Tax Court Ruling on Property Tax Exemption for Disabled Veterans

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correct size blogLast week the New Jersey Tax Court issued a published opinion dealing with the applicability of the disabled veterans’ property tax exemption to certain surviving spouses of qualified disabled veterans.  In Rosanna Pruent-Steven v. Township of Toms River, the court determined that the terms, “widow” and “widower” as they appeared in the State Constitution and the statute, define a person and not a marital status.  Thus, surviving spouses of disabled veterans can be eligible for property tax exemption after they have remarried, provided that they are not currently married at the time they request the exemption.

The issue arose when the municipal tax assessor denied the property tax exemption request from a disabled veteran’s widow, who although currently unmarried, had previously remarried for a period of time after the death of her disabled veteran husband.  In denying the request the assessor relied on the language of the statute requiring certain eligibility requirements, one of which is a certification that the surviving spouse, “has not remarried.”   The assessor interpreted this to mean that once a widow (or widower as the case may be) has been remarried they forever cease to be eligible for the disabled veteran’s property tax exemption, regardless of their current marital status.

The Tax Court disagreed with the municipal assessor’s reading of the statute and instead found that the eligibility for the property tax exemption should be determined using the widow’s current marital status.  By unlinking marital status and widowhood, the Tax Court creates a situation where a widow’s eligibility for the disabled veteran property tax exemption can essentially be paused during periods of remarriage.  This occurs because the Tax Court has determined that once a widow, always a widow and therefore anytime the widow is unmarried they are entitled to the disabled veteran’s property tax exemption.

Municipal tax assessors need to be aware of this new ruling and should ensure that they are complying with the Tax Court’s holding when reviewing exemption requests from the surviving spouses of a disabled veteran.  After this ruling, it is very much possible that previously denied exemption requests would now be approved upon a determination of the current marital status of the surviving spouse.

As of this date, we do not know if the Township will appeal the ruling.

Contact: Frank Marshall, Esq., League Staff Attorney, fmarshall@njslom.org or 609-695-3481 x137.

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Voters Asked to Approve New Funding for Libraries

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correct size blogOn July 21, the Governor signed PL 2017, c. 149, the “New Jersey Library Construction Bond Act.”   This bill, upon voter approval, authorizes the issuance of $125,000,000 in general obligation bonds to finance capital projects at public libraries.    As a result, on Election Day, New Jersey voters will cast their ballots on Public Question 1, the “Bonds for Public Libraries Measure. “

 

Summary:

If approved by the voters:

  • the State Librarian, in consultation with the President of Thomas Edison State University, to establish eligibility criteria for the receipt of grants. The State Librarian, with the approval of the president, will prepare a list of eligible projects;
  •  for any approved project financed by bond proceeds, the grant award will support 50% of the cost of the project, and the appropriate local governing entity in the area served by the public library will support 50% of the cost of the project.
  • local governments are authorized to solicit and receive grants and other funds from any private source to support its required share of the project.

Background

The ballot question reads,

Do you approve the “New Jersey Library Construction Bond Act”? This bond act authorizes the State to issue bonds in the aggregate principal amount of $125 million. The proceeds of the bonds will be used to provide grants to public libraries. The grants will be used to build, equip, and expand public libraries to increase capacity and serve the public. A municipality or county that funds a public library would be required to match the grant amount.  The municipality or county may solicit private funding to support its match.

The interpretative statement reads,

Approval of this bond act will allow the State to sell $125 million in State general obligation bonds. Proceeds from the bonds will be used to provide grants to construct, expand, and equip public libraries. Municipalities or counties that fund public libraries will match the grant amount. The municipality or county may solicit private funding to support its match. The State Librarian, in consultation with the President of Thomas Edison State University, will set eligibility criteria for the grants.

The League’s Position

The League has joined the New Jersey Library Association in support of the enabling legislation, particularly since the funding must be approved by the voters.    This will allow, if the voters of the State agree, for much-needed funding to provide for the construction, reconstruction, development, extension, improvement, and furnishing of New Jersey’s public libraries. Specifically, for any approved project financed by bond proceeds, the grant award will support 50% of the cost of the project, and the appropriate local governing entity in the area served by the public library will support 50% of the cost of the project.

