Gov. Chris Christie Tuesday signed arbitration reform legislation as part of a wider set of proposals designed to get a grip on government costs and property tax costs.
The measure is the result of a bipartisan agreement reached on Dec. 9 with the Democratic legislative leadership to change what elected officials consider the long-overdue need to address the role of arbitration in public employee contract talks, especially those involving police and firefighter unions.
"Today, Trenton is demonstrating what can be done when we work together to find substantive solutions to the issues facing the hard-working taxpayers of our state," Christie said at a bill signing ceremony in Wayne. "Working with Senate President Steve Sweeney, Assembly Speaker Sheila Oliver, Senate Minority Leader Tom Kean and Assembly Minority Leader Alex DeCroce, we are delivering meaningful and substantive reform to New Jerseyans, transforming the interest arbitration process and providing a long-term solution that will help local governments keep property taxes down and costs under control.
"Our work, however, is not done, and I urge the legislative leadership to keep the momentum going by acting on other critical pieces of the tool kit of reforms that will ultimately help to keep property taxes low," the governor said. "New Jerseyans can no longer afford inaction and delay which is why the legislature must move on real, comprehensive civil service reform as I have proposed, not a watered-down version."
While an air of bipartisanship surrounded the bill signing, Christie said the civil service bill proposed by legislative Democrats falls short by, among other things, not offering cities and towns the option to opt-out of the civil service requirements. The governors feels his arbitration and civil service proposals get at the root of the problem faced by many local governments struggling to live within their means - ever-expanding operational costs.
Also awaiting legislative action is Christie's conditional veto of Senate bill 2220, which he believes would more effectively stop the abuse of sick and vacation benefits and prevent future use of sick days -- meant for employees who are sick -- as supplemental cash payouts for employees who already have generous pensions. Among improvements to the original bill, the conditional veto would phase out the practice of distributing cash payouts for sick days by prohibiting supplemental compensation for sick days that accumulate after the effective date of the legislation.
Christie's version of the bill would also suspend supplemental compensation for any employee under indictment for a crime that involves or touches his or her public office and mandate the forfeiture of any supplemental compensation if convicted. The governor continues to urge the legislature to act quickly to adopt the substantive changes in the conditional veto.
The bipartisan arbitration agreement signed into law Tuesday mirrors Christie's call for a meaningful cap that matches the new 2 percent annual cap on property tax hikes. The 2 percent cap will be applied to all salary items, such as across the board and cost of living increases, step increment payments and longevity pay.
In addition, there will be no additional exceptions for non-salary economic terms moving forward. The agreement also created a prohibition on allowing non-salary economic issues to be arbitrated above the cap, unless already included in an existing contract. This is considered an important provision because arbitrators will no longer be able to create new cost items in successor contracts.
"Finally, New Jersey's arbitration system has been brought back into balance," Sweeney said. "Finally, property taxpayers will be treated fairly by the arbitration process. This is truly revolutionary change.
"This law is a promise kept to property taxpayers that we would put into place the tools to help make the new property tax cap work," Sweeney said. "But just because this law is signed does not mean the hard work is done. It is still up to local officials to make use of these tools and to keep making the tough decisions that put their taxpayers first.
"Throughout the year, we have shown the people of New Jersey time and again that the best public policy is not dictated by one person, but is forged through partnership and compromise," the Senate president added. "We would not be here today without the Governor's recognition that listening to the Legislature on how to hammer out true reform was in the best interests of the state and its residents."
"The new interest arbitration law is another signal to property taxpayers that Governor Christie are serious about delivering property tax reform by giving local officials the help they need to control expenses," Assembly Republican Leader Alex DeCroce (R-Morris) said. "The new law puts taxpayers first and represents a beginning, not an end. There is much work to be done in the effort to reduce government spending which has placed an undue burden on the property taxpayers in New Jersey."
The new arbitration law:
**Provides a cap of 2 percent on arbitration awards that will be applied to all salary items, such as the cost of across the board and cost of living increases, step increment payments and longevity pay.
**Mandates no exceptions for additional non-salary economic terms moving forward. The agreement prevents arbitrators from awarding any new economic items moving forward. The agreement creates a prohibition on allowing non-salary economic issues to be arbitrated above the cap, unless already included in an existing contract. All salary items are subject to a maximum 2 percent cap. This is an important provision because arbitrators will no longer be able to create new cost items in successor contracts.
**Eliminates accruing labor costs by creating a fast track arbitration process. The agreement transforms the system by putting in place concrete deadlines to help eliminate delays in the arbitration process, from contract negotiation to the receipt of the actual award. Traditionally, once a contract expires, labor costs continue to mount until a new contact is reached. Enforcing deadlines and speeding up the process will ensure timely implementation of new contracts and the cap on interest arbitration awards. Effective Jan. 1, there will be a concrete deadline of 45 days from the filing of a request for interest arbitration to the date of award, without any extensions. All appeals must be decided within 30 days, if arbitrators do not comply with the 45 day deadline, they will be penalized financially.
**Caps arbitrator pay. The agreement will cap arbitrator compensation at $1,000 per day and $7,500 per case. Capping arbitrator pay will further incentivize speedy resolution of arbitration cases.
**Increases ethical standards and training for interest arbitrators.
**Randomizes the selection of arbitrators.
The legislation also creates a task force to examine the impact of interest arbitration reform and the effectiveness of the cap on restricting municipal spending. The task force will study the impact of the cap on taxes, services, expenditures, public safety, recruitment, retention and professionalism. The governor will directly appoint four members and two members will be directly appointed by the Senate president and Assembly speaker. The task force will provide its recommendations no later than Dec. 31, 2013.
Since September, Christie has been traveling the state to talk about the importance of enacting a tool kit of reforms to help local government leaders directly address cost drivers and manage within the 2 percent cap without adversely impacting core government services. Hundreds of mayors and local elected officials across political parties have voiced their support for the tool kit, and underscored the tool kit's importance in helping them manage their local budgets.
Bill Dressel, president of the League of Municipalities said of the bill, "This was a compromise and given the dynamics of the negotiations, the best compromise at this time. We thank Gov. Christie, Senate President Sweeney, and Speaker Oliver on this compromise and encourage them to move forward with remaining pieces of management reforms we so desperately need to meet the pending 2 percent cap.
"While today's reforms mark a dramatic change to the Arbitration process and will assist municipalities in controlling the never-ending rise in public safety personnel costs, this is only one piece of the puzzle," Dressel said. "Many more management reforms are needed to help local officials to meet the onerous 2 percent cap, which takes effect in 10 days.
— TOM HESTER SR., NEWJERSEYNEWSROOM.COM