On Friday, February 9th, 2018, New Jersey State Senator Declan O’Scanlon introduced legislation that would reinstate New Jersey’s interest arbitration salary cap that limits two-percent (2%) annual salary increases that can be awarded when disputed police and fire contracts enter the process of binding arbitration.

O’ Scanlon stated on his website that “One of the biggest mistakes made by the Legislature in recent memory was allowing the arbitration cap to expire at the end of 2017.  If we don’t act quickly to reinstate the arbitration cap we’ll quickly see arbitration awards that exceed the 2% tax cap and the beginning of the evisceration of that essential property tax control. As the noose tightens, we’ll see labor costs skyrocket over time and eat up local budgets at the exp

ense of other important programs and services. That would likely lead to the failure of New Jersey’s two-percent property tax cap. Let me be clear, any legislator who doesn’t back this bill is standing for higher property taxes. One cannot legitimately say he or she backs property tax caps without embracing this bill.”

O’Scanlon’s new legislation, S-1858, would implement the following changes to police and fire interest arbitration:

  • Making the interest arbitration cap permanent.
  • Maintaining that arbitrators have 90 days to render a decision.
  • Maintaining the 14-day deadline to file an appeal and 60-day period for a final PERC decision.
  • Keeping the compensation of arbitrators capped at $10,000.
  • Continuing to compound the two-percent cap each year over the length of the collective negotiations agreement.
  • Continuing to include the cost of increments previously negotiated, such as step movements and longevity payments, when determining base salaries.
  • Requiring contracts to be posted conspicuously on the municipal or county website at least 10 days prior to the execution of the contract.
  • Voiding final agreements not filed with PERC or that don’t contain a cost summary.
  • Abolishing “dynamic status quo” step increases after a collectively negotiated agreement has expired.

Despite what Senator O’Scanlon believes, reinstating the cap on interest arbitration awards would be a mistake.  Anyone who believes in the importance of collective labor negotiations and has an understanding of the dynamics that exist at the bargaining table realize that parties reach an accord based on good faith negotiations that take place because each understands the potential repercussions that exist if an impasse is reached.  This statement is true for collective negotiations in both the private and public sectors of our economy.  Furthermore, anyone who has a firm understanding of negotiations and interest arbitration in the public sector recognize the fact that the law, as it presently exists without a two percent salary cap, mandates that interest arbitrators take into consideration the effect their award will have on the two percent (2%) property tax cap levy and the interest and welfare of the taxpayers in general.

Over the last seven (7) years the result of the two percent (2%) salary cap on collective negotiations between public safety negotiations units and management was disastrous.  Because of the New Jersey Public Employment Relations Commission’s interpretation of the two percent salary cap, the bargaining table was no longer level but instead titled so far in favor of management that bargaining in good faith between the parties became non-existent.  Instead, management bargained with the “safety net” that they now had and no matter what the empirical evidence showed, they utilized the salary cap as a sword in achieving what one would believe to be draconian results.

What Senator O’Scanlon has failed to state in his press release is that now, as a result of the two percent (2%) salary cap, the cost of mandatorily legislated health care contributions and the various municipalities, counties and the State of New Jersey freezing increments upon the expiration of a contract; many law enforcement officers today are making less money than they were ten (10) years ago.  This empirical evidence can not be countenanced and when coupled with the cost of inflation, the effect of the cap has had a negative effect on our economy.

Take a look at the cold hard facts and figures and the undeniable truth that every tool one needs to limit police and fire salary increases is already in place in the existing law that governs interest arbitration.  The answer can no longer be legislative evisceration of collective bargaining and thus labor relations amongst management and employees.  Instead keep the playing field level and use the tools that are already at your disposal.