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February 22, 2010

Re:      Interest Arbitration Reform Sample Resolution

Dear Mayor:

In our Dear Mayor letter of February 9, 2010, regarding Interest Arbitration Reform, we asked that you reach out to your State Senator and Assembly representatives and urge them to support the League in moving Interest Arbitration Reform forward.

Below is a sample resolution to send to your state representative.


Urging the State Legislature to Reform Interest Arbitration

WHEREAS, the interest arbitration process was intended to fairly and adequately give all due consideration to the interest and welfare of the taxpaying public and support local government aims by arriving at award decisions that are equitable to all involved parties, including municipalities and Police and Fire Department personnel; and

WHEREAS, the New Jersey Employer-Employee Relations Act, adopted in 1968, was amended in 1977 to provide for interest arbitration as the statutorily imposed terminal step in the collective bargaining process for police and fire personnel as defined by the Act; and

WHEREAS, the Police and Fire Interest Arbitration Reform Act (L.1995, c. 425) was signed into law by Governor Christine Todd Whitman and became effective on January 10, 1996; and

WHEREAS, in 2005, the League of Municipalities’ Arbitration Reform Committee suggested a number of Legislative reforms to the Interest Arbitration Process among the changes proposed by the Reform Committee were that: (1) the Arbitrator may not award salary increases in excess of the expenditure cap (N.J.S.A. 40A:4-45 et seq.); (2) the Arbitrator’s Award may provide for salary increases limited to the budget cap imposed by the State of New Jersey and/or any lawful adjustment adopted by the public employer; and (3) the Arbitrator’s award may provide for salary increases limited to the percentage established by the State or the lawful adjustment adopted by the public employer, as may be appropriate, on a department line basis; and

WHEREAS, in 2007 the Police and Fire Interest Arbitration statute was amended to add a new ninth factor of the 4% Tax Levy Cap which resulted in  4 of the 9 statutory factors in Interest Arbitration addresses the employer’s fiscal situation; and

WHEREAS, municipalities are bound by strict fiscal controls embodied in the expenditure limit and tax levy caps and it is the norm rather than the exception for state approved arbitrators to award raises for police salaries at rates that exceed the annual caps; and

WHEREAS, binding arbitration awards in excess of the caps forces municipalities to cut other critically needed municipal services, in order to fund salary increases, compounded by pension increases, to police and fire personnel, and cost for police and fire services continue to spiral at an unacceptable rate; and

WHEREAS, the state approved interest binding arbitration process is inconsistent with the State cap laws and is unfair to municipalities attempting to control property taxes through fiscal responsibility; and

WHEREAS, interest arbitration should be reform to provide that the cost of living and the employer’s ability to pay should be given greater weight and the total costs of the arbitrator’s award, including steps and cost of living (COLA) increases, should not exceed the cost of living; and

WHEREAS, arbitrators should be required to evaluate and analyze the total cost of the salaries and benefits, including step increases, and must provide a detailed line item analysis and explanation of the costs in the award; and

WHEREAS, arbitrators must also evaluate and analyze the overall compensation received by the bargaining unit, including vacations, longevity, holidays, excused leave, medical and pension benefits; and

WHEREAS, arbitrators should be required to live in New Jersey and the process of selecting the arbitrators and the length of time the Arbitration process takes needs to be reviewed;

NOW, THEREFORE, BE IT RESOLVED, that the governing body of the (insert municipality) in the county of (insert county), State of New Jersey hereby urges the New Jersey State Legislature to pass legislation containing substantial reforms to the binding arbitration process; and

BE IT FURTHER RESOLVED, that a copy of this resolution be forwarded to (fill in State Senator, Assembly representatives), the New Jersey State League of Municipalities and the Office of the Governor.

Very truly yours


William B. Dressel, Jr.
Executive Director




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