Police, Fire Arbitration Cap Expires; Municipalities Press for Extension

AVALON – A 2014 2-percent cap on police and fire base salary arbitration contract awards was set to expire Dec. 31. Avalon has joined with other communities across the state and passed a resolution urging that the cap be maintained.  
The move to influence the state’s reaction to the impending expiration was being coordinated through the state League of Municipalities.
The league argues that the 2-percent cap on salary awards has been “an effective tool to control increased salary costs,” helping local governments stay within the annual 2-percent cap on the property tax levy.
The arbitration cap, last extended in 2014, was seen as a way to give governing boards some control over one of the single largest items in local budgets.
Supporters considered it a necessary move given the imposition of the 2-percent cap on the property tax levy which is not expiring.
During the recent gubernatorial campaign Governor-elect Phil Murphy declined to take a position on the arbitration cap that is opposed by police and fire unions.
For several years a state task force has been charged with the ongoing study of the impact of the arbitration cap’s impact. Its membership is evenly split between those appointed by the Legislature and those appointed by Gov. Chris Christie.
In 2017, the governor’s appointees on the task force took the unusual step of issuing their own report with data they said was too important to keep from the public.
Data from that report has been used to support the call for extending the cap. The report argues that the arbitration cap has reduced the number of petitions filed for arbitration and the number of appeals following an arbitration award.
The data in that report from a segment of the task force purports to confirm the usefulness of the cap. It argues that the average base salary increase provided in arbitration rewards has been below 2 percent, providing what the members who issued the report stated is in “stark contrast to the average annual increases” before the cap was put in place.
The report further argues that there is no evidence that the reductions in the growth of arbitration awards have had any negative impact on the crime rate or the ability of towns to recruit qualified candidates. 
Police union officials have publicly called the report one-sided, accusing the governor’s members on the task force of cherry-picking data that supports their argument.
The league warned, “If the cap on interest arbitration expires, while the 2-percent property tax levy cap remains in effect, municipalities will be forced to reduce or eliminate municipal services in order to fund interest arbitration awards.”
The resolutions being passed by communities supporting an extension of the cap say that a longer period is needed to collect data, arguing that it “needs a longer time to mature.”
The resolutions ask for another five-year extension.
A Wall Street rating agency, Fitch Ratings, warned that failure to pass an extension could harm municipalities as unions become less likely to settle voluntarily and seek to test the potential outcomes or arbitrations.
There were no signs that the legislature planned to pass an extension bill before the end of last year. 
Christie had indicated that he would sign a bill before leaving office in January, but the legislature had not received a clear indication from Murphy on whether or not he supports such an extension.
To contact Vince Conti, email vconti@cmcherald.com.