Police/fire salary cap expired — Should NJ taxpayers be worried?

Despite the end of the 2 percent cap on police and fire salary awards two weeks ago, the much-feared surge of arbitration filings hasn’t materialized – and might not for months.

Regardless, the issue remains front and center in Trenton. Officials in both parties are urging Gov.-elect Phil Murphy to make the issue an immediate priority after taking office Tuesday.

“We do have an obligation to act and move forward. And I think we should encourage – all of us, in one voice – our incoming governor to address this within his first acts in office,” said Sen. Troy Singleton, D-Burlington, who urged Murphy to find bipartisan consensus on the issue.

Public Employment Relations Commission chairwoman P. Kelly Hatfield said there were 21 arbitration fillings in 2017, including two or three at the end of December. There have been three filings so far in January, she said.

The 21 filings are an increase from the nine in 2016. But that had been a record low number, and the number of petitions last year was in line with most other recent years.

The biggest exception to the recent trend was in 2014, when the cap expired for nearly three months and the number of filings surged to 88. In a 2016 report, the Police and Fire Interest Arbitration Task Force said 74 of those 88 petitions were filed within a few days of the April 1 expiration, all but three filed by employers.

In a report issued last September urging that the cap be extended before its Dec. 31 expiration, Christie’s appointees to the task force said that without it they “anticipate another significant increase in the number of interest arbitration petitions filed by the end of 2017 given the inevitable uncertainty inaction would cause.”

Senate President Stephen Sweeney, D-Gloucester, said he plans to keep tabs every quarter on PERC to see what sorts of raises are being approved.

“Instead of being hysterical or being like the sky is falling, I’ll actually know by looking at settlements, are they out of control? Is things out of whack?” Sweeney said.

Sen. Declan O’Scanlon, R-Monmouth, said there’s no need to wait. He noted Moody’s Investors Service is already calling the expiration of the cap credit negative for all municipalities, creating a “potentially dangerous mismatch” for municipal finances unless it’s restored.

“We all like to quote Moody’s when it’s convenient. Moody’s is almost invariably accurate, even when we desperately want to disagree with it for political reasons,” O’Scanlon said.

The cap was established by a 2010 law that took effect in 2011, then was renewed – after an extended delay – in 2014. Christie said it’s one of the key reasons property tax increases have averaged just under 2 percent since 2011. Increases had been averaging 5.5 percent in the decade before that.

“If you do not act in a bipartisan way to renew the arbitration cap, the property taxes of our citizens will – will – skyrocket again,” said Christie, who said he becomes “just another property taxpayer” when his term as governor ends Tuesday.

Hatfield said the 2 percent cap on raises awarded through arbitration remains in effect for all contracts that expired Dec. 31, 2017, even if an arbitration filing isn’t made until this year. The League of Municipalities thinks unions could challenge that interpretation in the courts.

Arbitration filings can’t be made until there have been at least three negotiating sessions, so it might be months until they’re filed. Also, most contracts have a December expiration, rather than in June or some other point midyear.

“The world’s not going to end tomorrow. And there’s a process and a way of looking at things. We can always fix things,” Sweeney said. “We’ve got a new governor in a few days, and we’re going to work with him.”

Murphy has withheld making a public recommendation on whether to keep the cap, saying he wanted a final report from a task force that included input from its union members. The version published in September was only approved by the panelists appointed by Christie.

Assembly Speaker Craig Coughlin, D-Middlesex, said lawmakers will tackle the issue with Murphy as part of a broader look at taxes in New Jersey.

“We need to look at comprehensive tax reform. So interest arbitration may be one piece of that, but it certainly isn’t the entire solution,” Coughlin said.

New Jersey: Decoded cuts through the cruft and gets to what matters in New Jersey news and politics. Follow on Facebook and Twitter.

Michael Symons is State House bureau chief for New Jersey 101.5 and the editor of New Jersey: Decoded. Follow @NJDecoded on Twitter and Facebook. Contact him at michael.symons@townsquaremedia.com