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5-22-14 Big Issues in Trenton - State Budget FY's '14 and '15 Pension Cuts...Sen. Pres. Sweeney and Governor-Compromise Struck on Supreme Court Nominations
NJ Spotlight - Christie's Quid Pro Quo: Will It Change Direction of Top Court?

The Record- Stile: In compromise over N.J. high court, Senate leader Stephen Sweeney was in driver’s seat

Star Ledger - Christie defends decision to cut pension payments; Democrats, unions and Wall Street say it will hurt

Philadelphia Inquirer - Assembly Democrats question Christie's budget solution

NJ Spotlight - Christie's Quid Pro Quo: Will It Change Direction of Top Court?

Colleen O'Dea | May 22, 2014

 

It's unclear whether the renomination of state Supreme Court Chief Justice Stuart Rabner will change the direction of the New Jersey's highest court.

But Gov. Chris Christie's action yesterday, taken as part of a deal to add a Republican to the bench, resolves a question that had concerned the state's legal community. Some, however, say it does not negate the need for a constitutional amendment essentially giving judges lifetime tenure to ensure the continued independence of the state's judiciary.

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Christie Press Conference on Supreme Court Nominations

The governor, appearing at a Statehouse news conference with Rabner, Superior Court Judge Lee Solomon, the GOP nominee, and Senate President Stephen Sweeney (D-Gloucester) said he would not oppose such an amendment. Until then, however, he said the state constitution gives him full discretion over judicial renominations, a power he has exercised and will continue to exercise.

"I embrace the constitution, not some revisionist history of the constitution some people want to put forward," said Christie, asserting that the constitution gives the governor the power to renominate judges without any restrictions and without even having to give a reason for his decision to nominate or not. "I reserve the right to exercise my authority."

There was speculation that Christie might not renominate Rabner when his initial seven-year term expired at the end of June for a number of reasons: a continuing battle with Democrats over the makeup of the court, Christie's vow to remake the court more to his political leanings, and his vocal disagreement with some of the court's recent decisions.

Christie is the first governor since the modern constitution to not renominate a sitting Supreme Court justice, and he passed on two justices. This prompted the New Jersey State Bar Association to create a Task Force on Judicial Independence, which is holding hearings and expects to make recommendations for reform soon.

Christie dismissed that effort, and the bar association, saying there is no threat to judicial independence in New Jersey. "This judicial independence thing is a crock; it's a complete crock and the bar association knows it," he said. "I haven't cared what the bar association has said since I became a lawyer in 1987 . . . The sainted New Jersey State Bar Association? Really?"

A spokeswoman for the association did not comment on the governor's characterization of the group, but did issue a statement praising the renomination of Rabner.

"This is a resounding victory for judicial independence," said Paris P. Eliades, NJSBA president. "We laud today's renomination of the chief justice and the nomination of another justice to the court."

Several former judges and lawyers have criticized Christie for his vocal complaints about a number of judicial rulings as creating a climate that has made many untenured judges fearful for their jobs. But Christie said it is both his right and his duty to talk about court rulings.

ˇ§I have expressed very clearly my disagreements with this court and I have expressed very clearly at times disagreements that Iˇ¦ve had with individual opinions of the court and Iˇ¦ll continue to do so,ˇ¨ he said, ˇ§because I believe I have a first amendment right to do it and I think I have an obligation to do it as governor of New Jersey when I believe that my opinions need to be expressed to explain what public policy is all about and the impact the court has on public policy.ˇ¨

Breaking the Stalemate

Sweeney, who cut the deal with the governor to allow Rabner to stay on the court with the nomination of Solomon, said the agreement was important in breaking a stalemate that has had the court operating at less than its full complement of seven justices and in maintaining its impartiality.

"Today's announcement helps avert a constitutional crisis that had been brewing for some time," he said. "Most importantly, however, it allows us to maintain an independent court; one whose decisions and focus isn't driven by the ideology of any one man or woman, but continues to represent the diverse beliefs of the state as a whole."

