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February 1, 2008

Binding Arbitration and Property Taxes




Dear Mayor:

We know that you, along with all of our members, are concerned about the ever increasing property taxes. As costs rise only the property tax seems to provide the necessary monies to keep the ship afloat. Personnel and personnel related costs make up about 70%+ of municipal budgets. Binding interest arbitration has been a principal reason for the increase in public safety salaries and it has also caused other salaries to increase more than they might have without binding interest arbitration.

We need to act with one voice and one mission to stop the growth of personnel costs-not only salaries but other related costs such as health insurance and pension benefits (today's salary increase is tomorrow's increase in the pension bill, with or without unfunded liabilities). To do this we have to:
1)  encourage the Legislature to amend the binding interest arbitration laws to mandate greater emphasis on municipal fiscal realities in arbitration awards in recognition of the direct impact these awards have on the taxpaying public. We appreciate the recent actions of the Legislature and the Governor in adding “statutory restrictions on the employer”, including the property tax levy cap, to the factors to be considered in arbitration awards. However, this limitation on the awards should be mandatory and should be on a department salary line basis.  This will prevent arbitration awards from forcing a municipality to short-change other departments to pay a higher increase for police or fire employees.

2) ask your legislators to encourage PERC to educate the arbitrators about the massive damage their decisions and mediated settlements are causing to the property tax levy, and to cease the practice of keeping all unions at the same relative position regionally with their peers;

3)  encourage unions to hold the line on demands for increased benefits and wages;

4)  pursue regional, non-partisan, fiscally tight and disciplined strategies to contain the total cost of wage and benefit increases for all public employees to less than half the rate of inflation.  In some cases it may be appropriate to seek freezes of salaries; and 

5)  negotiate regional settlements that reduce the whip-sawing effect of current individual negotiations.

Local officials can make some of these changes, but they cannot do this alone.   Therefore, we ask that you discuss these actions with your governing bodies and contact your legislators and the Governor to get their support in achieving these goals.  We all need to convince the State of the strong connection between current binding arbitration awards and practices and the overwhelming property tax burden on New Jersey residents.


                                                                        Very truly yours,


                                                                        William G. Dressel, Jr.
                                                                        Executive Director





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