual obligation entitled to constitutional protection.
<span id="midArticle_6"/>Christie cut a state contribution to the public pensionsystem last year because of a revenue shortfall. The state'spension system has about $83 billion of unfunded liabilities andwas funded at only about 44 percent in fiscal 2014.
<span id="midArticle_7"/>Public-sector unions sued the administration, and inFebruary Superior Court Judge Mary Jacobson sided with them,finding that a 2011 pension reform law, signed by Christie,created a contractual right that the state make itscontribution. The state appealed to New Jersey's highest court,which heard arguments in May.
<span id="midArticle_8"/> <span class="second-article-divide"/>"That the State must get its financial house in order isplain," wrote Justice Jaynee LaVecchia in the opinion. "The needis compelling in respect of the State's ability to honor itscompensation commitment to retired employees. But this Courtcannot resolve that need in place of the political branches."
<span id="midArticle_9"/>New Jersey has seen its credit rating downgraded nine timessince Christie took office in 2010. Standard & Poor's said thestate could be vulnerable to further downgrade if it does notsolve its pension problem. Moody's said long term, the ruling"reinforces the state's ongoing reliance on onetime budgetsolutions."
<span id="midArticle_10"/>Philip Fischer, municipal research strategist at Bank ofAmerica Merrill Lynch, said the court essentially ruled that thecontribution was so large it violated the state constitution'sdebt limitation clause.
<span id="midArticle_11"/> <span class="third-article-divide"/>"It takes the heat off the pension issue at least for alittle while and allows the legislature and the unions to ...figure out a way to fund pensions consistent with the debtlimitation in the constitution," he said.
<span id="midArticle_12"/>All parties are now expected to negotiate a "comprehensivesolution," said State Senate Republican Leader Tom Kean.
<span id="midArticle_13"/>The Supreme Court voted to reverse the lower court ruling byfive votes to two. Justice Barry Albin, one of the dissenters,said the decision "unfairly requires public workers to upholdtheir end of the law's bargain."
<span id="midArticle_14"/>Hetty Rosenstein, New Jersey director of the CommunicationWorkers of America, the largest union representing stateworkers, said they would have to try to change the constitution.
<span id="midArticle_15"/>"It is devastating to all public employees, retirees,taxpayers, and families," said Wendell Steinhauer, president ofthe New Jersey Education Association, a teachers' union.
<span id="midArticle_16"/>
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