Sweeney and Christie have battled over the governor's nominations following Christie's decision in 2010 not to renominate Justice John Wallace for tenure. The court has always had a balance between the parties of 4-3 Democratic or Republican, and Sweeney and other Democrats in the Senate said they would not support an effort by the governor to skew that balance in his favor.

Arguably, if the Senate confirms Rabner and Solomon, the court could shift to the right. Solomon and the two other justices Christie appointed -- Anne Patterson and Faustino Fernandez-Vina -- are Republicans. Justice Jaynee LaVecchia, technically an independent, served in the administration of Republican Gov. Christie Whitman. Rabner and Barry Albin are Democrats. The seventh seat will be filled by Appellate Judge Mary Catherine Cuff, a Democrat who has been called up due to the vacancy. Christie said he has no immediate plans to try to fill that vacancy.

Sweeney was reportedly more concerned about ensuring that Rabner remain as chief justice than in trying to maintain a 4-3 split in favor of Democrats. He said in a statement that the compromise "will help create a better New Jersey moving forward, not because it means the protection of progressive causes, but because it means preserving the faith and belief that our courts act independent of political pressure."

Some court observers said it's not clear that the court, known for opinions that have protected the rights of minorities and the underprivileged, will rule much differently than it has in the past. LaVecchia is considered a centrist who has ruled against Christie on several issues, including those involving affordable housing.

"I think the partisan labels attached to the justices of the New Jersey Supreme Court are a deeply flawed way to view where they are going to come out on the issues of our day," said attorney Lawrence Lustberg of the Newark-based law firm Gibson PC. "These nominees are not likely to change the direction of the court to any substantial degree."

Lustberg said Rabner has done a "superb" job and his renomination "says a lot about the continued independence of the judiciary." He called Solomon "a man of integrity" and said he thinks the former state Assemblyman has what it takes to be "a fine jurist."

Sen. Majority Leader Loretta Weinberg (D-Bergen) said giving Rabner tenure will maintain balance on the court.

ˇ§The renomination of Chief Justice Rabner is an important victory that will help protect the independence and integrity of the stateˇ¦s highest court and preserve its partisan balance,ˇ¨ she said. ˇ§We fought for this agreement because we believed we had to prevent the governor from imposing his ideological and political will on a Court long respected for its brave, legally sound decisions.ˇ¨

Christie, who has criticized the court as being too liberal and activist, said he has made his mark on it.

ˇ§You will see three new justices on the court nominated by me and confirmed by the Senate, I think thatˇ¦s a significant change,ˇ¨ he said.

Retired Supreme Court Justice Gary Stein applauded the compromise to resolve what he called a "crisis" but said it does not negate what he sees as a need for the state to amend the constitution to give sitting justices automatic tenure following an initial seven-year term unless they are deemed unfit for service.

"There is a disconnect between what the constitution said and what the framers meant," said Stein, who first proposed the amendment that received the support of the NJSBA, 20 of the 21 county bar associations, a number of specialty bars and law school alumni groups. "I think there is a significant need for an amendment that makes crystal clear the intent of the framers that justices and judges should be renominated unless they demonstrate unfitness."

He noted that Christie made clear at his press conference that he alone has the power over nominations.

"The governor can choose to not renominate a judge for any reason at all; that's not healthy," Stein said. "The Legislature ought to take a hard look at this and recognize there is a problem . . . This is a great time to do it, now that it's right on the table in front of everyone."

Worried About the Future

Like Stein, Eric Lesh, fair courts project manager for Lambda Legal, which supports equal rights for gays and lesbians, was pleased with Rabnerˇ¦s renomination but worried about the future for other judges in New Jersey.

ˇ¨While it is good Gov. Christie has not taken the unprecedented step to reject the renomination of the Chief Justice, we remain concerned about the politicization of the judicial confirmation and retention process,ˇ¨ said Lesh. ˇ§Whether it's the freedom to marry, affordable housing, or equality in education, the people of New Jersey need to trust that the courts will safeguard their constitutional rights. We do not want judges looking over their shoulders to make sure they aren't deciding a case in a way that is at odds with a governor's political agenda."

