Christie and Dems Reach Landmark Deal

Friday, December 10, 2010

Republican Gov. Chris Christie of New Jersey. (Kevork Djansezian/Getty)

As a result of a bipartisan compromise, New Jersey police and firefighters won't get more than a two percent raise over the next three years. Under the deal struck by Governor Christie with legislative leaders to cap first responders salaries, there will also be major reforms to how contracts are negotiated.

Under state law, police and firefighters are prohibited from striking, but they do have the protection of binding arbitration. Local governments complained that even as the economy stalled, arbitration awards exceeded the rate of inflation and, in turn, pushed up local property taxes.

Senate President Steve Sweeney said now contract arbitrators have to take local financial conditions into account and that the reforms will help local governments balance their budgets..

"An arbitrator has to actually put in a written report on how they looked at the municipal finances when they came to the determination of the award -- the ability to pay -- which they never had to do before," Sweeney said. 

On January 1, local governments also face a two percent cap on property tax hikes.

Bill Dressel with the New Jersey League of Municipalities said the deal was a breakthrough for local governments. "The true test will come when we see if it helps keep property taxes hikes within the two percent cap."

Dressel said a lot more needs to be done to help local government keep a lid on costs, like civil service and pension reform.

Sweeney agreed with Dressel that Trenton's next heavy lift is coming to terms with the state's public employee pension crisis. Currently, the state's public pension fund is under-funded by $46 billion.

A vote on the police and fire salary cap and contract reforms could come as early as Monday.


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Comments [6]

Marc from NYC

An arbitrator who is evaluating "ability to pay" must necessarily be asked to look at the choices a locality made in where to spend their dollars. It is inherently unfair to claim no ability to pay for a raise for some workers when the municipality has spent money to give raises to other employees (administrators, politiicans) or has chosen to give tax breaks to developers or for job creation rather than set aside that money to provide raises to first responders.
I don't think that the consequences of this kind of review were throught through very carfully by the drafters of this law. Will the arbitrator be able to say the local legislators made poor choices? Will all of these decisions have to be made by public referendum?

Alvin wants to exclude overtime from public pensions. He forgets that many first responders are required to work overtime. Shouldn't those hours of earned salary count toward pension. If employers wnat to exclude overtime costs from pension, the fair way to that is to hire enough full-time employees to obviate the need for overtime. Alternatively, the employer can prevent employees collecting large amounts of overtime by negotiating a limit on the number of hours for the year, or negoatiate a cap on the percentage difference between an employee's final salary and the salary earned in the year(s) preceding retirement.

Instead of being critical of the defined pension benefit plans that public employees have negotiated for (and paid for by deferring wage increases), Alvin and others should be asking why all employees, public and private, can't get defined pension benefit plans.

The data is clear that providing retirees with adequate incomes is good for the economy. Retirees with incomes above the poverty level, spend money creating demand and jobs and continue to pay taxes. Isn't that what the economic reforms are intended to create?

Dec. 10 2010 01:53 PM

Next step: Have all public employees contribute to their health care coverage.

Dec. 10 2010 12:47 PM

Excellent read, I just passed this onto a colleague who was doing a little research on that. I found it for him smile So let me rephrase that: Thanks so much! Regards,

Dec. 10 2010 12:31 PM

Excellent read, I just passed this onto a colleague who was doing a little research on that. I found it for him smile So let me rephrase that: Thanks so much! Regards,

Dec. 10 2010 12:30 PM
Alvin G. Thompson from NJ

typo - I meant "earning" in paragraph 2, not "early"

Dec. 10 2010 06:59 AM
Alvin G. Thompson from NJ

How about a law that overtime does not count towards final average salaries for pension costs?

People are already early 1.5x their hourly rate for overtime. Why should they also be given a boost to their monthly pension payment for 20 or 30 years?

How much does each of these overtime hours actually cost taxpayers? I think $800 or more per overtime hour for those retiring at age 50 with 30 years served.

Under the current system, there's a huge incentive to work massive overtime hours to boost pensions.

Dec. 10 2010 05:11 AM

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