If approved this funding can address critical needs. Many public libraries in New Jersey are not in compliance with the Americans with Disabilities Act. Other facilities are simply outdated and cannot accommodate modern technologies. And by providing an appropriate revenue source, this funding will diminish the financial impact on the local governing entities.

We would recommend, particularly if your community’s library may benefit from this funding, to share this information with residents.

Other Stakeholders:  The New Jersey Library Association, http://www.njla.org/   & http://njlibrariesbuildcommunities.org/

For more: https://ballotpedia.org/New_Jersey_Public_Question_1,_Bonds_for_Public_Libraries_Measure_(2017)#cite_note-text-1

Contact:  

Michael F. Cerra, Asst. Executive Director, mcerra@njslom.org, 609-695-3481 x120.

Local Governments Using Lawsuit in Fight Against Opioid Crisis

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correct size blogA plague of opioid addiction is spreading across our country and leaving many state and local governments scrambling to find the resources needed to deal with the litany of problems this epidemic has fostered.  To that end, local governments throughout the country have filed lawsuits against pharmaceutical manufacturers and distributors whom they feel are culpable, at least to some extent, for the proliferation of opioid-based drug abuse.

These lawsuits against pharmaceutical companies are reminiscent of the suits brought against “big tobacco” in the 1990’s which resulted in a settlement that saw, among other things, the creation a multi-billion dollar trust fund.  The big-tobacco-settlement trust fund is used to reimburse the states for their tobacco-related health care costs as well as for use in efforts to stymie the expansion of the tobacco public health disaster. Local governments are hoping their lawsuit against the pharmaceutical companies will provide an outcome similar to the big tobacco lawsuits.

At least two New Jersey municipalities – Paterson and Toms River – plan to file their own lawsuits against the pharmaceutical companies.  Their suits are expected to echo the complaints filed against the pharmaceutical companies by various other states and municipalities throughout the country.  The legal theories used by municipalities and other plaintiffs vary and no suit has yet to advance far enough to determine which of these theories could lead to a success in court.  But, one theory has emerged as having the most potential for success – the “public nuisance” theory.  This is the most commonly put forth legal theory and mirrors the one used in the successful, big tobacco lawsuits.

The public nuisance theory is premised on the idea that as a result of pharmaceutical companies’ questionable marketing techniques in conjunction with their understating of the addictive nature of the drugs, companies have created a situation which has caused local governments to incur additional costs to protect the health, welfare, and safety of the public.  No doubt, local governments have seen an increase in drug-related crime and health issues since the beginning of the opioid epidemic and the cost to address these issues has ballooned.  In fact, many first responders now carry and regularly need to use the anti-overdose drug Narcan, as the last lifeline for more and more overdose victims.  While the cost of carrying Narcan can be easily tallied, the total costs to a municipality battling the opioid epidemic are impossible to quantify and it is these costs that the plaintiffs seek to recover.

Monetary damages are not the only thing sought in these lawsuits.  The true goal of the municipalities is to put an end to the techniques employed by the pharmaceutical companies that many believe have led to this national crisis.  Absent addressing that, it is believed any court ruling would be a pyrrhic victory.

The League is working with our national counterpart, the National League of Cities, to monitor the New Jersey lawsuits and those across the country.  We will continue to monitor this important issue and will keep our members updated on any developments.

Contact: Frank Marshall, Esq., League Staff Attorney, fmarshall@njslom.org or 609-695-3481 x137.

Governor’s Appointees to the Interest Arbitration Task Force 2017 Report

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correct size blogOn September 28, the 2017 Report of the Governor’s appointees to the Police and Fire Public Interest Arbitration Impact Task Force was released. The report was issued, following the Task Force’s September 25 meeting, where the eight-member committee was deadlocked on adopting the report and delivering it to the Governor and Legislature. All four of the Governor’s appointees supported the adoption and release, while all four legislative appointees were against the adoption and release. The Governor’s appointees decided that the “information was too important to keep from the public” and released the report.

Click here for the report.

And click here for the copy of the report tabs, which includes significant and relevant data.

