Amending NJ Constitution to Require Payments to Pension Plan (ACR109, SCR2)

Overview

The Senate President and Assembly Speaker introduced identical resolutions  proposing a constitutional amendment to require quarterly pension payments by the State, thus removing public workers pension payments from the annual budget appropriations process. They claim that the quarterly payments called for in the resolution, which are calculated on an assumed three percent growth in tax revenue, would cost the state about $3 billion in 2018 and another $600 million a year until the state is contributing the full amount recommended by actuaries in 2022. 

The Governor and Republican lawmakers are opposed to the resolution and called it an inappropriate use of the state’s constitution. They also state that the amendment would require severe spending cuts or tax hikes if the state economy does not hit the three percent growth target. 

Particularly troubling to opponents is that the constitutional amendment process in NJ allows the resolutions to go directly to the public as ballot questions if the Legislature passes the resolutions in two consecutive legislative sessions. (It was already approved in the previous legislative session.) The resolutions do not need approval from the Governor. That means that despite the Governor’s opposition, the public could be voting on the proposals as soon as November 2016. 

In addition to stiff resistance from Republican lawmakers, business groups in NJ, including the NJCPA, are also opposed to the resolution. They too argue that amending the constitution is an inappropriate method for dealing with what should be an annual legislative appropriation process. They believe that the state needs the flexibility to deal with economic emergencies and that if the state economy doesn’t perform at the three percent growth rate called for in the resolution, funding for the pension payments will have to come from tax hikes and cuts to critical areas of state spending such as education and municipal assistance. 

Opponents of the measure call for renegotiating the state’s pension and health care obligations with the unions along the lines of the recommendations contained in the February 2015 report issued by the bipartisan NJ Pension and Health Benefit Study Commission.