Lifetime tenure would erase that fear and Stein noted Christie said he would not oppose giving state judges lifetime tenure.

"If the people want lifetime tenure like the federal system, I am not opposed to that," Christie said. "I think that's worked in the main in the federal model and I think it could work here."

But that would likely mean a longer confirmation process with greater scrutiny, since it would be the only chance legislators would get to decide whether to allow someone a lifetime of service on the bench.

In announcing his renomination of Rabner, Christie said he considers Rabner, with whom he worked at the U.S. Attorney's Office, a friend and said that while he has disagreed with some of his rulings, "my respect for him has never been diminished."

Yet he drew Christieˇ¦s ire last July when he wrote the courtˇ¦s opinion overturning the governorˇ¦s plan to abolish the state Council on Affordable Housing. At the time, Christie said, ˇ§The Chief Justice's activist opinion arrogantly bolsters another of the failures he and his colleagues have foisted on New Jersey taxpayers. This only steels my determination to continue to fight to bring common sense back to New Jersey's judiciary.ˇ¨

Rabner also led the unanimous court that refused to stop a lower court ruling that ordered same-sex marriages go forward in the state. Christie had vetoed a bill that would have allowed gay marriage.

Rabner said he was grateful for the opportunity to continue to serve the public by returning to the court "I care so deeply about." He is a former state attorney general and served as chief counsel to Gov. Jon Corzine before Corzine nominated him to the court.

Solomon is the current Assignment Judge in Camden County. He has a close relationship with the governor, having been appointed by him first to head the state Board of Public Utilities -- the governor has since given that job to Solomonˇ¦s wife -- and then to the Superior Court, where he had been a judge prior to Christieˇ¦s naming him to head the BPU. He has also served as a deputy U.S. Attorney and Camden County prosecutor, as well as five years in the Assembly. After Christie announced his nomination, Solomon said he would ˇ§work very, very hardˇ¨ as a justice and looked forward to the opportunity to serve.

ˇ§Judge Solomon will bring to the Court unquestioned qualifications, a depth of experience in public service, and knowledge in policy matters touching on issues across the state,ˇ¨ Christie said in announcing his nomination. ˇ¨I have known Lee for many years as a person of integrity who is universally well respected for his independence and temperament throughout his long history of serving the people of our state.ˇ¨

 

The Record- Stile: In compromise over N.J. high court, Senate leader Stephen Sweeney was in driverˇ¦s seat

May 21, 2014, 11:50 PM    Last updated: Wednesday, May 21, 2014, 11:54 PM

By Charles Stile

Record Columnist

The Record

Governor Christie cast his decision Wednesday to renominate Chief Justice Stuart Rabner as a triumph of bipartisanship, a deal brokered with Democratic Senate President Stephen Sweeney on ˇ§common ground.ˇ¨

But the truth is, Christie was forced to bargain on Sweeneyˇ¦s turf this time. He didnˇ¦t cut a deal so much as capitulate to reality.

ˇ§I tried to get everything I wanted,ˇ¨ Christie conceded at a State House news conference. ˇ§I couldnˇ¦t.ˇ¨

In exchange for Rabnerˇ¦s renomination, Sweeney agreed to support Christieˇ¦s latest Republican nominee, Superior Court Judge Lee Solomon of Camden County, a popular former legislator who served in the governorˇ¦s Cabinet as president of the Board of Public Utilities. Solomon will fill one of two seats that have remained vacant during Christieˇ¦s four-year feud with Sweeney over the balance and direction of the court.

Yet this so-called compromise actually represents another retreat for Christie in what is rapidly becoming a season of retreat for the second-term governor, who is struggling to regain traction under the cloud of scandal. Just 24 hours earlier, Christie announced a dramatic reduction in a promised payment to the public-employee pension system ˇV a move that undermines his 2011 pension reforms, a signature achievement of his first term that he has trumpeted all around the country as proof of his fiscally conservative pedigree.