The Legislative appointees, who are all public safety union representatives, released a statement denouncing the release of the report without their consent.    The Legislative appointees stated that at the same September 25 meeting, a motion was also “made to obtain additional information to provide a clear and concise final report.”   That vote resulted in a 4-4 tie, as well.

The Governor’s appointees to the Police and Fire Public Interest Arbitration Impact Task Force made the following recommendations:

  • Permanently impose the 2% cap well in advance of the current December 31, 2017, expiration.
  • Eliminate the dynamic status quo doctrine to require that increment and longevity schemes cease upon the expiration of a collective negotiations agreement.

This most recent report continues to again demonstrate what the previous Interest Arbitration Task Force reports found; that the “amendments have had a profound effect on limiting interest arbitration to a procedure of last resort, leaving it to the parties to settle labor contracts through direct negotiation and within budgetary constraints.”

In addition, the underlying data continues to show that Interest Arbitration cap works and has not adversely impacted crime rates or recruitment of public safety personnel. In fact, the report also found that while the rates of the police and fire salary increases have slowed, New Jersey firefighters’ average salaries remain the highest in the nation while police officers’ salaries are the second highest in the nation.

The report noted that from 2012 to 2016 there was 90 interest arbitration awards. 36 of the 90 awards were subject to the 2% cap, with an average salary increase of 1.6%. Over the same period of time, 46 voluntary settlements were reached with an average increase of 1.80%.

Using Civil Services data, the report found that there has been an increase in the number of individuals taking both the police and fire exams – a 43% increase in the number of applicants and eligible candidates for police and a 90% increase in the number of applicants and eligible candidates for fire. The increase in candidates is at a time when NJ’s unemployment rate dropped from 9.5% to 5%.

In addition, the caliber of candidates has not suffered. In fact the number of applicants with Bachelor’s, Master’s or Doctorate degrees has increased as follows:

Police:

Year Applicants Admitted to Exam Eligible Candidates Applicant with Bachelor’s Degree Applicants with Master’s or Doctorate
2010 (Pre cap) 26,066 25,526 18,568 4,941 311
2013 (cap) 27,852 26,763 20,443 6,016 511
2016 (cap) 37,393 36,117 26,696 7,812 608

Fire:

Year Applicants Admitted to Exam Eligible Candidates Applicant with Bachelor’s Degree Applicants with Master’s or Doctorate
2010 (Pre cap) 18,170 17,606 6,392 1,984 116
2015 (cap) 19,075 18,365 12,272 2,988 229

 

The report found that using data from the Division of Pensions, the average annual pay for all police pre-cap (2006-11) increased 18.3%, from $75,301 to $89,066. Post cap (2011-16) it increased 4.8%, from $89,066 to $93,360. In addition, using data from the US Bureau of Labor Statistics from 2012-14, the report found that the average mean wage of police in New Jersey was the highest in the nation. In 2015-16, New Jersey moved to 2nd place behind California.

For all fire personnel, using data from the Division of Pensions, the report found that the average annual pay for all fire pre-cap (2006-11) increased 21.8%, from $78,079 to $95,107. Post cap (2011-16), it increased 4.8% from $95,107 to $99,674. In addition, using US Bureau of Labor Statistics data, from 2013-16 the average mean wage of fire service employees in New Jersey was the highest in the nation.

In regards to crime rates the report found, using data from the Uniform Crime Report, that crime rates fell before and after the cap. Precap (2006-11), there was a 5.8% decrease in crime rates. Post cap (2011-16), crime rates decreased by an additional 22.3%.

Finally, while noting that “it was impossible to cull out and quantify the precise impact of any single one of the major reforms enacted in 2010 and 2011, the dramatic significance of the arbitration award and property tax caps is undeniable.” The report found that the average annual increase in municipal property taxes from 2005-10 (pre-cap) was 7.19% or $129 average per year per taxpayer, compared to 2.41% or $56 per year per taxpayer from 2011-16.

Once again, the underlying data reaffirms the continued success of the interest arbitration cap in containing property tax increases and facilitating negotiations between local governments and the respective public safety unions, including a reduction in the number of petitions, a reduction in open interest arbitration matters, and a reduction in appeals. Further, the data demonstrate that not only has the number of recruits for both police and fire increased, but the number of applicants with Bachelor, Master or Doctorate degrees has also increased, and crime rates have continued to fall.

