PoliticoNewJersey- Two of the state's most influential business groups say they are planning aggressive campaigns to fight a proposed constitutional amendment to require quarterly payments into the state’s public pension system, and they expect other major organizations to join their cause.
The leaders of the New Jersey Business and Industry Association and the New Jersey Chamber of Commerce say the amendment, sponsored by Senate president Stephen Sweeney and Assembly speaker Vincent Prieto, could lead to drastic cuts in important services, like education and public safety. Perhaps worse for their members, they say, it could lead to major tax increases on business and business owners.
“What happens when that quarterly, mandated payment comes up and you’ve got your school aid bill sitting here, and you’ve got your constitutionally mandated pension bill sitting here?” Michele Siekerka, NJBIA’s president, said in an interview at the group’s office Tuesday. “What are you going to do? You going to go fire a teacher? You’re either going to cut service or you’re going to raise revenue.”
Siekerka said the NJBIA and other organizations are forming a “coalition” and planning to work together on a multi-faceted campaign against the amendment, first to convince lawmakers to defeat the legislation when it comes up for another vote this year and then, if that fails, to persuade voters to reject the proposal at the polls. The legislation already passed both houses last session, meaning it would be placed on the ballot in November with another simple majority vote of the Legislature.
Siekerka described the effort as a "very large business coalition. Business is even the wrong word. It’s a job coalition. It’s all about keeping New Jersey competitive … A campaign to educate, first, our legislators about how this is going to impact all of their own projects right in their own neighborhoods across the state. And, then, the electorate, if we get that far. Hopefully we beat it before it gets a second vote.”
Siekerka declined to say who else would be in the coalition, saying an announcement would come soon. But Tom Bracken, president of the Chamber of Commerce, said he would certainly be a part of the effort along with eight other groups. He said the coalition was born out of a summit the chamber held in Atlantic City last year and includes several regional chambers, the New Jersey affiliate of the Biotechnology Innovation Organization, New Jersey Society of CPAs and others.
“This could be absolutely disastrous for the state of New Jersey, and we do plan to fight it very vigorously,” Bracken said.
Sweeney’s office criticized the groups for attacking the proposal, saying supporters of the measure simply want the state to follow the law and not get stuck with a huge bill in the future.
“We would expect the business community to take a more fiscally responsible position,” Sweeney's spokesman, Richard McGrath, said in an email. “The bottom line is that making the pension payments when they are required will reduce costs, save the taxpayers money and stabilize state finances. Their opposition is the equivalent of putting state expenses on a ‘credit card,’ resulting in more debt, higher costs and additional credit downgrades. That would not be good government.”
Democrats have argued the resolution would be a solution to a court ruling last year that said the state can skip its annual pension payments to help balance the budget, despite a 2011 law that required the state to reach full funding.
The court ruling did not say the state would not have to pay out individual pensions when they come due. That puts New Jersey on a collision course, saddling it with an even bigger debt that could have been avoided by making full payments. The state hasn’t made a full payment in decades. As Prieto put it before the Assembly voted on the resolution last month, “we cannot trust the politicians who are in charge are doing the right job.”
But Bracken says pension payments are not “worthy” of being written into the state constitution, even beyond the issues of “cash flow to the state.”
“If we do not get growth to cover these payments, there are only a couple of options,” like cutting services, borrowing money and raises taxes, he said. “We’re kind of boxing ourselves in with very low flexibility.”
While Sweeney, who first proposed the amendment two months ago, has argued a millionaire’s tax — a perennial topic for Democrats — could cover a good junk of the increased cost of payments, it would not cover all. The state contributed $1.3 billion to the pension system last year, well below the amount it was supposed to hit under the 2011 landmark reforms signed by Gov. Chris Christie. The amendment would boost that to $5 billion a year in 2021.
“Who are you going to raise revenue on?” Siekerka said, saying she expects lawmakers would push for an increase in the corporate business tax after the millionaire’s tax.
“You can’t just rely on corporate business tax, because it’s just so vulnerable throughout the year,” she said. “So that’s still not enough. What you going to go to next? Sales tax? Then it starts affecting all of you? School aid? Guess what that will do? It will drive up property tax. The pie is only so big. The pie doesn’t get bigger. And when you shove more stuff in the pie, eventually something’s got to give.”