New Jersey League of Municipalities
March 19, 2014
LEAGUE WELCOMES TASK FORCE REPORT ON INTEREST ARBITRATION
The Police and Fire Public Interest Arbitration Impact Task Force released its final report today, including a series of recommendations to the Legislature. Based on the Task Force analysis, a number of conclusions can be drawn:
- The number of cases submitted for interest arbitration has declined, demonstrating that the law has facilitated negotiations between management and employees.
- The backlog of cases at PERC has been reduced as have the number of appeals, demonstrating that when contract negotiations go to arbitration, the process is now streamlined.
- Impasse proceedings, which utilize a neutral mediator, have also increased further, demonstrating the willingness of both parties to negotiate.
- Most importantly for taxpayers, the evidence demonstrates that the 2% cap on interest arbitration awards has resulted in awards coming in under the 2% cap.
This cap was part of the bi-partisan management reforms enacted in 2010 and 2011 but will sunset on April 1. Absent further action by the Legislature, any police or fire contract that expires on or after April 1, 2014, will not be subject to the 2% cap on awards. Without those limits, arbitrators will be able to impose awards similar to those issued prior to the implementation of the 2% hard cap. As such, municipalities would still have to comply with the tax levy cap and the appropriations cap without the aid of the 2% interest arbitration cap.
The Management representatives on the Task Force further recommend the permanent extension of the 2% cap on interest arbitration.
Assemblyman Declan O’Scanlon, a member of the Task Force, will be introducing legislation to implement the Task Force’s recommendation, including a permanent extension of the interest arbitration cap, which the League of Municipalities fully supports.
League President Suzanne Walters, Mayor of Stone Harbor, commended the Task Force and Assemblyman O’Scanlon for their work,
“The arbitration cap has been a successful tool to contain property taxes. If the interest arbitration cap is not extended, arbitrators will be able to impose excessive awards without regard to the 2% tax levy cap. Such awards would immediately threaten funding for all other municipal services. Failure to extend the 2% cap on interest arbitration awards will force municipalities throughout the State to further reduce or even eliminate crucial services, personnel, and long-overdue infrastructure improvement projects in order to fund an arbitration award.”
The interest arbitration cap has taken a playing field that was weighted heavily to the benefit of the unions and leveled it so that collective bargaining was once again a “give and take” between the parties. There are many examples where municipalities negotiated contracts with significant savings because the unions recognized that if they went to arbitration they would only receive a 2% increase. Steps were lengthened, sick leave incentives were reduced or eliminated, and vacation time was reduced, providing savings to taxpayers.
League Executive Director Bill Dressel added,
“The clock is ticking. The cap on interest arbitration awards has worked by controlling one of the largest municipal expenses, public safety salaries, not only through arbitration awards but also by encouraging contract negotiations. The Legislature should act swiftly and immediately implement the Task Force recommendations. “
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For further information contact: William G. Dressel, Jr., Executive Director
at (609)695-3481, extension 122 or 609-915-9072.
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