It is imperative that the Legislature take prompt action to extend the cap when they reconvene. The possible sunset of the interest arbitration cap in December is of great concern, and we look forward to working with our state and public safety union leaders on this issue.

Contacts:

Michael Cerra, Assistant Executive Director, mcerra@njslom.org, 609-695-3481 x120;
Lori Buckelew, Senior Legislative Analyst, lbuckelew@njslom.org, 609-695-3481 x112.

Federal Tax Reforms Could Threaten Infrastructure Investments and Homeowners

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correct size blogAs you may recall, in our August 4 Weekly Update we alerted you to the possibility that Federal Income Tax reform could jeopardize two provisions of the Tax Code that are vital to New Jersey taxpayers and New Jersey municipalities. Those are the deductibility of interest earned on municipal bonds (First highlighted, this year, in our February 3 Weekly Update.), and the state and local tax (SALT) deduction. (Most recently discussed in our September 15 Weekly Update.)

On Wednesday, the result of weeks of discussions among the White House, the Senate Majority Leader, the Speaker of the House and the Chairs of the respective House and Senate tax-writing Committees was released as the “Unified Framework for Fixing Our Broken Tax Code” (the Framework).

This nine-page document provided some details that were missing from the Administration’s earlier one-page statement of principles. (See our April 28 Weekly Update for information on that.) It makes no specific mention, however, of the future of the municipal bond and the SALT provisions.  Instead, it directs the House and Senate tax-writing committees (the House Ways and Means Committee and the Senate Finance Committee) to ‘develop legislation through a transparent and inclusive committee process,’ which would (among other things) close ‘special interest tax breaks and loopholes’ in order to recover some of the revenue that would be lost by lowering rates and expanding a small number of deductions for individuals and corporations.

The goal is to eliminate many tax breaks, in order to simplify the tax code and to help pay for lowering tax rates. The Framework calls for significantly increased standard deductions, specifically allowing itemized deductions for mortgage interest and charitable giving.

Some budget analysts estimate that the tax cuts included in the Framework could decrease government tax revenue by more than $5 trillion over 10 years. The elimination of other, yet to be specified, itemized deductions will be needed to offset some of that loss, and to ease the impact that it would have on the deficit and on continued funding for vital federal programs and services.

The tax code is incredibly complex and every one of its provisions was enacted for a reason. While some of those reasons may no longer serve the public’s interest, others remain fair and effective tools that promote the general welfare and serve legitimate public interests.

For more than a century, states and local governments have depended on the issuance of municipal bonds for essential capital projects. The federal income tax exemption of the interest earned on those bonds has kept the cost of issuance well below other investment options.   It has allowed for vital investments in our public infrastructure, at a discount to those taxpayers.  Loss of that advantage would force municipalities and states to increase rates of return, in order to compete with other investment opportunities. That, in turn, would increase a local government’s costs that would, ultimately, be shouldered by our property taxpaying residents and businesses.

Nearly two-thirds of core infrastructure investments in the United States are financed with municipal bonds. In 2015 alone, more than $400 billion in municipal bonds were issued to finance these vital projects. These are the pro-growth investments which spur job creation, help our economies grow, and strengthen our communities. A combination of local control and local responsibility makes municipal bonds an incredibly effective and efficient tool.

Over the last decade, overall state and local borrowing has actually declined in proportion to the economy, while still financing more than $2 trillion in new infrastructure investments. And, if simply left alone, municipal bonds likely will finance another $3 trillion in new infrastructure investments by 2026. Keeping infrastructure costs low is critical to job creation and to the infrastructure investments that are the backbone of our economy Savings from affordable financing through tax-exempt bonds allows for greater infrastructure investments and savings passed directly to taxpayers and ratepayers in the form of reduced taxes and fees.