And Wednesdayˇ¦s deal also means that he will come up short in his pledge to stock the seven-member court with conservative justices and thus purge the New Jersey judiciary of its ˇ§liberalˇ¨ and ˇ§activistˇ¨ tradition. The one-for-one deal is about as far as Christie can take his crusade.

It means he will have to live with a court of three Democrats, three Republicans and one independent, and with Rabner still at the helm. If he didnˇ¦t agree ˇV and carried out his threat to dump the chief justice ˇV Christie faced the likelihood of a deepening stalemate with Sweeney, who already had used his power to block two Christie nominees and delay another one. Who knows how Sweeney might have retaliated elsewhere.

Extending the stalemate also would have had serious practical consequences for Christie. It would have created three vacant seats that would have been temporarily filled by senior appellate court judges ˇV all of them Democrats ˇX a far cry from a promised conservative overhaul.

Thatˇ¦s not the kind of lineup Christie was eager to face, with looming court battles over school funding and, quite possibly, challenges to his cut in pension funding. Especially if he remains committed to promoting himself as the answer to deep-pocketed Republicans desperate to take back the White House.

ˇ§Itˇ¦s a reality that he couldnˇ¦t win,ˇ¨ Sweeney said later over the Supreme Court tug of war. ˇ§At the end of the day, we reached a compromise.ˇ¨

Over the past year, Christie had tacked a bullˇ¦s eye on the back of Rabnerˇ¦s black robe. He was clearly unhappy with Rabnerˇ¦s rulings on affordable housing and gay marriage. His ˇ§old friendˇ¨ Rabner became the poster boy for the liberal activism Christie so despised.

At a town hall meeting in March, Christie signaled that he might not extend Rabnerˇ¦s career when his current term expires. It was a threat Trenton took seriously ˇV the governor had already taken the unprecedented step of bouncing two sitting justices. And removing Rabner would have boosted Christieˇ¦s stock among conservative voters in the 2016 Republican primaries for president.

But ideology and ambition proved to be of little use in his talks with Sweeney, who was clearly in the driverˇ¦s seat this time.

Sweeney was willing to accept one Republican nominee, but not two. And it couldnˇ¦t be a conservative ideologue, people close to Sweeney said Wednesday. It would have to be a candidate cut more from the moderate Jersey Republican mold.

Solomon, who had warm relations with South Jersey Democrats, fit the bill.

ˇ§We couldnˇ¦t have come up with a better deal here,ˇ¨ Sweeney said. ˇ§For the people of the state of New Jersey, to put this controversy behind them now, to eliminate the uncertainty thatˇ¦s going on with their justice system, is an enormous win.ˇ¨

But perhaps even more important to the Democratic Party, which controls the state Legislature, the agreement also ends the uncertainty over who will be the chief justice in 2021, when a bipartisan commission redraws legislative districts for the next decade. The chief justice gets to choose a tiebreaking member if the commission deadlocks on a new map. And Democrats, who won the last round of redistricting in 2011, wanted to insure that Rabner, a Democrat himself, would be the person to make that appointment, several sources said.

To some observers, Christieˇ¦s decision to keep Rabner reflects just how much his power has been weakened by the George Washington Bridge lane-closing scandal that has spawned multiple investigations, including a criminal probe by the U.S. Attorneyˇ¦s Office in New Jersey. Before the furor erupted, Christie was riding high from his 22-point reelection victory, touted as the early front-runner for the Republican nomination.

Now, several recent polls have put him in the second tier of GOP contenders.

Before he can win fans in Iowa, he may be thinking, heˇ¦s got to rebuild his reputation in Trenton.

The news didnˇ¦t go over well with at least one prominent conservative advocacy group.

