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labor Christie's Pension Payment Reduction Plan Sparks Lawsuit From CWA

New Jersey Governor Christie is reducing pension payments worth $2.43 billion to cover a budget deficit thus threatening the stability of the pension fund. He is walking away from a pension overhaul he signed in his first term. He is being sued by the Communications Workers of America and the New Jersey Education Association.

TRENTON — Another prominent labor union, the Communications Workers of America, says it will file a lawsuit in an effort to stop Gov. Chris Christie's plans to grab $2.43 billion meant for the pension system to balance the state budget.

The announcement from the CWA today comes a day after the largest public-worker union in the state, the New Jersey Education Association, said it would challenge Christie's plans in court. The CWA is the largest state workers union.

The Republican governor, in a stunning about-face, announced Tuesday that he would reduce two key payments meant to shore up New Jersey's strained pension system, grabbing a total of $2.43 billion to cover unexpected revenue shortfalls in his budgets.

For Christie, the move means he is walking away from a major pension overhaul he signed in his first term to restore the pension system's financial health over approximately 30 years. But the governor said he had few other choices: He won't raise taxes, he won't take funds from schools and health care programs, and there is next to nothing left to cut in state spending.

“Governor Christie is not only breaking his word, but he’s also breaking the law in failing to make these pension payments,” said Hetty Rosenstein, state director of the CWA. “Put aside how Christie’s actions are immoral. If the pension payments are not made, the plan will go bankrupt. Retirees and active workers will spend their retirement in poverty through no fault of their own. For these reasons, and more, we are taking the governor to court. And we will be mobilizing our members and allies in protest of Christie’s outrageous, illegal actions.”

The pension overhaul from Christie's first term shifted more costs to public workers, raised their retirement age to 65, and froze yearly cost-of-living adjustments. In exchange, Christie and lawmakers agreed to make bigger payments each year to the pension fund to repair the financial damage after years of governors who paid nothing at all.

Now, reducing those payments would increase the financial pressure on the pension system, which already faces $52 billion in unfunded liabilities, and would erase some of the progress Christie and Democratic lawmakers made after they overhauled the pension system in 2011.

Public worker unions won a contract provision, under that 2011 law, to challenge any delays or reductions to the pension payments in state Superior Court.

Christie said he would take nearly $900 million through an executive order he signed Tuesday. The other $1.5 billion would be taken next year -- if the Democratic-controlled Legislature approves of the governor's plan.

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State Democrats criticized Christie on Tuesday, blaming him for a pattern of missed revenue projections that have brought years of budget pain for the state and urging him to sign a millionaires' tax to raise more money. (Christie has vetoed the tax three times and vowed to do so again.)

The three major Wall Street credit-rating agencies have downgraded the state's debt this year, based partly on those same revenue concerns.

Christie said Tuesday that he wasn't worried about credit downgrades or lawsuits from unions. The state has made untenable commitments to public workers' benefits, he said, and needs to revise them. Christie said he would present a new plan next month to tackle those long-term costs.