Unauthorized Release of Report Turns Up Heat on Arbitration Cap Debate

Task force data seems to show that cap on salary growth for cops and firefighters may have saved property owners $530 million in taxes

An already politically charged debate over the fate of one of Gov. Chris Christie’s pet property-tax reforms took a new turn yesterday after a Christie ally released new figures from a special task force review of the reform’s effectiveness well before a final report is due.

The new data indicates that the property-tax reform commonly referred to as the interest-arbitration cap has helped to curb salary growth for police officers and paid firefighters in New Jersey. It was immediately used as ammunition by the Republican governor and others who have been calling for the cap to be renewed before it is due to expire at the end of the year.

But since the figures were made public without the consent of all eight members of the panel — and with the endorsement of only those who were appointed by Christie — their release also fueled concerns that the gambit could ultimately backfire.

‘Political stunt’

Democratic legislative leaders were unmoved yesterday, and their own appointees on the task force suggested a fair analysis of the arbitration-cap issue may now be impossible to conduct in the current political atmosphere. And among the candidates who are vying this year to replace the term-limited Christie, a spokesman for Democrat Phil Murphy called the release of the new figures a “political stunt,” while Republican Kim Guadagno said they back up her ongoing call for the cap to be extended.

At issue is a state law that sets a 2 percent limit on the salary increases that police officers and professional firefighters can receive from arbitrators if they reach a contract impasse with their government employers and choose to go into binding arbitration. The limit went into effect in 2011 as part of a broader “toolkit” agenda that Christie sought to enact to curb property-tax increases in the wake of the Great Recession and ensuing real-estate collapse.

In addition to enacting the arbitration cap, Christie also worked with Democrats who control the Legislature to put in place a 2 percent limit on overall property-tax levy increases as part of the same initiative. But the two caps are completely separate as a matter of law, and importantly, they do not operate on the same timeline. While the broader cap on property-tax levy hikes was enacted as a permanent cap, the limit on interest-arbitration awards was instead given a sunset date.

Extending sunset

The interest-arbitration cap was renewed once before, after an initial sunset date was reached in 2014, but it is now set to expire once again, on December 31, 2017. And under the terms of the 2014 renewal, a task force report on the effectiveness of the cap is also due, by law, to be released to the governor and lawmakers by the members they appointed by December 31, 2017.

Though the issue received little attention earlier this year, debate has now picked up in recent weeks as the expiration date has drawn closer — and as the campaign season has begun to heat up.

Christie, Guadagno, and other Republicans have been calling for the cap to be renewed before it expires, while Democratic legislative leaders and Murphy have all said they prefer to wait. In fact, Senate President Stephen Sweeney (D-Gloucester) has suggested he would hold off until after the upcoming gubernatorial election to make a decision, while Murphy and Assembly Speaker Vince Prieto (D-Hudson) have pointed to the pending release of the task force’s final report as a reason to delay judgment.

Meanwhile, municipal and county government leaders have also weighed in, calling the arbitration cap a key tool in their fight to keep in check property tax bills that are already the nation’s highest. But union officials have argued that the cap stacks the deck in collective bargaining, especially in the wake of a 2011 law that also forced public workers to contribute more toward their pensions and health insurance. Recent U.S. Census data has also indicated taxpayers may now be getting more than 2 percent raises themselves, with the statewide median income rising by 4 percent last year, and private-sector wage growth up nearly 6 percent according to data Christie’s office has been highlighting in recent weeks.

Released to the press

The version of the task force’s findings that was made public yesterday was endorsed by all four of Christie’s task-force appointees, including Assemblyman Declan O’Scanlon (R-Monmouth), who was the one who released it to reporters in the morning. The findings include the results of an analysis of the effectiveness of the arbitration cap that found it has saved New Jersey property owners a combined $530 million by curbing salary growth among police officers and paid firefighters.

The new figures also showed the total savings for taxpayers when the impact of other reforms is factored in, including the broader, 2 percent cap on property-tax increases, is close to $3 billion. And despite those controls being in place, the findings indicated New Jersey’s police officers and sheriff’s officers have been earning the second-highest mean wages in the country — $87,490 — for their occupation, and that the state’s paid firefighters have been earning the highest mean wages in the country for their occupation — $81,730.

“This is definitive,” O’Scanlon said in an interview yesterday. “The policy is both essential and effective. You don’t need any further study on this.”

But the four members of the task force who were appointed by the legislative leaders called the findings that were released by O’Scanlon yesterday a “sham.” A joint statement released by all four legislative appointees also said when they tried to make a motion during a task force meeting earlier this week to collect more information before drafting a final report the vote ended in a 4-4 deadlock.

“The desire for this early release is clearly part of a strategic plan that matches this Governor’s political agenda,” the members said in the statement.

Asked what additional data is needed to complete a more thorough assessment, task force member Eddie Donnelly, the president of New Jersey Firefighters Mutual Benevolent Association, pointed to seven different items related to state spending, municipal funding, and local property-tax bills that should also be reviewed.

“The governor’s appointees all voted against this idea, choosing to limit the lens through which the arbitration cap was examined,” Donnelly said.

Prieto, the Assembly speaker, said yesterday that he’s still waiting for “a complete report” before making any final decision on the fate of the arbitration cap.

“I continue to await the release of an official, approved report from the full task force, and once that’s received, I will review it and make a decision,” Prieto said.

Sweeney declined to comment yesterday through a spokesman.

But Christie said in his own statement that the new findings “prove that the arbitration cap works.” And Guadagno, who has served alongside Christie as lieutenant governor since 2010, accused Murphy of “ducking” the issue and choosing “the side of the Trenton special interests.”

O’Scanlon, who is running as a candidate for state Senate this year, dismissed concerns that releasing the data without all of the task-force members’ endorsement could bog the issue down in politics and undermine the effort to renew the cap.

“They don’t want this information in the public’s hands,” O’Scanlon said of the legislative appointees. “There is no way to taint these facts.”

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