At our Annual Conference, last November in Atlantic City, the members of the League unanimously endorsed a resolution calling on Congress to preserve this vital tool. The state and local tax deduction was one of six deductions in the original tax code in 1913. The principle that no government should tax another, strikes at the heart of federalism and any reversal would be an overreach by the federal government. This preemption would result in a double taxation and increase the constraints of local budgets due to a lack of revenue.

A Draft Resolution on SALT Deductibility is posted on our website, for your consideration.

Since the last comprehensive tax reform in 1986, the tax code has become increasingly complex and the need for streamlining is apparent. While we appreciate the need for reform, revenue neutrality should not be accomplished by preempting state and local governments taxing authority. Any effort that includes cutting these vital tools is short-sighted and would undermine the ability to meet the needs of the citizens’ local officials are sworn to serve.

Please contact Senators Menendez and Booker and your Congresswoman or Congressman and urge them to protect these vital provisions.

Contact:

Jon Moran, Senior Legislative Analyst, jmoran@njslom.org, 609-695-3481, x121;

Frank Marshall, League Staff Attorney, fmarshall@njslom.org, 609-695-3481, x137.

Hopes Are High for Legislative Action on Restaurant Liquor License Bill

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town-crier_facebookOur State’s liquor licensing laws date back to the ratification of the Twenty-first Amendment in the 1930’s. The world is a different place. And those laws have tended to stifle competition and to hamstring local economic development options.

New Jersey municipalities looking to revitalize downtowns and Main Streets, could use some new tools. Thus, the League of Municipalities supports A-2452, which would create new liquor licenses for restaurants meeting certain criteria. It is the sponsor’s intent to foster and encourage economic development and growth in this State by creating a new less-costly restaurant license that permits the licensee to sell alcoholic beverages and to provide financial compensation to certain plenary retail consumption licensees who already have established businesses and paid market value for their licenses.

This bill creates a restricted restaurant license (R1) which permits the holder to sell any alcoholic beverages for consumption on the premises of certain restaurants.  In addition, the bill creates a restricted beer and wine license (R2) which permits the holder to sell only beer and wine by the bottle or can.  There is no doubt that these licenses would represent an important economic development or redevelopment tool for many municipalities, and give an economic boost to neighborhood restaurants and to other businesses located in proximity to those establishments.

Under current state law, dating back to the repeal of Prohibition, a municipality may not issue a new license unless and until the combined total number of licenses in the municipality is less than one for each 3,000 people. Assemblyman (and former Mayor) John Burzichelli, the prime sponsor of the bill, has noted, “As a result of this restriction, there’s an insufficient number – or complete lack – of available licenses in many municipalities, inflating the value of existing licenses and forcing prospective restaurateurs to buy a license at an exorbitant price or simply operate without a license. This has created an unfair situation for many restaurant owners.”

Allowing restaurants to get a newly created license makes sense, as long as it’s coupled with relief for existing license owners, so this bill proposes tax credits to the holders of existing licenses to compensate them for any devaluation of their licenses.

The bill establishes a fee schedule for the initial issuance and annual renewal fee for the restricted restaurant license and restricted beer and wine license based on the square footage of the restaurant. The first $2,500 of the initial and renewal fee for the restricted restaurant license and the first $1,250 of the fees for the restricted beer and wine license, would be paid to the municipality where the restaurant is located. If the restaurant is located within the boundaries of two or more municipalities, the fee is to be divided equally among those municipalities. The remainder of the fees would go to the Director Division of Taxation to be used solely for the purposes of offsetting the costs associated with issuing tax credits provided under the bill.  After the Division of Taxation is reimbursed for costs associated with issuing tax credits, the full fee is to be paid to the municipality.

The bill imposes certain penalties on the holders of the restricted restaurant license or restricted beer and wine license who violate the law.  Any fine money collected is to be paid to the Director of the Division of Taxation to be used solely for the purposes of offsetting the costs associated with issuing tax credits provided under the bill.  After the Division of Taxation is reimbursed for up to 75 percent of the projected estimated cost associated with issuing tax credits, the full fee is to be paid to the municipality.

The League’s Liquor License Task Force carefully studied this proposal and recognized the benefits such licenses could provide to many municipalities throughout the State.  We also identified some problems in the bill.

