When Gov. Christie came to office in 2010, he took action to address the biggest problem New Jerseyans have faced for decades – property taxes. Working with the Legislature, historic tax reforms were signed into law. These included a two percent limit on property tax levies, increased health and pension contributions by public employees and a two percent cap on awards arbitrators can grant when towns and their unions can't agree on a contract.
These cost control tools are working. Recent property tax data shows the average property tax bill grew by 1.7 percent in 2013 and by the lowest consistent rate in decades since the reforms were passed. While our ultimate goal is to actually cut property taxes, slowing their growth is an essential first step.
The clock is now counting down to the destruction of the delicate framework that has successfully controlled our property taxes. An essential component of that framework – the arbitration award cap which enables local officials to control their largest costs – expired on April 1 of this year. The first contracts exempt from the cap will expire in June. That will be a disaster for property taxpayers throughout New Jersey. Without an honest and effective arbitration award cap, the property tax cap will fail.
The state's interest arbitration cap law is one of the primary reasons we have turned the tide on the escalation of property taxes. According to the Public Employment Relations Commission, from January 2011 (when the arbitration law took effect) to September 2013, average raises in local contracts, whether through arbitration or negotiations, were 1.86 percent - the lowest in at least 20 years.
The day before the cap was to sunset, a bill conditionally vetoed by the Governor to extend it passed almost unanimously through the Senate. The Speaker of the Assembly felt it needed more work. I accept that good faith challenge and continue to work hard to meet it. In fact it is one we must meet – and the end product must be one that abides by the unalterable laws of mathematics, and doesn't blow apart the property tax cap. Without these limits, arbitrators will be able to impose awards similar to those they regularly made prior to this law- frequently increasing labor costs at rates 50% to 200% higher than revenues could increase.
If the two percent property tax cap is left in place (an absolute certainty) without a commensurate cap on labor costs, there will be chaos in local government. Property taxes will rise, services will be slashed and layoffs will be inevitable. The very people police and fire union officials claim to care about – their own members – will be laid off due to the inevitable slashing of forces resulting from the fatally conflicting policies. Public safety can't help but be affected, which means it is quite possible people will die while trained and willing young police and firemen are on unemployment lines.
Some union leaders are shamelessly playing on peoples' emotions suggesting that this debate is about respect for cops and firefighters. Nothing could be further from the truth. This debate is simply about the math. We all respect the services our police and firefighters provide, but increasing their salaries- which to be fair are ready the highest in the nation – at a rate faster than the 2% property tax cap is simply untenable.
I have been fighting for and working on these policies for 20 years. Gov. Christie was the first executive leader, in conjunction with the Legislature, to sincerely deal with these issues. That was four years ago in an amazingly productive moment in New Jersey when we led the country in passing bold and innovative reforms.
For a moment, as we came together to pass those pioneering reforms, the people of New Jersey could be proud of their elected officials. The renewal of the arbitration award cap, in a form that doesn't eviscerate the laws of mathematics, is an opportunity for the Legislature to validate the credibility it earned four years ago – or not. There is no middle ground.
I have faith that our present leadership will step up and make the tough decisions. The future fiscal solvency of local governments – and the taxpayers who foot the bills – is on the line.