2% Cap on Binding Interest Arbitration Awards

Events on 22 Sep , 2017

The New Jersey State League of Municipalities (NJSLOM), the New Jersey Conference of Mayors (NJCOM), the New Jersey Association of Counties (NJAC), and elected officials from across the State held a press conference on Friday, September 22nd, at 1:00 p.m. on the steps of the State House Annex in Trenton.  They urged State leaders to permanently extend the 2% cap on binding interest arbitration awards before the law sunsets at the end of this year.

The 2% cap on binding interest arbitration awards first enacted in 2010 and extended for an additional three years in 2014, has empowered municipal and county governments across the State to effectively control public safety employment salaries and personnel costs.  As has been well documented, local governing bodies dedicate the majority of their overall annual operating budgets to employee salaries, wages, health benefits, and other related costs.  In addition to these considerable fiscal pressures, municipalities and counties must comply with a restrictive 2% property tax cap, and significant regulatory and statutory State mandates.

Importantly, the 2% cap on binding interest arbitration awards has leveled the playing field in negotiations between collective bargaining units and local governing bodies.  Prior to the 2% cap, arbitrators routinely awarded contracts with double digit increases. These awards took into consideration base salary, step increments, and longevity pay all of which are now included under the cap. In addition to effectively controlling personnel costs, the cap on interest arbitration awards has proven to be a critical tool for negotiating reasonable successor contracts as parties are closer to reaching an agreement from the onset of negotiations avoiding further legal and administrative costs. As such, failure to permanently extend the 2% cap on binding interest arbitration awards will allow arbitrators to once again award generous contracts that will force municipalities and counties to further reduce or even eliminate essential services, critical personnel, and long-overdue capital improvement projects.

Although our collective members maintain the utmost respect and admiration for the police, firefighters, correction officers, and sheriff officers that put their lives on the line every day to protect the communities in which they serve, they also recognize that our State, local governments, and property taxpayers are struggling to make ends meet. With this in mind, we are once again urging State leaders to permanently extend the 2.0% cap on binding interest arbitration awards as an effective tool to prudently manage valuable property taxpayer dollars.    Please contact 609-394-3467 with any questions or concerns.