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January 21, 2014

Re:       Extension of 2% Cap on Interest Arbitration Awards

Dear Mayor:

On December 21, 2010, Governor Christie signed into law reforms to the interest arbitration process.  The reforms marked a dramatic change to the arbitration process and have helped municipalities to control the never-ending rise in public safety personnel costs.  The reforms, which took effect on January 1, 2011, capped arbitration awards on base salary items to no more than 2% in the aggregate per year of the contract, provided for random selection of arbitrators, expedited the determination of awards, required the arbitrator to provide a written report detailing the weight accorded to each of the required considerations and expedited the appeal process.

The law was a compromise and given the dynamics of the negotiations, the best compromise at the time.  Under the terms of the ultimate compromise, the limit on arbitration awards is set to expire in April of this year.  Failure to extend the 2.0% cap on interest arbitration awards will force municipalities throughout the State to further reduce or even eliminate crucial services, personnel, and long-overdue infrastructure improvement projects in order to fund an arbitration award. 

Absent further action by the Legislature, any contract that expires on or after April 1, 2014, will be subject to all new procedures and requirements, EXCEPT the 2% awards cap.  Without those limits, arbitrators will be able to impose awards similar to those issued prior to the implementation of the 2% hard cap.  As such, municipalities would still have to comply with the tax levy cap and the appropriations cap without the aid of the 2% hard cap.  Such awards would immediately threaten funding for all other municipal services. And, in the not-too-distant future, such awards could force local budget makers to reduce public safety staffing levels, as fewer local employees steadily take home higher percentages of local funds.

Accordingly, a major priority for us will be to convince the Legislature to permanently extend the limitations on arbitration awards, beyond the April 1 ‘sunset’ date.  To that end, we request that you adopt the sample resolution, available at as a pdf or at as word, urging the swift passage of legislation to permanently extend the cap on arbitration awards.  We also ask that you reach out to your State Senator and Assembly representatives urging them to take action quickly on this matter.

While the Governor Christie highlighted the 2010 Interest Arbitration Reforms and the need to “renew the cap on interest arbitration and make the cap permanent” in his State of the State address we need the Legislature to act.  We have now less than three months for the legislature to act. The clock is ticking. Please contact your Legislators as soon as you can.

If you have any questions, contact Senior Legislative Analyst Lori Buckelew at 609-695-3481, ext. 112 or

Very truly yours,

Wilda Diaz
Chair, Management Reform Committee
Mayor, Perth Amboy

William G. Dressel, Jr.
Executive Director






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