Local Officials Hopeful Governor's Tool Kit will Provide Relief

Last week, Gov. Chris Christie signed legislation for arbitration reform as part of his Reform Agenda, but local officials said they have yet to see any real changes promised in Gov. Christie's "tool kit" that will curb rising property taxes.

"I haven't seen anything yet from the toolkit that is going to benefit South Brunswick," said Mayor Frank Gambatese.  "We're still looking for relief from the state and we haven't seen any yet."

The bipartisan agreement reached last week to transform arbitration is just one element of the governor's  toolkit.   The package of bills is designed to attack the problems of operational costs that have hindered local governments across the state, according to Gov. Christie.

"There is no doubt that by going after the issues normally considered to be off limits politically, we are changing the conversation in New Jersey and getting results," Gov. Christie said last week via press release.  "Now we're showing the rest of the country that if you work together on substantive solutions, you can change the way government works. We're just starting to turn Trenton upside down and I'm confident that if we keep this same pace and continue to work together on what matters, we're going to be able to go even farther." 

Elements of the arbitration reform include:

• A cap of 2 percent to be applied to all salary items, such as the cost of across the board and cost of living increases, step increment payments and longevity pay, according to Gov. Christie.
• An agreement that creates a prohibition on allowing non-salary economic issues to be arbitrated above the cap, unless already included in an existing contract. All salary items are subject to a maximum 2 percent cap, which will prevent arbitrators from creating new cost items in successor contracts.
• Putting in place concrete deadlines to eliminate delays in the arbitration process, from contract negotiations to receipt of the actual award.

Sen. Jennifer Beck (R-12), who represents East Windsor and Hightstown, said she would like to see more measures put in place, but she also said she was encouraged by the Senate's progress.

"Frankly, we never thought we'd get even this far," she said of the recently passed reforms. "A year ago we wouldn't have even seen this bill get posted."

Sen. Beck said the new, three-year ability to limit raises for government employees through binding arbitration to 2 percent would allow municipalities to control the "huge" costs often associated with their workers' salaries. But she also said the time limit may have a negative effect on negotiations.

"In my mind I would've rathered there was no expiration because now as public employee unions are negotiating contracts, that's in the back of their minds," she said.  "But I understand that in the legislature there are a lot of different opinions."

The changes in civil service rules, Sen. Beck said, were not enough to make a dent in taxes. She voted against the measure.

"Opt-out was not part of the reform bill and frankly the legislation that passed was really token reform," she said.   "It really doesn't get to the substance of what's changing in New Jersey."

Without the ability to opt out of the rules, Sen. Beck said, it would be nearly impossible for school districts, municipalities or local agencies like police forces to merge without increasing costs because the highest salaries for each position must be kept.

"There's always going to be a disincentive to merge," she said. "The opt-out provision was really the key to allowing school districts and towns to merge without a penalty."

Mayor Gambatese said the changes in civil service are by and large irrelevant to much of the state.

"We don't have civil service employees and about three-quarters of the state doesn't have civil service employees so this does nothing for us," he said.  "We're talking 70 to 100 municipalities out of 560 so that doesn't help."

Other key elements of the toolkit include:

• A constitutional amendment that would place a 2 percent limit on property tax growth.
• Changes to public employee benefits to bring them closer to employee benefits available to private sector employees.
• Pension reform that would limit pension to full-time workers while placing part-time workers into a contribution program; base pension calculations on one public job to eliminate the holding of two jobs for short periods to pad pension payments; base pension payments on an average of the highest five years of salary instead of three and would repeal a 9 percent benefit increase put in place in 2001; cap sick pay and banked vacation time for school district and local government employees.
• Movement of the school elections to November.

Mayor Gambatese said without offering relief to offset the rising costs of pension payments and health insurance the toolkit will not offer meaningful relief.

"So far the Governor keeps talking about a 2 percent cap and that's great but unless he's going to give some kind of relief to towns to offset the cost of pension and health insurance then he's not giving taxpayers any relief," Mayor Gambatese said.  "These two items almost require every town to layoff people to lower the overall costs. Towns are going to have to come in with a budget under the cap and to do that they will still have to raise taxes."

South Brunswick's $47.3 million municipal budget for 2010 was reduced from the $48 million budget the previous year, but carried a 5-cent increase that raised the tax rate to 72-cents per $100 of assessed valuation. The increase was driven by a drop in ratables and a decrease in new construction costs, according to township officials.  South Brunswick's total assessed value dropped between February 2009 and February 2010 by $60.9 million to $3.89 billion, a 1.5 percent reduction.

The tax increase was also driven by rising health and pension costs, which will again be a problem in 2011.  Mayor Gambatese said South Brunswick is facing an increase in pension payments and health insurance costs from about $3 million to $3.7 million for the upcoming year.  South Brunswick also saw its state aid cut by $164,580 to about $6.3 million in 2010.

"Here we are beginning to put next year's budget together and we haven't seen anything in the toolkit passed to help us that the Governor pledged last year," Mayor Gambatese said.  "The costs keep going up with no aid to offset them."

Sen. Beck said she supports the governor's proposals and believes the Reform Agenda will bring about change in 2011.

"I think we're going to see in the beginning of the next session a real focus on pension and health benefits reform," she said. "The governor has a series of bills he's proposed, and that's an area we have to go next."

The most recent reform in that arena calls for new contracts with government employees to include a provision for them to pay 1.5 percent of their base salaries toward their health insurance costs.  But that reform will not be enough, according to Sen. Beck.

"In the private sector for small businesses the average contribution is about 20 percent," she said. "The government employee contributions of 1.5 percent are turning out to be a tiny percentage of the premium and it's a huge cost-driver."

Gov. Christie said he is pushing for considerable measures to modernize and improve the pension and benefit system and has received assurances from Democratic leadership that these reforms will be passed in 2011.

Sen. Shirley Turner (D-15) represents Lawrence and most of Mercer County. She said she voted against the 2 percent tax increase cap because she did not think it would be effective. 

Sen. Turner said she hoped for the full passage of a bill she has introduced which has been passed by the Senate.  The bill would limit annual fees for shared services and now awaits a vote in the State Assembly.

"A lot of small towns can save money if they're able to share services with abutting communities so that they don't have to go out and reinvent the wheel, so to speak," Sen. Turner said.  "Another way (to save money) is to consolidate a lot of these small towns and a lot of these smaller school districts. That would help reduce the cost to the taxpayers."

Sen. Linda Greenstein (D-14) and Sen. Barbara Buono (D-18), chairwoman of the Senate Budget Committee, did not return multiple calls seeking comment.

Gov. Christie remains adamant that his reform agenda will finally provide the property tax relief residents voted him into office to provide.

"New Jerseyans have waited a long time to see real reform happen in Trenton, which is why they deserve nothing less," Gov. Christie said via release.

However, local officials believe it will take more than sound bites to truly provide the township with the tools needed to keep the tax rate flat.

"I applaud the effort," Mayor Gambatese said. "But it's one thing to say something that sounds good when your making a statement to the public and it's another to provide real reform.   I don't see any real help yet, but I'm hopeful."