Representatives from the New Jersey Association of Counties, the State League of Municipalities and the Conference of Mayors will make a plea to state lawmakers Friday to reauthorize the cap that limits pay increases for police and firefighters by arbitrators to 2 percent.

The arbitration cap, first enacted in 2011 to help towns hold the line on property taxes, was reauthorized in 2014 but will end on Dec. 31 unless the Legislature takes action to reauthorize it.

“It’s an important issue to control property taxpayer dollars. The cap has really leveled the playing field in negotiations between police, fire, sheriff’s officers, corrections officers, their unions and the local governing bodies,” said John Donnadio, the executive director of the New Jersey Association of Counties.

He pointed out prior to the cap, “these interest arbitration awards averaged around 5 percent, some were even in double digit increases."

Donnadio said law enforcement salaries on the county level in New Jersey approach $1 billion annually, so controlling salary increases is extremely important.

“The more tools that we have, the better able we are to control property taxes, which are New Jersey’s number one problem.”

He also noted local and municipal officials in New Jersey must deal with a restrictive 2 percent property tax cap, and if the interest arbitration cap is removed “we’re going to have to look to cut services, perhaps look harder at privatizing certain services, enacting furloughs. We are just concerned that if this cap sunsets we’re going to have a difficult time making ends meet.”

Assemblyman Declan O’Scanlon, R-Monmouth, who was one of the original sponsors of the bill that created the interest arbitration cap, said Republican and Democratic leaders on the local and county level are uniting on this issue because if the cap is scrapped “their governments will not be able to function without destroying the property tax cap and massive property tax increases.”

He says the arbitration award cap does not limit police or firefighter pay increases to 2 percent.

“There’s nothing that limits police salaries, as long as taxpayers, local officials want to give raises and can afford to give raises above 2 percent, they can do whatever they want,” he said.

“But you can’t have a bureaucrat from Trenton come in and say we’ll decide what you can afford, we’ll decide how you should spend your money.”

He calls the 2 percent property tax cap and the interest arbitration cap “the single greatest transfer of power from bureaucrats in Trenton to property taxpayers and local elected officials in the history of any state.”

He also said police and firefighter salaries may need to be increased more than 2 percent, but “the solution isn’t to have a bureaucrat from Trenton force higher salaries upon taxpayers.”

“I’m sorry, I’m not a fan of bureaucrats over taxpayers. I’ll side with the taxpayers every time.”

Democratic legislative leaders along with their front-running candidate for governor, Phil Murphy, have repeatedly said they are waiting for a task force report on the effectiveness of the cap to be released at the end of the year before deciding whether to extend it.

Pat Colligan, the president of the New Jersey Police Benevolent Association, argues the interest arbitration cap is a mistake.

He recently wrote an op-ed for InsiderNJ, saying "the reality underlying all of this is that arbitration caps do not control or reduce property taxes and there is no correlation between the cap and taxes since the cap was instituted."

"All one need do is look at PERC’s own website and review the numbers over the last 25 years. Arbitrations were rare prior to the cap law as they should be. Voluntary contract settlements were moving closer to 2% and lower without the law."

You can contact reporter David Matthau at

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