ˇ§Itˇ¦s sad to see this is what it has come to,ˇ¨ said Daryn Iwicki, president of the Americans for Prosperity. ˇ§When Governor Christie was elected, taxpayers had hope that one of the most radical supreme courts in the land would be remade. Instead, if todayˇ¦s reports are true, the governor has all but waved the white flag of surrender to Steve Sweeney and obstructionists in the majority party.ˇ¨

Yet Christie seemed unfazed, at least in public. He has fashioned himself as a broker of bipartisan compromise, and heˇ¦s sticking with that message, even if some of his other talking points have taken a hit.

ˇ§People want bipartisan cooperation. And then of course when they get bipartisan cooperation, they complain about that, too,ˇ¨ he said at his news conference. ˇ§The fact of the matter is, if you want both parties to work together, then you have to give us the time and the room to work together.ˇ¨

Christie and Sweeney did work together. Itˇ¦s just that he had little room to maneuver.

Thatˇ¦s usually the case when you are in retreat.

 

Star Ledger - Christie defends decision to cut pension payments; Democrats, unions and Wall Street say it will hurt

Salvador Rizzo   Email the author | Follow on Twitter
on May 22, 2014 at 6:00 AM, updated May 22, 2014 at 8:12 AM

TRENTON ˇX Gov. Chris Christie defended his plan to grab $2.43 billion meant for New Jerseyˇ¦s strapped pension system over two years on Wednesday, responding to a stream of criticism from public-worker unions, Democratic lawmakers and Wall Street analysts warning about the damage it would do to the stateˇ¦s financial health.

In a fast-paced day of budget developments, Christie and state Treasurer Andrew Sidamon-Eristoff said taking the money was a regrettable, last-ditch option to cover a staggering, $2.7 billion budget shortfall over the current and incoming fiscal years.

But they said raising taxes or making unexpected cuts to school funding, hospitals or health-care for seniors would be irresponsible.

The administration also announced that property tax rebates would be delayed until next year.

Two of the stateˇ¦s largest public-worker unions, the New Jersey Education Association and the Communications Workers of America, have announced they will challenge Christieˇ¦s pension maneuver in state court. Under a major pension overhaul Christie signed in 2011, unionized state workers began to pay more for their benefits, but won the right to sue over any delays or reductions in the stateˇ¦s contributions to the pension fund.

"They want to sue? The courts are available to them. They want to protest? The First Amdendmentˇ¦s available to them. Go ahead and have at it," Christie said at a news conference in the Statehouse. "I will tell you that I took a lot of time examining this issue, and given the circumstances that weˇ¦ve been confronted with, I believe this is not only the best but the only decision weˇ¦re left with to deal with the magnitude of the problem that we have."

Sidamon-Eristoff told the Assembly Budget Committee that homestead property tax rebates would not arrive in New Jersey residentsˇ¦ mailboxes this summer as planned. Instead, the $395 million in rebates will go out next spring. Christie said he was still committed to sending out the property tax relief checks, even with the delays.

"When youˇ¦re running out of money, youˇ¦ve got to manage your cash carefully," the governor said. "If I wanted to eliminate it, I would have eliminated it. Iˇ¦ve done that before."ˇ¦

The treasurer also told lawmakers the $34.4 billion plan Christie had drafted for the fiscal year beginning July 1 would be reduced to $32.7 billion. Instead of forecasting 5.8 percent revenue growth for that year, Christie is now predicting 3.8 percent.

At one point, the treasurer said he should be "held to account" for the budget shortfalls bedeviling the state. "I feel that all of you have been far too polite to me today," he told the committee at one point.

But he also gave a strong defense of Christieˇ¦s plan, arguing that the governor is not abandoning his commitment to long-term pension reform despite walking back the higher contributions he had promised in 2011. And he said raising taxes on top earners. as Democrats are urging, would only increase the difficulty of predicting revenue every year, since New Jersey already relies on its wealthiest 1 percent of residents for the bulk of its income tax revenue.

"We donˇ¦t have a revenue problem in this state; we are a high-tax, high-spending state," he said. "Whatˇ¦s really driving this is the fact that our pension and our health benefits obligations are too large and too generous for us to sustain."

