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Wednesday, November 27, 2013

         (Corrected Copy*)

COURT SIDES WITH TAXPAYERS IN “BASE SALARY” DISPUTE

Today in Trenton, a State Appellate Court ruled in favor of our property taxpayers in the case of Paterson Police PBA v. City of Paterson. At issue were the amounts that Paterson police officers would contribute towards their health insurance benefits.

The 2010 pension and benefits reform law (P.L. 2010 c. 2) – designed to lessen taxpayer burdens -  required employees enrolled in the State Health Benefits Plan (SHBP) to contribute 1.5% of their “base salary” towards their plan. The statute did not define the term “base salary.” However, the Department of Community Affairs (DCA) advised municipalities that this term meant the salary used to determine an employee’s pension benefits. Those benefits are based on a police officer’s compensation, including longevity payments, educational incentives and night and detective pay differentials.

The Paterson PBA argued that these others payments should not be included. The city disagreed.   The League of Municipalities, represented by Brian Kronick, Esq., joined with Paterson as amicus curiae, as did DCA’s Division of Local Government Services, the Attorney General, the State Treasurer and the Division of Pensions and Benefits. Today the Appellate Division sided with the City of Paterson, the State and the League.

 This is a sound decision, and a good one for municipalities and property taxpayers, all around New Jersey. Had the decision gone the other way, employee groups throughout the State would have demanded reduced obligations – shifting costs back to local budgets.

The property tax relief focus will shift back to the Legislature in 2014, as the 2% cap on police and fire contract awards is set to expire in April. Absent the cap, municipal budget makers will be forced to devote increasingly larger percentages of available resources to public safety employee compensation. Extending the cap beyond the April 1 ‘sunset’ will be a major priority for municipalities struggling to maintain essential services.

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For further information contact: William G. Dressel, Jr., Executive Director at (609) 695-3481, extension 122 or 609-915-9072.

*- Note deletion of “overtime” from earlier advisory. Overtime is not included in determining “base salary” for health benefits contribution.

 

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