TRENTON, N.J. – Calling the arbitration award cap one of the most important reforms implemented to control property taxes, Assemblyman Declan O’Scanlon said today that if the cap isn’t permanently extended taxpayers will face tax increases, draconian cuts to municipal services or both. O’Scanlon was a prime sponsor of the original cap law and vocal advocate of the extension. He was the only legislator appointed by the governor to sit on the Interest Arbitration Task Force.
“There’s no question that the cap has been successful and is an essential tool for municipalities to keep expenses and property taxes contained,” said O’Scanlon (R-Monmouth). “Every report we’ve done to date has been absolutely consistent and shows the arbitration and tax cap are working together as intended. You can’t keep the tax cap in place without the arbitration cap. You would create a mathematically untenable situation. And it isn’t just police and fire salary costs that are affected, there is a ripple effect throughout all salary expenses.”
O’Scanlon made clear that even delaying action until after the cap sunsets in December would be irresponsible of legislators.
“It’s unfathomable that Democrats are waiting for yet another analysis, which coincidentally, is due the same day the cap is set to expire. It would be completely irresponsible, and a disservice to property taxpayers, to fail to remove the sunset of this essential policy in time for the Legislature to act before the end of this year. Just like the last time the policy expired, the Democrats dithering will cost taxpayers hundreds of thousands of wasted dollars just in professional fees as towns scramble to file unnecessary arbitration actions to insulate themselves from the Legislature’s paralysis.”
O’Scanlon made his remarks following a press conference sponsored by the New Jersey State League of Municipalities, the New Jersey Conference of Mayors, and the New Jersey Association of Counties, urging the Legislature to permanently extend the 2 percent binding interest arbitration cap before the law sunsets at the end of this year.
During a June voting session, O’Scanlon made a motion to remove the sunset provision from the police and firefighter arbitration reform law, but Democrats tabled the move along party lines 52-25.
“This isn’t rocket science. It’s basic math. If the cap expires, pay raises will dramatically increase resulting in higher property taxes or service cuts and layoffs,” said O’Scanlon. “Any legislator who says he is serious about making New Jersey affordable and doesn’t take action now to make the cap permanent is speaking out of both sides of his mouth.”
A 2 percent cap on interest arbitration awards was overwhelmingly approved in 2010 by the Legislature after Democratic legislative leaders inserted a provision allowing the rule to sunset after three years. It was extended in 2014, but will expire on December 31 – the same day a final report on the effectiveness of the cap is due.
The task force annually studies the effectiveness of the cap. Last year salaries only increased roughly 1.8 percent compared to an estimated 4.69 percent increase without the cap. Those numbers aren’t directly comparable since, prior to the arbitration cap reforms, total value of contracts was understated.