Real Property Tax Reform: Fixing Interest Arbitration (Dec. '10 Constituent Newsletter)

To our towns and counties, interest arbitration is a roadblock in efforts to lower property taxes. These public employees are often awarded contracts with annual raises of 4, 5 or even 6 percent—with no regard to a town’s fiscal reality or staggeringly high unemployment. With daily reports of layoffs in the private sector and residents struggling to find jobs, these contracts must better reflect economic conditions and fiscal realities.

Legislation I have sponsored would reform this broken system. This week, the Governor signed this historic measure into law – part of the property tax reform “toolkit.” This bipartisan bill would level the playing field for towns and property taxpayers by placing a 2 percent cap on salary increases for police and firefighter arbitration awards. By requiring arbitrators to consider the wallets of property taxpayers and the balance sheets of municipalities, we can ensure that arbitration awards put the property taxpayer first.

In addition, my bill will ensure that unbiased arbitrators are selected fairly and provides incentives for arbitrators to consider cases more quickly, preventing cases from dragging out unnecessarily. My legislation will also sunset after three years. This provision will allow us to study the effectiveness of this reform and evaluate the best options in a bipartisan fashion on how to proceed.

Truly, my bill is what New Jersey needs—fair, bipartisan reform. By putting the needs of property taxpayers front and center in the arbitration process, we will rein in questionable decisions that have helped drive up property taxes. At the same time, we have put into place a fair system that does right by our police officers and firefighters who regularly risk their lives fighting crime or running into burning buildings to protect our families.

The Governor is expected to sign my arbitration reform legislation today. Undoubtedly, there is still much work to be done to truly reform property taxes in New Jersey. We must not fall victim to the urge to declare the property tax crisis solved once and for all, as some have already done. We must avoid the urge to be seduced by the appealing 30-second sound bytes that will accompany this legislation. But there is no doubt this historic agreement takes a significant step toward long-term property tax reform.

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