Local governments are at a crisis point with state mandates, decisions by interest arbitrators granting significant salary increases to uniform police and fireman, reductions of state revenue replacement funding, rigid, non-yielding environmental regulations and COAH requirements. Absent state attention to these issues, there is little help for property taxpayers in sight.
On behalf of my co-chair, Mayor Anthony Persichilli of Pennington Borough, the members of the League’s Mandates Relief Committee, all the members of the League of Municipalities and the taxpayers of New Jersey, I want to thank Lieutenant Governor-elect Guadagno and her colleagues for joining us at our Conference. We sincerely appreciate this opportunity to discuss some of the unfunded mandates that can be relaxed, reformed or repealed, so that we can continue to deliver vital local programs and services, while keeping a lid on property taxes.
Last year, the League provided state level policy-makers and their staffs with a comprehensive study conducted by Township Manager Marianne Smith of Hardyston. If the Legislature needed a basis for examining the impact of mandates on the property tax, this report supplied all that was needed. In testimony presented to the Legislature’s Budget Committee’s earlier this year, League President Tim McDonough reiterated our call for mandates relief. We, subsequently, asked local officials to complete a mandates survey, just as the demands of preparing their own budgets, while attempting to deal with the current crisis, was paramount on their agendas.
Through our survey, we have been able to begin to quantify the effects of a few unfunded mandates.
COAH Reform There is little doubt that affordable housing is a real and persistent need in our state. However, the assessments and calculations by COAH are the subject of current controversy. New Jersey municipalities have already spent taxpayers’ money, preparing plans based on faulty data and on projections that conflict with other state planning priorities. With two dozen current appeals of the COAH 3rd round regulations pending, it seems likely that local governments will again be forced to expend additional resources preparing new plans. The League would welcome the opportunity to work with the Christie Administration to reform the COAH process, to harmonize housing policy with other State planning priorities, and to reduce the financial obligation on our taxpayers.
Binding Interest Arbitration This is a State mandated process for settling collective bargaining disputes between a local government and a police or fire employees’ union.
Hamilton Township (Mercer) Mayor John F. Bencivengo presents testimony before the Christy/Guadagno Transition Team Red Tape Review Group.
The process allows a union to bring in a third-party arbitrator whenever economic issues, such as salary percentage increases, longevity pay, or shift and rank differentials, remain unresolved after at least three negotiation sessions. After considering guidelines contained in the law, the arbitrator has the power to impose the terms of a new contract. Since 2000, salary schedule increases have averaged approximately 4 percent per year. (Previous arbitration awards ranged upwards of 8 percent.) However, the movement between the salary steps, which can cost as much as $15,000 per officer, is not considered by interest arbitrators as a cost to employers. As a result, a 4 percent increase to the salary guide can cost an employer upwards of 10 percent, depending on the way the award is structured.
Almost all other local government employees have benefited from this, though to a lesser extent. When the police are receiving a 4 percent increase to their guide, which is costing the municipality 6 to 10 percent, it is difficult for a governing body to justify only 1 to 2 percent for other public employees. At times, municipal collective bargaining units will wait for the municipality to settle with the police or fire union prior to negotiating, so as not to “lose out” on any benefits, including percentage increases, given to the police or fire unions.
One Bergen County municipality has a fire department with a personnel cost of over $6,000,000. The largest labor unit within the department has a cost of $5,750,000. If a 3.5 percent increase were provided to the guide, a practice that has been common over the past 32 years, the total cost of the contract would have been 6.12 percent or over $350,000. If, on the other hand, a total cost increase were provided to the union of 2.9 percent, the increase would be $166,750 or about $185,000 less. That 2.9 percent represents an estimate of the amount that a municipality can increase its budget, within the limits of the 4 percent property tax levy cap. For this unit of firefighters, those estimated excess costs equal $2,720 per employee.
We know that the Governor-elect supports binding arbitration for uniformed employees. But major savings and more rational awards could be gained if, for example, the arbitrators were State employees, rather than independent agents.
Civil Service The voters of a municipality can choose to place their public employees into the civil service system.
However, once they make that decision, the state statute mandates that future generations of citizens are bound by it. We can amend our Constitution—our basic framework of civil rights and self-government—but we cannot rescind a personnel policy decision made decades ago. Requirements imposed on local management by civil service rules can often times increase local personnel costs and limit the municipalities’ ability to create shared services. Our citizens should have the right to withdraw from Civil Service.
Municipal Stormwater Regulations The New Jersey Department of Environmental Protection developed these regulations in response to the U.S. Environmental Protection Agency’s Phase II Rules. Among other mandates, the regulations require municipalities to distribute annual notices to residents on stormwater management, to label catch basins, to reclaim water from washing municipal vehicles and street sweeping, to adopt and enforce stormwater control ordinances, and dictates use of salt storage structures. These regulations, while noble, have increased public works departments’ budget throughout the state.
Based on the responses to our survey, average cost for a municipality is $38,625.
Pension contributions Currently, the municipality must contribute a percentage determined by the Division of Pension. Given the ability to negotiate an employee “match” by contract, we could save the taxpayers some money.
Mandatory Training Police Training Commission rules and N.J.S.A. 52:17B, et seq., for example, impose various training requirements for police officers. The 911 Commission, N.J.S.A. 52:17C, et seq., and N.J.A.C. 17.26 impose training costs for public safety dispatchers. Based on cost estimates we have received, the average cost per officer, per year, is about $4,600.
Lack of Due Diligence in Processing Applications One Camden County municipality has identified NJDEP permit delays to have cost them $500,000 in potential added revenue for the municipal government. With a population barely over 5,000, the impact of these delays is relatively enormous. Small municipalities have greater difficulty in these situations as they do not have the sophisticated staff to do battle with NJDEP staff members.
These are only a handful of examples of the mandates problem afflicting local budgets. We stand ready to assist with these efforts in any way. And again, we want to thank Lieutenant Governor-elect Guadagno for taking on this challenge and for allowing us to be part of the process.
More than ever, in tough economic times, the people need property tax relief. The state can provide it through immediate relief from unfunded mandates.
The article above was originally published in the January 2010 issue of New Jersey Municipalities Magazine