Recently, we had a conversation with a “Trenton insider” about the need to renew the 2% cap on interest arbitration and found the response curious. We were told that since the IA cap expired and “…the sky isn’t falling…”, there was no need to extend the cap. We took the time to explain that the Public Employment Relations Commission (PERC) determined (correctly in our view) that contracts that expired on December 31, 2017, were still bound by the 2% interest arbitration cap. Because of that determination (which could still be appealed), contracts that expire after January 1, 2018, will no longer be under the IA cap, including the several dozen contracts with expiration dates at the end of calendar year 2018, that would see the impact. We further noted that the impact of the IA cap expiration was, in fact, being felt now, as it is inhibiting negotiations.
So while we corrected this misimpression of the “insider,” it is emblematic of a false narrative that is being spun regarding the IA cap. And we need you to help us correct this false narrative and continue to engage your Legislators and the Governor on the pressing need to renew the 2% cap on interest arbitration awards. In the upcoming weeks, the League will provide you another sample resolution for your consideration. But in the meanwhile, it is paramount to press your State representatives on this issue, particularly if you have contracts expiring later this year.
This concern is particularly striking following the release of a recent Monmouth University Poll, in which 45% of the respondents cited property taxes as the most important state issue, significantly higher than any other concern. So while our voters continue to cite property taxes as their top concern, State Leaders have yet to take the common-sense action of extending the IA cap, which was a valuable tool in curtailing taxes. Every report of the Interest Arbitration Task Force has provided all the evidence needed to draw that conclusion. You can click here for the reports from 2011 through 2016. And you can click here for the 2017 report, which is not considered final because the employee representatives chose not to vote on its approval.
In talking to your Legislators, please keep the following in mind:
The interest arbitration cap marked a dramatic change to the arbitration process, which is available to only police and fire unions, 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.
- New Jersey voters have identified property taxes as their #1 concern.
- The IA cap worked. The 2% Interest Arbitration cap has controlled one of the largest municipal expenses, public safety salaries, not only through arbitration awards but also by encouraging fruitful contract negotiations.
- Accountability. The IA cap is a reasonable limit on the ability of an unelected third-party, who is not accountable to the voters or responsible for finding the money to pay for his or her decisions, to impose annually increasing costs on our property taxpayers
- The levy cap is permanent. Municipalities are statutorily limited to raise their property tax levy by no more than 2%, with very limited exceptions which do not include personnel expenses.
- Local governments will be hit hard if the IA cap is not renewed. Failure to reinstitute 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.
- Taxpayers will be hit hard. If the cap on interest arbitration is not revived, 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, or will need to seek voter approval to exceed the 2% property tax cap in order to fund an arbitration award.