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Taxpayers’ Resolution: Don’t Wait for the New Year

It has now been five months since the Governor and Legislative Leadership agreed to impose a 2% levy cap on New Jersey municipalities. At that time, there was universal recognition that more reforms were needed to make that cap workable.

Until our State’s policy makers recognize the connection between property tax relief funding and property taxes, our taxpayers’ best hope for help will be local government management reforms and mandates relief.

Substantial progress can be made in dealing with the new 2% levy cap, if we can convince State policy makers to agree on three major issues. Those issues are Affordable Housing and COAH, Binding Interest Arbitration Repeal or Reform and Civil Service Reform.

While coming too late to provide help in 2011, action on these matters BEFORE the end of the year would serve as evidence that State leaders respect the efforts of local officials to lower regressive property taxes and deliver high quality essential services to their fellow citizens.

Over the years, the State’s Council On Affordable Housing has done a better job of imposing cumbersome, impractical requirements on local governments and costly, counterproductive policies on our property tax payers, than it has of encouraging the production of affordable housing. The tipping point for COAH came when the bureaucracy issued its latest “Third Round” regulations.

Legislators on both sides of the aisle and in both Houses agree that only dramatic reforms can protect the interests of New Jersey citizens. Governor Christie stands ready to sign Affordable Housing reforms into law. But, to date, disagreements regarding specific revisions have prevented meaningful progress.

So, too, is it with binding interest arbitration reform. Interest arbitration is a state-mandated process for settling collective bargaining disputes between local governments and police and fire employee unions.

When a town or other public employer can’t reach a contract agreement with a union representing civilian workers, it can impose its final offer. But in an impasse with a police or fire union, a third-party arbitrator is called in to decide the terms of the new contract. Since 2000, this binding arbitration process has resulted in reported salary schedule increases averaging nearly 4 percent per year. Only in the last six months have those average salary increases been reduced.  

And those figures don’t represent the full cost.  When viewing arbitration awards one must look beyond the salary increase to determine the true impact on the municipal budget.  Factors, such as step increases, longevity, pension payments all must be considered as they impact the municipal budget.   Salary steps based on years of service — which can amount to as much as $15,000 per officer — often are not considered by the interest arbitrator as a cost to the employer. As a result, a 3 percent increase to the salary schedule can cost an employer upwards of 17% percent, depending on the way the contract is structured.

Awards like this to police and fire personnel can put pressure on the governing body to give similar increases to other public employees. On the other hand, it can also result in layoffs or furloughs of other government workers to pay for the police and fire contract awards.

Here again, Governor Christie and legislators from both parties in both Houses agree that the current system is untenable. But there, the agreement ends. Now is the time for our elected leaders in Trenton to sit down together and hammer out a workable compromise.

In order to properly deal with today’s economy, governments need to become leaner, more streamlined and more flexible, if they are going to be able to continue providing services that the public has come to expect.  The current system under the Civil Service rules makes this almost impossible.   The present Civil Service rules and regulations make it extremely difficult for a public manager to terminate non-productive employees.  It is even more difficult to reward productive employees, to recruit the best qualified candidates or cross-train personnel to meet community needs.

Here again, our leaders in Trenton need to stop posturing and start producing. Absent progress on these, and other issues, essential municipal services will be cut, and dedicated public servants will lose their jobs. Beyond the impact of these consequences on individuals and their families, they are bound to affect our citizens’ quality of life, our State’s industrial and commercial competitiveness, and our hopes for a speedy economic recovery.

Michael F. Cerra,
Senior Legislative Analyst
NJ League of Municipalities
222 West State Street
Trenton, NJ 08608
(609) 695-3481 x120
(609) 695-0151--Fax



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