The Times of Trenton Archive
COPYRIGHT © The Times of Trenton 2010
Date: 2010/12/27 Monday Page: A01 Section: News Edition: Trenton
Jersey's tax cap at risk of capsizing
BY GEORGE AMICK
New Jersey's mayors didn't get all they wanted in the police and firefighter arbitration bill that Gov. Chris Christie signed last week. More remains to be done to prevent their towns' future contract settlements with public safety unions from punching holes in the much-touted 2 percent cap on annual property-tax hikes that will take effect Jan. 1.
The rapidly rising costs of employee benefits, particularly health-care costs, are excluded from the tax cap, and also from the cap on arbitrator-awarded pay increases that is imposed by the brand-new law. Unless those costs are contained, both caps will become sieves.
Gov. Christie and the Legislature's Democratic leaders understand the problem and have promised to address it. Both sides also seem to grasp that a key part of the solution will have to be greater participation by public employees in paying for their benefits.
Christie isn't alone in complaining that government workers in New Jersey contribute only 1.5 percent of their salaries to their health insurance premiums, while workers in the private sector, as well as federal employees, are billed many times more for that purpose. Until this year, New Jersey public employees paid nothing.
One of the most outspoken mayors is Elizabeth's Chris Bollwage, who says they should pay 50 percent of their health-care costs and contribute twice as much toward their pensions as they do now.
All that said, the new police and firefighter arbitration law is far more sweeping and potentially more effective than many would have thought possible. It has surprised even the New Jersey State League of Municipalities, which has been lobbying to change the system for at least two decades.
In the early years, when executive director Bill Dressel and other league officials regularly visited The Times and other newspapers to seek editorial support for change, their aims were modest.
They proposed that the arbitrators -- who are called in when contract talks between municipalities and their police and firefighter unions reach a stalemate -- be allowed to craft their own settlements rather than have to choose between the "fair and final" offers submitted by both sides.
Too often, they argued, the arbitrators reflexively went for the unions' package. And they wanted a requirement that arbitrators consider the fiscal health of the towns and the impact their decisions would have on local property-tax rates.
Even those tepid reforms were fought by the unions before they were incorporated into the law in 1996. But little improvement followed. Arbitrators, in the end, remained free to impose whatever settlements they wished, and these included generous pay and benefits hikes that have led to today's dubious distinction for New Jersey: Its property-tax-funded police and firefighters are the highest-paid in the nation.
Enter Chris Christie with his 2 percent cap on property-tax increases, which was accepted by the Legislature earlier this year, and his toolkit of proposals that would allow towns to cope with the cap without resorting to devastating service cuts and layoffs. The most formidable tool in the kit would have slapped a companion 2 percent cap on annual increases in pay and benefits for public employees, including those resulting from arbitration.
Christie waged a relentless public-relations campaign to prod the Democratic Legislature to pass his toolkit bills, especially arbitration reform. In the end, the Democrats, led by Senate President Steve Sweeney, D-West Deptford, braved the wrath of the unions that form a substantial part of their base and offered a compromise. Christie took it.
The new arbitration law contains provisions, Bill Dressel admits, that he and the league wouldn't have dreamed of winning a few years ago. Not only does it put a ceiling on salary awards, including longevity pay and automatic step increases; it changes the method of selecting arbitrators to a method favored by the municipalities, and it requires an arbitrator to deliver a verdict within 45 days of his or her assignment to the job.
That tight timetable will prevent protracted arbitrations that run up costs, such as the one that has been going on in Hoboken for two years and counting.
The downside of the compromise is that it exempts increases in the cost of benefits from the cap. That's why it's essential that the lawmakers revisit the issue early in 2011 and come up with a way to prevent those increases from being loaded directly onto the back of the staggering property owner.
Contact George Amick at email@example.com.