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Employee rights or annual budget: Debate over New Jersey pensions

New Jersey Gov. Chris Christie is reportedly considering moving June's state-funded pension payments back due to a budget shortfall. At the same time, an appeals court is considering a case that could impact the payment of pensions going forward.

The case centers on a law signed by former Gov. Christine Todd Whitman in 1997. That law defined pensions as contractual rights for public employees. A positive court decision for employees would confirm that pensions are nonforfeitable and should account for increased cost of living.

As you can imagine, retirees and unions of the state's public sector are cautiously awaiting the results of the case.

The issue at hand is whether laws passed by previous legislators can demand spending out of future budgets. Naysayers hold that the appropriations and debt limitations in the state's constitution trump other state laws in matters of budgeting.

The lawsuit was brought by 26 former assistant and deputy attorneys general who have challenged a 2011 overhaul of health and pension benefits for state workers and retirees. The overhaul removed cost-of-living increases for approximately 300,000 individuals.

In addition, cutting the retirement benefits could violate federal and state protections, though the lower court judge upheld the Christie administration's efforts to reduce state spending by eliminating the cost-of-living adjustments. Now an appellate court will decide whether the state must add cost-of-living increases to pension payments.

Currently at stake is up to $74 billion in pension payments over 30 years, with additional tens of billions in payments to be made in the future.

From pensions to weekly paychecks, workers have a right to compensation. Current and retired public employees in New Jersey may want to follow up on this case as it progresses.

Source: NJ Spotlight, "Analysis: $74 Billion In Future Pension Payments At Stake in Lawsuit," Mark J. Magyar, May 12, 2014

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