State cap on arbitration awards may end


NORTHERN VALLEY, N.J. —— At the stroke of midnight Dec. 31, the state’s interest arbitration cap – a law that limits annual police and firefighter salary increases to two percent – was scheduled to expire and many North Jersey mayors are worried taxpayers will face a double-whammy in 2018: reduced federal property tax deductions and a likely increase in local property taxes.

In fact, nearly all mayors from Bergen County’s 70 municipalities supported a resolution passed by the county’s League of Municipalities calling for a five-year extension of the two percent interest arbitration cap, said Alpine Mayor Paul Tomasko, who also serves as Bergen County League of Municipalities president.

Most mayors interviewed by Northern Valley Press believed the interest arbitration cap – along with the state’s two percent annual property tax cap – have helped to control local tax increases during eight years since it was begun.

They were less sure what a future without the cap on public safety salaries may mean for taxpayers in the highest property tax state in the nation.

“There is near unanimity of the need that a two percent cap on interest arbitration be extended,” Tomasko said Dec. 27. “No question that this has a dampening effect on police salary increase expectations,” he said.

Tomasko noted most Bergen County police contracts are renewed “without arbitration” and that remains the norm.

The county League of Municipalities’ resolution states if the cap expires while the two percent property tax cap remains in effect “municipalities will be forced to reduce or eliminate municipal services in order to fund interest arbitration awards.”

On a state level, Democrats control both the senate and assembly, though no action appeared imminent to renew the cap law. The law was approved in 2010 under Gov. Chris Christie and renewed by a bipartisan majority in 2014. Prior to the cap, average police and firefighter salary increases awarded via arbitration ranged from two to six percent.

Neither Gov.-elect Phil Murphy nor running mate Sheila Oliver took a position on the cap during the election campaign, preferring to wait for a task force report due by Dec. 31.

A committee report was released in September by four of the committee’s Republican members – not the four Democratic members – indicating the cap law saved taxpayers $530 million on police and firefighter salaries, and combined with the state’s property tax cap saved taxpayers $2.9 billion.

However, Patrick Colligan, state Patrolmen’s Benevolent Association president, said they were told that the 2014 extension would be the law’s last renewal and said the state League of Municipalities “has conducted a ‘the sky is falling’ campaign” regarding the cap’s expiration.

“It’s absolutely going to expire, there’s no doubt,” said Colligan Dec. 27, regarding any last-minute efforts to renew the law in a lame-duck session before Murphy’s inauguration Jan. 16.

Colligan said that the state League of Municipalities started the arbitration process for police and firefighters years ago “and now they want to legislate it.”

He said an existing state law requires arbitrators to take impacts on local taxpayers into account when deciding arbitration cases. He said many mayors have been using the interest arbitration cap law to limit raises when they might be able to pay more.

“Many mayors, many, are not negotiating in good faith,” said Colligan, not directly referring to Bergen County. “The overwhelming attitude is ‘OK, we’re going to arbitration’” if initial negotiations are not successful.

Colligan said police offer “24-hour services” to residents and that no other public employees provide what a local police force does.

“My position is that if a town has the ability to pay an officer more, we are just asking that they do it based on that,” he said.

“I know that taxes are high, and (the state) has the highest cost of living too,” he said, noting that schools also require a large share of local taxes.

Colligan said he hopes “to have an honest conversation” about the impact of police contract negotiations without a cap law in place.

He said most police are paying an increased share of health insurance costs and that is rarely mentioned.

“It’s expiring because it should expire,” he said.

Mayors worry with no cap
“It’s not sustainable over the long term,” said Demarest Mayor Raymond Cywinski, asked about the cap’s expiration. Cywinski said though towns may give more than two percent raises, and do, it is up to local officials to manage budget increases.

“Overall I’m hoping it gets extended. Not just for Demarest, we have pretty good negotiations with our unions. Sometimes people on a local level don’t make the tough decisions,” he said. “It’s not the end-all answer. We didn’t get into this pickle overnight and we don’t get out of it overnight.”

Cywinski said “shared services are the tip of the iceberg” and that in the future a move toward merging municipal services including police and public works employees “may save taxpayer dollars and serve both taxpayers and employees.”

Mayor John Smart, Haworth, said the borough has not used arbitration “but the fact that it was out there…may have helped to expedite our (contract) resolution,” he said.

“In other communities, if they’re allowed to take their salaries/benefits higher, it would work its way into Haworth,” Smart said. “So it’s good to have a two percent cap across the state. It imposes some discipline on salaries and wages,” he said.

Hillsdale Mayor John Ruocco said “most municipalities are in favor of an extension. They understand how difficult it is to keep their budgets in balance without this kind of control,” he said. “We had difficulties prior to the cap to keep control of local expenses.”

Ruocco said being without an arbitration cap “puts municipalities in a difficult position” because they are required by the state’s permanent property tax cap law to keep local tax increases to two percent per year.

All mayors stressed they have good police-local government relations. And in some cases, several said, with cont racts expiring in 2018 or 2019, they hope to continue building on positive relations established in previous union negotiations.

Kim Guadagno, with Woodcliff Lake Mayor Carlos Rendo as her running mate, ran for governor on a platform calling for renewal of the cap. Rendo said failure to do so would lead to higher property taxes.

Moreover, he said recently passed federal tax reform limiting a New Jersey taxpayer’s federal property tax deduction to $10,000 in 2018 would be another fiscal hardship to North Jersey residents.

“I was speaking for every municipality who wanted that (arbitration) cap extended during the campaign,” said Rendo.

“Coming from a mayor, we’re here at ground zero. That cap was a bipartisan effort to control taxes,” said Rendo, who noted the county’s mayors were generally in favor of retaining the cap.

Jon Moran, spokesman for New Jersey League of Municipalities, said the legislature could renew the cap and make it retroactive to Dec. 31.

He said “well over 100 municipalities” passed a resolution in favor of renewing the arbitration cap at the League’s November conference.