A Leon County judge was wrong in ruling that Gov. Rick Scott and the Republican-ruled Legislature violated the state constitution last year by ordering 3 percent payroll contributions from public employees in the Florida Retirement System, state lawyers said in a new filing with the Florida Supreme Court.

At stake in the case before justices: close to $2 billion in the budgets of the state, counties and school districts.

Lawyers for Scott and other state officials are appealing the March ruling. Circuit Judge Jackie Fulford at the time said the state’s action overran contractual rights granted public employees in 1974, when the pension plan was converted to a “noncontributory system” for workers.

But former Justice Raoul Cantero, now a private attorney representing the state in the case, argued in a 44-page brief filed with the court that Fulford’s order ”runs contrary to decades of precedent.”

“The Legislature’s decision to modify the FRS system was fully within its prerogatives because the right of public employees to collective bargaining does not override the Legislature’s appropriations power,” Cantero wrote.

Also at the center of the state’s appeal is Fulford’s interpretation of a 1981 state Supreme Court decision involving the Florida Sheriffs Association, which pivoted on the Legislature changing benefits for future state employment. 

Cantero argued that in the Sheriffs ruling, justices held that the Legislature could reduce the amount of benefits that would go to FRS members in the future.

 But Fulford concluded that employees currently in the pension system have a property right to a noncontributory plan and that nothing in the Sheriffs’ case authorizes the Legislature to “change the fundamental nature of the plan itself.”

The lawsuit was filed last summer against Scott and other state officials on behalf of 11 public employees who are members of the retirement system. Those suing include members of the Florida Education Association, AFL-CIO, America Federation of State, County and Municipal Employees, Fraternal Order of Police and Service Employees International Union.

There are 655,000 government workers in the FRS. The Supreme Court has not yet set a date for arguments in the case.

Scott and the Legislature last year used the $1.1 billion in pension fund payments to help close a yawning budget gap. The state’s 67 counties also saved about $600 million in pension payments by having employees contribute the 3 percent.

The same payments were incorporated into the $69.9 billion state budget set to take effect July 1.

If  justices uphold the lower court’s ruling, the state has said reserves would have to be deployed to cover the lost revenue.

As part of its appeal, the state also is arguing that Fulford exceeded her authority by ordering that payments be refunded to the public employees in the FRS.

Cantero, in the state’s appeal, acknowledged that the Legislature’s decision to require pension payments to close a budget hole was controversial. But he said that justices should affirm that such actions are within the power of lawmakers –not courts, to decide.

“While reasonable people may differ about whether the Legislature should have solved the states $3.6 billion budget shortfall in part by reducing employees’ future pension benefits, such difficult policy choices are for the Legislature,” he concluded.

The Senate budget committee approved a tough new rewrite Thursday of the Florida Retirement System that pours $1.1 billion into a proposed $69.8 billion state budget.

But the 13-8 vote doesn’t look like the last word from the Senate.

Even budget chairman J.D. Alexander, R-Lake Wales, hinted that Thursday’s action was not, “where I hope we wind up.”

After weeks of the Senate offering a softer version of a pension overhaul than either of those promoted by the House or Gov. Rick Scott, version unveiled by Alexander imposes a 3 percent contribution rate for 655,000 government employees, puts most new employees into 401(k)-style investment plans, and close the state’s Deferred Retirement Option Program to new participants July 1.

The Republican-ruled committee was blasted for more than an hour by more than two-dozen teachers, firefighters, sheriff’s deputies and other union representatives.

“They keep telling us ’we’ve got to suck it up,’” said Sharian Keys, a Port Orange teacher. “But who else is `sucking it up’ in this budget?”

UPDATE: GOP officials appear to be linking Attorney General Bill McCollum to billions of dollars in losses – on paper – to the state pension fund during the 2008 financial meltdown.

Attorney General Bill McCollum may have finally put to rest speculation that he may eventually endorse Rick Scott in the governor’s race in the spirit of party unity.

Instead, he helped Scott’s opponent Chief Financial Officer Alex Sink, the Democrat candidate for governor, debunk ads bashing Sink for her role in the state pension fund’s loss of billions of dollars in value during the financial meltdown in 2008.

McCollum, who lost the GOP primary bid in a brutal battle against Scott last month, sits with Sink and Gov. Charlie Crist on the board of trustees that governs the State Board of Administration, which handles the pension fund and other investments.

In a public meeting yesterday, McCollum repeatedly asked SBA chief Ash Williams about reports that the pension fund is troubled and that the SBA made risky investments.

Williams assured the trustees the $119 billion fund is sound.

“The SBA is stronger and different then it was only two years ago,” Williams said.

He also refuted allegations that the investments were risky.

“The truth is they are performing,” McCollum said. “They are assets that pay back.”