Christie added: "There are not enough taxes to raise to pay for this system. There just arenˇ¦t. For those who believe in tax increases on this, detail for me how youˇ¦re going to close a $2.7 billion problem with tax increases. And weˇ¦ll see how the public reacts to that proposal." He said he would take another stab at major pension reform before he leaves office, but has not presented plans yet.

Democrats at the budget hearing repeatedly pointed to speeches and interviews Christie gave after he signed the pension overhaul in 2011, celebrating it as a major bipartisan achievement that would return New Jerseyˇ¦s pension fund to sound fiscal footing over approximately 30 years. Without the $2.43 billion going into the pension fund, however, any progress on the pension front would quickly evaporate, they said.

Assemblyman Gary Schaer (D-Passaic), the chairman of the budget panel, and Assemblyman John Burzichelli (D-Gloucester), the vice chairman, noted that Christie knew well the pension woes New Jersey was facing when he first ran for office and said the governor was too quick to give up on his pension overhaul. The pain from his mistakes will be felt by public workers, they charged.

"We made a commitment," Schaer said of the pension payments. "Itˇ¦s the word of the state."

"Chris Christie represented, in a gazillion quotes, that this system was fixed," said Assemblyman Joseph Cryan (D-Union).

Assemblyman Declan Oˇ¦Scanlon (R-Monmouth), the lead Republican lawmaker on budget matters, said Christie was ready and willing to do more work on the pension system in his first term but could only go as far as Democrats let him. "He was stopped by the very people now condemning him for not having gone further," he said.

A payment to the pension fund scheduled to be made before June 30 will be reduced ˇX from $1.6 billion to $696 million ˇX through an executive order Christie signed Tuesday. The governor also intends to shrink a $2.25 billion payment that was set for the next fiscal year to $681 million, but said he will seek the Legislatureˇ¦s approval for that.

The new, lower payments he has proposed will cover the cost of employees currently active in the pension system, the governor said, but will not chip away at the total unfunded liability in the pension fund accrued before he was governor.

Fitch Ratings, a major Wall Street rating house, called the plan a "credit negative" for New Jersey, the kind of move that governors used for years leading up to the current crisis.

"Fitch views this reversion to prior practices ˇX cutting pension contributions as a way to balance the state's budget ˇX as a form of deficit financing that is of particular credit concern at a time of economic recovery," Fitch analysts wrote in a research note Wednesday.

"The state has few options to respond to a shortfall of this magnitude with so little time left in the fiscal year. However, the proposal to cut the pension payment for fiscal 2015 by $1.57 billion as the primary means to close the identified $1.75 billion budget gap for next year is particularly troubling."

Christie blasted the major Wall Street credit-rating agencies Wednesday. All three ˇX Fitch, Standard & Poorˇ¦s and Moodyˇ¦s Investors Service ˇX have downgraded New Jerseyˇ¦s credit rating this year after taking a look at the stateˇ¦s budget predicament. The governor said their advice should be taken with a grain of salt because "this is the same group of folks who allowed the financial crisis to occur."

In 2006 and 2007, he said, the agencies were "collecting huge fees from their corporate clients and others, to look the other way" instead of warning of an economic bubble.

"The fact of the matter is, I don't know how much credibility these places really have," Christie said. "They were too extreme on one end; I'd suggest to you now, they're trying to readjust and make sure that something like that never happens again and go too far in the other direction. That's what discredited institutions do."

Sidamon-Eristoff is scheduled to testify before the Senate budget committee today. In a letter, state Sen. Paul Sarlo (D-Bergen), the chairman of that committee, asked the treasurer to bring an attorney to explain the legal rationale for taking the $2.43 billion meant for pensions.

Philadelphia Inquirer - Assembly Democrats question Christie's budget solution

 Andrew Seidman, Inquirer Trenton Bureau

Last updated: Thursday, May 22, 2014, 1:07 AM
Posted: Wednesday, May 21, 2014, 4:45 PM

TRENTON - Assembly Democrats on Wednesday slammed Gov. Christie's move to cut New Jersey's pension payments to shore up a $1 billion revenue shortfall, while the state treasurer defended the plan and repeated calls for further changes to the pension and health-benefits systems.

