NJ Spotlight published the following article on 5/12/2014. To read the full article, click here.

Analysis: $74 Billion In Future Pension Payments At Stake in Lawsuit

Mark J. Magyar | May 12, 2014

While Gov. Chris Christie considers pushing off June’s pension payment to close an $807 million budget gap, a state appeals court is weighing a lawsuit challenging the elimination of cost-of-living increases for retirees that would not only add $74 billion to future pension costs, but could set a precedent that would require the state to make all future pension payments on time.

The Attorney General’s Office and the state’s public employee unions and retirees are awaiting a decision by an Appellate Division panel in the case of Berg, et al, v. Christie that is based on a 1997 law signed by Republican Gov. Christine Todd Whitman that made pensions a nonforfeitable, contractual right for public employees.

The key issue in the case is whether governors and legislatures can pass laws establishing contractual obligations requiring their successors to spend money out of future budgets, or whether the debt limitation and appropriations clauses of the New Jersey Constitution establish the primacy of the annual budget bill over all other state laws and make such guarantees essentially worthless.

In Berg v. Christie, 26 former deputy and assistant attorney-generals are challenging a provision of the 2011 pension and health benefits overhaul that eliminated cost-of-living adjustments (COLAs) for them and for 300,000 other retirees.

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