Assemblyman Burzichelli, has indicated his willingness to accept many of our recommendations.   In particular, the Assemblyman agreed to our suggestion to allow an “opt-in” provision for all municipalities.  We sincerely appreciate his eagerness to involve us in discussions on the bill and to consider our concerns.

We have no doubt that a significant number of municipalities, if given the opportunity, would take affirmative action to make such licenses available to local restaurateurs. The bill is referenced to the Assembly Regulatory Oversight Committee, which held a “for discussion purposes” only hearing on February 27.  We hope to see the bill advance soon.

We suggest contacting your Assembly representatives and ask for their support of A-2452.

Contact: Jon Moran, Senior Legislative Analyst, jmoran@njslom.org ,609-695-3481, x121.

 

 

 

NJ Supreme Court Hears Arguments in Public Employee Immunity Case

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correct size blogEarlier this week the NJ Supreme Court heard oral arguments in the case of Hazel Hamrick Lee v. The City of Paterson, a case in which the League is joined as Amicus.  At issue, in this case, is the interpretation of whether qualified immunity should be afforded to public employees versus absolute immunity in cases when the public employee is enforcing the law.

Both the trial court and the Appellate Division determined that when enforcing a law a public employee is only afforded qualified immunity, not absolute immunity.  The matter is now before the Supreme Court to decide.  Should the Court reverse the lower courts and determine that a public employee is entitled to absolute immunity when enforcing the law, then the city will not be liable for damages.  However, should the Court uphold the lower courts’ decisions of allowing only qualified immunity, then the case will be remanded to the lower court for a determination to be made as to whether or not the city employee acted in good faith when enforcing the law.  This is because, under qualified immunity, a city employee is granted immunity only if it can be shown that the employee acted in good faith.

At this time there is no set date for when the Court will issue its ruling.  However, it is anticipated that a ruling will be issued before the beginning of December.  The League will keep our members updated on this matter.

Contact: Frank Marshall, Esq., League Staff Attorney, fmarshall@njslom.org, 609-695-3481 x137.

 

 

Interest Arbitration Cap to Expire At End of Year

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correct size blogIf the Legislature and Governor fail to take action, the 2% cap on Interest Arbitration will expire on December 31, 2017, the same day that the final report and recommendations of the Police and Fire Public Interest Arbitration Impact Task Force are due.  The permanent 2% property tax levy cap, however, will remain in effect. Setting the stage for local officials to be forced to either raise property taxes by a referendum or cut other municipal services to fund an arbitration award for a police or fire contract.

Now is the time to take action to make sure this critical management tool, which has successfully curtailed property tax increases, is preserved.

In 2010, Governor Christie signed into law bipartisan reforms to the Arbitration process that took effect January 1, 2011.  The reforms:

  • capped arbitration awards on economic factors to no more than 2%,
  • provided for random selection of arbitrators,
  • expedited the determination of awards,
  • required the arbitrator to provide a written report detailing the weight accorded to each of the required considerations, and
  • expedited the appeal process.

As a result of this reform arbitration filings dramatically decreased from over 100 per year to 26 in 2013.  The 2010 law included an April 1, 2014 sunset on a key element of the reforms, the capping of arbitration awards.

In 2014, Governor Christie again signed into law a unanimous bipartisan extension of the cap to December 31, 2017.  The 2014 law also:

  • changed the calculation of the 2% cap from the aggregate amount to compounding at the end of each agreement year,
  • increased the time for the arbitrator to render a decision in the case from 45 days to 90 days,
  • required the arbitrator to conduct an initial meeting as a mediation session to effect a voluntary resolution of the impasse,
  • extended the time for an aggrieved party to file a notice of appeal of the arbitrator’s decision from 7 days to 14 days,
  • increased the time frame for PERC to render its decision in an appeal of an arbitration award from 30 days to 60 days,
  • increased the maximum pay for arbitrators from $7,500 to $10,000, and
  • extended the reporting requirements of the Police and Fire Public Interest Arbitration Impact Task Force to December 31, 2017.

As a result of this reform, arbitration filings continued to dramatically decrease from 89 fillings in 2014 to 9 in 2016.

