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2% Salary Cap for Police, Firefighters to Expire, Dems Block Debate on Renewal

Municipalities alarmed at financial consequences for local governments if cap goes while 2 percent property tax levy remains in place

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Local government leaders in New Jersey have for years credited a 2 percent limit on the raises that police officers and firefighters can win once their contract disputes are taken to binding arbitration for helping to contain the state’s highest-in-the-nation property tax bills.

But that cap — which has worked in tandem with a 2 percent limit on local property levy increases since both were adopted in 2010 — is set to expire at the end of the year, and there are mounting concerns that the arbitration limit may not be renewed before that looming deadline.

With state lawmakers set to break for the summer in just a few weeks, Assemblyman Declan O’Scanlon (R-Monmouth) sought to force a debate on the issue when the Assembly held a voting session in Trenton last week. But the majority Democrats used procedural rules to rebuff O’Scanlon. A bill O’Scanlon is sponsoring that seeks to renew the salary-arbitration cap has also been stalled in the Assembly since it was first introduced early last year.

Democrats urge patience

For their part, the Democrats point to what they consider a good reason for holding back final judgment on the arbitration cap, which has been opposed by police and firefighter unions. A pending task-force study of the cap’s effectiveness and any recommendations on what to do about it are due by the end of the year, and the Democrats are urging patience until that final report is completed.

But since the 2 percent limit on overall property tax levy hikes has no sunset provision, local government officials are warning they could be forced to cut back services if arbitrators are once again allowed to award raises above 2 percent. And the issue could also get ensnared in politics this year, with all 120 state legislative seats on the November ballot.

Police officers and firefighters are, by law, not allowed to strike in New Jersey when they cannot reach new contract agreements with their local government employers. Instead, their unions and government officials are offered the option of entering into binding arbitration to resolve ongoing contract disputes.

But Gov. Chris Christie, a second-term Republican, worked with Democratic legislative leaders in 2010 to enact a 2 percent cap on the size of the annual raises that police officers and firefighters can win through the arbitration process. The cap was part of a broader “tool-kit” initiative that Christie championed during his first term in office that was aimed at curbing growth in the average New Jersey property tax bill. Another key element of that initiative was the adoption, also in 2010, of a law that caps increases to the local property tax levy that can be approved by municipal and county governments and school districts. The tax levy is the amount of money that is directly raised from property owners through property tax bills.

O’Scanlon: Cap is ‘essential’

While the 2 percent property tax levy cap was enacted on a permanent basis, the limit on salary-arbitration awards was initially set up to sunset after a few years. And when it expired in early 2014, Christie worked again with Democratic legislative leaders to extend the cap until December 31, 2017. Their compromise also called for a final report and any recommendations to be drafted by a task force that was organized to study the cap and its effectiveness.

O’Scanlon, a leading GOP member of the Assembly’s Budget Committee, said the experience of the last several years has already provided lawmakers with enough reason to extend the cap without further debate.

The latest annual report from the task force, which was released last year, indicated the arbitration cap has helped to limit annual raises through arbitration from nearly 5 percent before it was enacted to just under 2 percent since it was put in place. The average New Jersey property tax bill was also increasing by as much as 7 percent annually before the limit was put in place, but the annual increases have shrunk to just over 2 percent since then. For example, last year the average New Jersey property tax bill rose by slightly over 2 percent to $8,549.

“We know it’s essential,” O’Scanlon said of the salary-arbitration cap during an interview yesterday. “The uncertainty is a problem,” he said. “It needs to be on everybody’s radar screen.”

Political pressure?

O’Scanlon —who is running for a state Senate seat that’s being vacated by longtime lawmaker Joseph Kyrillos — tried to force a vote during last Thursday’s Assembly session on the legislation he’s sponsoring that would make the arbitration cap permanent. But Assembly Majority Leader Lou Greenwald (D-Camden) blocked the effort procedurally by making a successful motion to table it. Greenwald suggested it makes sense to hold back consideration of the cap extension while the task force’s final report is still pending. “There’s still time before us,” Greenwald said.

But with the full Legislature up for re-election this year — as well as the governor’s office with Christie term-limited by the state constitution — concerns are running high that the Democrats could face political pressure to keep the issue on the backburner all the way through the lame-duck session that will follow the November elections.

The New Jersey State League of Municipalities recently posted an alert on its website that encouraged local officials to adopt resolutions urging the governor and lawmakers to take action to keep the arbitration cap in place for another five years. The alert also sounded alarms about the financial challenges that local governments would face if the broader property tax levy cap is kept in place at the same time the limit on salary-arbitration awards is allowed to sunset.

“If the cap on interest arbitration expires, while the 2% property tax levy cap remains in effect, municipalities will be forced to reduce or eliminate municipal services in order to fund interest-arbitration awards,” the alert said.

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