TRENTON, N.J.—Budget negotiations are rarely easy, but tensions seem even higher this year given the two principal dealmakers — Republican Gov. Chris Christie and Democratic Senate President Stephen Sweeney — are eyeing higher offices and have a labor lawsuit over pension payments hanging over their heads.
Arguments in the lawsuit are set for June 25, just five days before the deadline for adopting a new state budget. That puts the end of the fiscal year in limbo and pushes adoption of the new budget to the wire.
“Before the pension issue, this wasn’t going to be a tough political budget,” said Monmouth University political pollster Patrick Murray, who noted that a late-year revenue shortfall caused a sudden shift in both the fiscal and political landscape.
At issue is $2.25 billion in pension payments promised over the next two fiscal years that Christie plans to skip to fill gaping holes in both budgets. Christie says he will make statutorily required payments of $696 million in June and $681 million next year to cover part of the government’s costs for active employees. But, he says, he won’t chip away at the unfunded liability in the pension system that accrued before he was governor.
Union leaders say that’s not good enough.
Hundreds marched in front of the Statehouse on Thursday to remind Christie and Sweeney they expect promises made during a bitter pension reform battle three years ago to be kept. That fight resulted in substantially higher pension and health care costs for workers, a suspension of cost-of-living benefit increases for retirees and legislation that the state would phase in its share of the cost to return the once-flush system to fiscal health.
Christie, a potential 2016 presidential candidate, now says the changes weren’t adequate. He has repeatedly vetoed tax increases and says there’s no Plan B for balancing the budget, as required by the state constitution. Any talk of spending cuts is likely to resonate with conservative voters in early primary states for Christie while hurting Sweeney’s standing among core Democratic groups.
That could leave only unpopular options for Sweeney, a frequent Democratic ally of Christie’s who would like to run for governor in 2017.
“They’re both looking to advance their political futures,” Murray said. “This budget is tied up in that.”
The pension lawsuit addresses the payment Christie reduced by executive order in the budget that’s about to expire. The governor said he would seek signoff from the Legislature in the 2015 budget to reduce the next payment.
If Christie is forced by the court to make the pension payment, the Legislature won’t have to act.
Otherwise, Sweeney could be left with these choices, and the Assembly would have to decide whether to go along:
- Allow Christie to pass his budget, further angering the unions whose backing Sweeney would need in a contested party primary for governor.
- Send Christie a bigger budget that includes the pension payment, which he can then line-item veto in areas that hurt Democrats the most.
- Force Christie to stick with the original pension deal by agreeing to spending cuts, then having to explain to core constituencies how much less money they’ll be getting.
“Sweeney faces the toughest choices,” Murray said. “He’s going to have to hurt somebody.”