The most recent Police and Fire Public Interest Arbitration Impact Task Force report notes that preliminary data “shows that the economic impact of the 2% cap recognized in the 2014 Final Report has continued.”  In fact, the Interest Arbitration Salary Increase Analysis found:

 

Year No. Voluntary Settlements Average Increase Base Salary –  Voluntary Settlements No. Arbitration Awards Average Increase Base Salary –  Arbitration Awards
2015 9 1.73% 6 1.71%
2014 16 1.61% 12 1.69%
2013 8 1.96% 27 1.89%
2012 29 1.82% 36 1.98%

 

These reforms marked a dramatic change to the arbitration process and assisted municipalities to control the never-ending rise in public safety personnel costs.   The interest arbitration cap took 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.

We all depend on the service of our police, firefighters and first responders, and greatly respect and admire their service.  But we also respect and admire the service of all public employees, and a failure to extend the cap on interest arbitration would force local budget makers to make deep cuts in services.

The arbitration cap is about budgeting within our means, keeping a control on local taxes, and providing a level playing field at the bargaining table.  Awards which exceed 2%, while there is 2% levy cap in place on municipalities, could immediately threaten the funding for all other municipal services. And, in the not-too-distant future, such awards could force local budget makers to reduce public safety staffing levels, as fewer local employees steadily take home higher percentages of local funds.

Now is not the time to lift the limit on arbitration awards.  If the cap on interest arbitration expires, while the 2% property tax levy cap remains in effect, municipalities will be forced to reduce or eliminate municipal services in order to fund interest arbitration awards.

As long as there is a 2% cap on the tax levy there must be a 2% cap on the interest arbitration awards.

If you have not done so already, we urge you to pass a resolution (word or pdf) urging the State Legislature and Governor to extend the 2% cap on Police and Fire Arbitration Contract Awards for an additional five years, at which time the Legislature will have hard data to examine and then make a final decision as to whether this law should be made permanent.

And local leaders should continue education their state officials, candidates for office and the general public on why this management tool must be extended.

Please take action!

Contacts: 

 

U.S. District Court Strikes Down Federal Overtime Rules

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town-crier_facebookRecently, the U.S. District Court for the Eastern District of Texas issued a ruling that impacts New Jersey municipalities and businesses.  In State of Nevada, Et Al. v. United States Department of Labor a group of states and national business groups challenged the Department of Labor’s recently adopted regulations regarding overtime payment for certain salaried employees.  More specifically, at issue was whether or not the Department of Labor (“DOL”) was granted the authority under the Fair Labor Standards Act (“FLSA”) to create a rule which uses the amount of salary as a determining factor for when overtime payments must be made to employees.

Prior to being found unlawful, the 2016 regulations provided that employees could not qualify for the exemption to overtime payment requirements found in the FLSA, regardless of their duties, if they earned a salary less than $47,476.  The regulations also provided for an annual increase in the salary threshold used in determining overtime payment exceptions.  Regulations in effect before 2016 determined exemptions to overtime payments based on a duties test and used a very low salary threshold merely as a means to filter out extreme circumstances where the overtime exemption would not apply.

The court found that the DOL did not have the authority to create a test for overtime payment eligibility that was based primarily on a salary threshold which effectively abandoned a duties test.  The court was sure to clarify that while the DOL could use a salary level test when determining overtime pay exemptions, the salary set by the new regulations was far too high, thereby impermissibly supplanting an analysis of an employee’s job duties.

This ruling is beneficial to employers, including municipal employers, as the increase in the salary threshold for overtime payments would have likely meant an increase in municipal payroll obligations.  Or in the alternative, taxpayers could have seen a reduction in government services as municipalities would have likely prohibited salaried employees from working longer hours that would have required overtime payments.

Due likely to a mixture of legal concerns over the 2016 regulations and differing political ideologies, the DOL, under the new administration, is attempting to revisit the issue of overtime payments and other regulations under the FLSA.  In revisiting these issues the DOL in late July posted a request for information and public comment regarding the current overtime exemptions.

You should review this ruling with your municipal attorney for more information on how the ruling will impact your municipality.

Contact: Frank Marshall, Esq.League Staff Attorney, FMarshall@njslom.org, 609-695-3481 x137.