Pension and health care costs not counted toward 2 percent cap Watch video
TRENTON — Police and firefighter union contracts would be limited to 2 percent annual pay increases if they seek arbitration under an agreement reached Thursday by Gov. Chris Christie and legislative leaders.
After days of closed-door talks, Christie, Assembly Speaker Shelia Oliver (D-Essex) and Senate President Stephen Sweeney (D-Gloucester) reached a deal on one of the biggest pieces of the "tool kit" intended to help municipalities handle the 2 percent property tax limit that goes into effect Jan. 1.
"This is the product of compromise," Christie said. "It is extraordinarily important that we all stand up for the principles we believe in but also recognize that we are sent here to get the work done that the people have sent us here to do. Mayors, council people have been crying out for this reform for a long time."
The compromise will limit the awards at 2 percent that can be given to cops and firefighters unions when they enter arbitration, the use of a third-party negotiator when there is an impasse during contract negotiations. Since property tax collections will be limited to 2 percent, Christie pushed for limiting union contract increases by the same amount.
Bill Dressel, executive director of the New Jersey League of Municipalities, called the accord a "sledgehammer" for mayors to keep down costs, but noted implementation will be pivotal.
"The success of the system is going to be determined by how close these rewards stay within this 2 percent cap," he said.
Pension and health care costs were exempted from the limit on property tax increases, and will not be counted toward the 2 percent cap on arbitration awards. While Christie and the Democratic leaders acknowledged those may drive up costs more than 2 percent, they pledged pension and heath care reform next year.
Christie, a Republican, has been touring the state berating the Legislature for not addressing his tool kit, which also includes civil service reform and changes to education policies. Democrats released their own version of arbitration reform two weeks ago and Christie mocked it as "fake reform" and "full of holes like a piece of Swiss cheese."
On Thursday, Christie and the Democratic leaders, along with Assembly Minority Leader Alex DeCroce (R-Morris) and Senate Minority Leader Tom Kean Jr. (R-Union), praised the compromise.
"It bodes well for government leaders at every level in our state to now be armed with a tool to constrain the costs," Oliver said.
Steve Demofonte, president of the New Jersey Fraternal Order of Police, said the proposal is just an attempt by Christie to unfairly blame for high property taxes on public employees.
"We weren’t privy to the governor’s thought process on his plans on arbitration," Demofonte said. "It was only through the Legislature that we were able to have input into the process."
Both Christie and Democrats appeared to get what they wanted.
Democrats hoped to make the 2 percent limit expire in three years and not include health care and pension costs in the cap. Christie agreed. Christie wanted to select arbitrators randomly and have no wiggle room for other exceptions. Democrats agreed.
Christie said he and Democrats agreed to take any steps needed if someone figured out how to circumvent the 2 percent limit.
"If we see folks who are gaming the system in a way that is making this cap ineffective, we have committed to each other that we will come back and fix the problems," Christie said.
Next on the agenda is negotiating reforms of civil service, the rules used to promote and fire public employees, Christie said.
After announcing the compromise, Christie conditionally vetoed a bill to limit the ability of public employees to take cash in exchange for their unused sick days when the leave their jobs, saying it should be tougher. Sick pay is part of ongoing talks.
By Ginger Gibson and Matt Friedman/Statehouse Bureau staff
Assemblywoman Sheila Oliver (D-Essex) stands by Gov. Chris Christie, as the governor announces they have reached a deal on a key part of Christie's "tool kit" to help towns curtail property taxes on arbitration reform for police and firefighters. ARBITRATION REFORM: THE COMPROMISE
When a town deadlocks in contract talks with cops and firefighters, an arbitrator steps in to settle the dispute. But high arbitration awards have been blamed for inflating property taxes. On Thursday, Gov. Chris Christie and legislative leaders agreed on a compromise aimed at limiting these awards. The details:
• 2 percent annual limit on pay increases. Pay can increase more than 2 percent in one year, however, if a multi-year contract averages 2 percent.
• Health care and pension costs are exempted from the 2 percent increase limit. The leaders promised to take up pension and health care reform early next year.
• Arbitrators cannot create new non-salary costs that don’t already exist in the contracts to get around the 2 percent limit
• Either party can request arbitration on the day the contract expires
• An arbitrator has 45 days to make a decision
• Arbitrators will be selected randomly, and can only be paid $1,000 a day and no more than $7,500 per case
• Arbitrators must have more educational training and will have higher ethical standards
• Takes effect Jan. 1 and expires April 1, 2014; a task force to review the 2 percent cap will report its findings by Dec. 31, 2013