A three-judge appeals court panel on Friday rejected Gov. Chris Christie's executive order banning state worker unions from making political donations.
The court ruled that the order exceeded his executive power. The ruling is scheduled to take effect July 1, however, Christie can appeal to the state Supreme Court.
"An executive order cannot bypass the Legislature and carry out what would be, in effect, an implied repealer of existing legislation," the court wrote in its ruling.
The Republican governor issued the executive order on his first day in office, making good on a campaign promise to close a loophole in the state's pay-to-play rules, which aim to stop the practice of rewarding political donors with lucrative government contracts.
The anti-pay-to-play rules prohibit state agencies from awarding contracts worth more than $17,500 to companies that have donated more than $300 to a gubernatorial campaign or any state or county political party committee within 18 months. Unions, which donate heavily to Democrats, had been exempt, but Christie has said he believes the rules should apply to everyone.
"I don't think there is one class of speech that should regulated and another class that should not be in the political realm," Christie said Friday in response to the ruling.
He said he would look into other ways to accomplish his goal.
"There might be a different way we can write the executive order to accomplish the same thing ... there's a bunch of different things we're going to look at over time."
The Communications Workers of America District 1, New Jersey's largest state worker union, filed a court challenge to the order. Teacher and law enforcement unions joined in the lawsuit.
"We are gratified that the court recognized the basic principle that in our system of government, the Legislature makes laws and the executive branch executes them," said CWA New Jersey state director Hetty Rosenstein.
Unions argued that it was wrong to equate a collective bargaining agreement with a corporate contract. The court found that "a labor organization is not organized for the commercial profit of the organization itself."
The court also questioned how, were the order to stand, unions would be punished for disobeying it. If a union were to contribute anyway, the state couldn't stop engaging in collective bargaining with the union because that would clash with the constitutional right of public employees to be represented by their union.
The court said that what the governor wishes to accomplish is not "illegal, impossible, or unwise public policy," but that such a change would require legislative approval -- something unlikely to pass in the Democratically controlled Legislature.
Assembly Majority Leader Joseph Cryan said the ruling was "another rebuke for a governor who too often would rather rule by dictatorial fiat."
The ruling marked the second time an appeals court has stopped an executive order by Christie, who took office on Jan. 19.
In February, an appeals court judge set aside the governor's executive order putting a 90-day hold on all activities by the state's affordable housing council. Christie later rescinded that order.
"When you are going to govern aggressively," Christie said, "there are times you'll swing and hit, and times you'll swing and miss."