Treasurer Andrew P. Sidamon-Eristoff testified before the Budget Committee a day after the Republican governor issued an executive order to reduce the pension payment from $1.58 billion to $696 million for the fiscal year ending June 30.

Sidamon-Eristoff said the administration also had identified $118 million in underspending and savings in other departments and agencies to close the shortfall, which he has attributed to lower-than-expected income-tax receipts in April.

The administration has said it missed revenue targets because it underestimated the fallout from the 2012 "fiscal cliff," when federal income-tax cuts on the wealthy expired. Financial transactions made as a result caused income-tax payments to jump last year, but left 2014 payments trickier to project.

More coverage

„h  Christie charges ahead as budget issues mount

„h  Christie supports chief justice in deal with Dems

For fiscal 2015, which begins July 1, Christie proposed Tuesday that the state make a $681 million payment to the pension system, down from the $2.25 billion expected. Total revenue for 2015 is projected at $32.7 billion, almost $2 billion less than included in February's budget proposal.

Also in fiscal 2015, Christie plans to delay $400 million in property-tax rebates for nine months.

Overall, the administration reduced its revenue expectations by $2.75 billion for the two fiscal years.

Sidamon-Eristoff said he expected the unfunded pension liability to grow by $2.4 billion to more than $40 billion in fiscal 2016.

Democrats on Wednesday accused Christie of reneging on changes he and the Legislature agreed upon in his first term. The laws, which drew national attention, required public workers to contribute more toward their pensions and health plans.

Assembly Budget Chairman Gary Schaer (D., Passaic), reading aloud remarks the governor made when he signed the measure and later in a speech at the 2012 Republican National Convention, said Christie had misled the state's public workers into thinking he had solved the pension problem.

"At what point does the word of the state mean something?" Schaer said.

The state's public-sector unions have vowed to challenge the executive order in court.

Credit-ratings agencies have downgraded New Jersey's debt, citing revenue shortfalls, budget imbalances, growing pension costs, and other things. Schaer asked Sidamon-Eristoff whether he had considered whether the pension cuts could trigger another downgrade. Downgrades increase the cost of borrowing.

"We're always aware of the possibility," Sidamon-Eristoff said. "But our obligation is, first and foremost, our responsibilities under the constitution."

The state constitution requires the governor and Legislature to pass a balanced budget. Sidamon-Eristoff also noted that ratings agencies have highlighted New Jersey's unfunded liabilities with regard to pensions.

"Those currently, and for the foreseeable future, represent huge challenges in the state's budget," he said. "That is why the governor has repeatedly said we need to revisit pension and health-benefit reforms."

Christie said Tuesday that he would likely unveil his plan next month.

Sidamon-Eristoff said the alternative to slashing the pension payment would have been to cut spending for hospitals, higher education, and schools.

To address this year's shortfall, Democrats had floated the possibility of raising income taxes on New Jersey's highest earners with a so-called millionaire's tax. Assemblyman Declan O'Scanlon (R., Monmouth) said that such a tax hike would only increase the volatility in the state's revenue stream. He also said the state's budget woes lay not in Christie's proposed cuts, but rather in Democrats' opposition in 2011 to bigger pension changes.

"You can't blame the governor for digging us into a ditch when it was you yourself who dug the ditch," O'Scanlon said.

Earlier Wednesday, David Rosen, the Legislature's budget and finance officer, told the committee that he now projected a two-year revenue shortfall of about $2.7 billion - an estimate similar to Christie's.

The Office of Legislative Services, like the administration, underestimated the effects of the fiscal cliff, he said.

"We assumed that about half of the jump was a one-shot, with the rest attributable to a strong year in the stock market," Rosen said, referring to a one-time increase in income-tax receipts. "In retrospect, it is clear that our assumption was wrong."

 


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