Voters Should Decide NJ Pension Reform
We believe that fiscal issues of this size and significance should be decided by the people's representatives, or the people themselves.
June 02, 2019 at 12:00 PM
5 minute read
Recently, the Legislature passed, by overwhelming bipartisan majorities, a bill that would require the New Jersey Turnpike Authority to establish safety standards for highway maintenance workers. One would think that this is an issue no more controversial than motherhood and apple pie. But Gov. Murphy has vetoed the bill. Why? Because, he says, of principle. Regardless of the merits of the safety standards, he said, working conditions for public employees should be established by collective bargaining, not legislation. That the unions representing the workers supported the bill is immaterial to him. It is the principle that matters.
This decision is not as mad as it might first appear. What the Legislature can bestow by statute, its successor can take away by statute. And Senate President Stephen Sweeney proposes to do just that. Last week, Senate President Sweeney proposed a slate of bills aimed at reforming the state's insolvent pension system. These proposals are vehemently opposed by the state's public employee unions, including the teachers' union that supported a pro-Trump candidate against Sweeney in the last election.
Without addressing the merits of the proposals, we are firmly on the senator's side in the procedural dispute over who should consider them. The Legislature is the ultimate source both of the terms of public employment and the money to pay public employees. Since the late 1960s, it has chosen, by statute, to delegate much of its authority to a process of collective bargaining and arbitration. It is not required to do so. New Jersey Constitution Art. I § 19 confers on the workers of private employers the right to bargain collectively. However, Art. I § 19 confers on government employees only the more limited right to organize and “make known to the State … their grievances and proposals through representatives of their own choosing.” This is by its terms no more than a right to organize and lobby the government, just as any other interest group might.
Our constitution's distinction between private and public employment is not accidental. In the private context, the conflict is between workers and investors, and the result of collective bargaining is checked by the discipline of the market. The employer can move away, or it can fail or be driven out of business if customers find the consequences of collective bargaining to be unattractive. None of that is true for the government. It cannot go out of business or move to some cheaper country. The economic adversaries of government employees are not the owners of capital who have chosen to invest for a profit but their fellow citizen taxpayers and voters. The capacity of the government to pay is determined not by the judgment of the marketplace, but by the willingness of the voters to be taxed. The Legislature is the taxpayers' representative and the ultimate fiscal authority. Determining the terms of employment by collective bargaining cuts the Legislature out of the process and binds it to honor the terms of a contract that it did not negotiate.
That's all abstract. In more concrete terms, the state's system of public employee pensions is insolvent and has been for many years, due to a bipartisan refusal by the state to pay in the necessary contributions. The most recent reports show that on the basis of actuarial accounting, the deficit is increasing annually as the state's appropriations continue to fall short. Under the principle that when you're in a hole you should stop digging, Sen. Sweeney is proposing a revision to the pension system that will leave existing vested rights untouched but shift new hires and employees with less than five years' service to a cash balance plan, similar to a 401(k), in which the employee bears more of the financial risk, and the taxpayers less. Police, firefighter and judicial pensions will remain unchanged. If he cannot obtain the governor's approval, he has proposed to incorporate this change in an amendment to the state constitution, which can be submitted to referendum by the Legislature without the governor's involvement, and which would have to be approved by a majority of the voters at a general election.
We believe that fiscal issues of this size and significance should be decided by the people's representatives, or the people themselves. Public employees will not be helpless spectators to the Legislature's deliberation or the voters' decision. A normal gubernatorial election in this state polls approximately 2.1 million votes. According to the federal census, there are more than 430,000 state and local government employees in New Jersey, and more than 120,000 part-time ones. Many if not most have spouses and adult relatives. That is an extraordinarily large and widely distributed single interest group, all strongly determined to defend if not improve their present terms of employment. Even without collective bargaining, the grievances expressed by their chosen representatives will receive a careful hearing in Trenton before the Legislature enacts any statute or proposes any amendment, and we can be sure of a well-funded, heart-tugging media campaign urging a “no” vote on any referendum. In the rough and tumble of politics, unionized public employees can take care of themselves. But the real parties in interest on the other side, which is to say the taxpayers who don't work for the government, will also have their seat at the bargaining table—as they should. And they will have the last word about what they are willing to pay for.
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