Mayor Hawkins pushes Trenton for Arbitration Reforms to Reduce Cost of Government by Taking into Account Ability to Pay

On Thursday, October 14th, Mayor Eldridge Hawkins spoke at a news conference at the state house in Trenton to call for reforms in binding arbitration between municipalities and unions. The news conference was sponsored by the New Jersey League of Municipalities.

Following the news conference, Mayor Hawkins testified on the subject in front of a State Senate hearing.
Since Governor Christie’s budget message in March, Mayor Hawkins has been a state-wide leader in the fight to give municipalities new powers to reduce spending and keep taxes down.

NJN television coverage of the news conference may be found at:
http://njnnewspublictv.wordpress.com/2010/10/14/toolkitbillsstatus/

A photo and photo caption from the news conference are attached.

The following is Mayor Hawkins testimony on Arbitration Reform:

I want to thank you for giving me the opportunity to discuss with you the urgent need for municipalities to have the tools to reduce spending in the aftermath of the 2% tax cap and the devastating cuts in aid to municipalities.

Some have suggested that we can deal with the fiscal crisis by simply cutting spending in Orange to make up for the loss of state aid. The answer is that we can’t. Most local spending is outside of our control.  Almost 95% of the budget is salary or salary related items awarded through the binding arbitration process, and expenditures such as debt service or state mandated programs.

With the 2% cap and the loss of $3 million in various forms of state aid, Orange faces an unprecedented fiscal crisis. If there are no basic changes in the rules governing local government, the cap in combination with the state cuts, will cause a reduction in municipal services so severe that even police and fire protection will not be spared.

We need your immediate help. The longer it takes to pass a toolbox of reform measures, the deeper the hole we must climb out of. The state immediately took away our aid and two months ago limited our ability to make up the difference with taxation. But, it is moving at a snail’s pace to give us the power to make the spending reductions we need.

The League of Municipalities had asked that the 2% tax levy cap be delayed until the governor and legislature could agree on management reforms and mandates relief that could make the cap workable. Our voices were ignored. And now, inertia has set in.

Common sense tells us that the only way to hold down local spending0 while the state is cutting back is to give our cities and towns the power to control the vast majority of our spending that is presently off limits and beyond our reach. Give us the power at the local level to bring our benefits and work rules in line with those of private industry. Do not continue to saddle us with a binding arbitration process that requires us to increase spending at a time when we must be cutting back.

Binding Arbitration Reform should top the list of State priorities for meaningful property tax relief.
Most public employees are dedicated and work hard. They are entitled to salary increases when the public can afford them.  But, they are not entitled to salary increases imposed by arbitrators who totally ignore the consequences of their decisions on the overburdened property taxpayers.

For example, at present, there is effectively a single standard for cost of living increases. One arbitration decision in a single municipality might call for a 3 or 4% increase in pay and benefits, and for all practical purposes, the other arbitration decisions follow suit. That establishes a precedent for the mediation process. The 3 or 4 percent standard might be affordable in a wealthy municipality, but it will break the backs of taxpayers in less affluent areas.

And, if a municipality wants to challenge the prevailing standard by going to binding arbitration, it faces a very lengthy and very expensive process involving weeks of testimony and tons of research and documents, with the possibility of at best achieving a miniscule reduction from the prevailing unaffordable standard.

Two recent arbitration awards in Rumson and Belmar highlight the urgent need for reform. In the Rumson award, police officers will receive 3% in 2010 and 2.75% in 2011. In Belmar, the award was a 15% increase over a five year period beginning in 2008, which equates to a 3% increase per year.

In Orange, we are in the midst of union negotiations that will require significant salary and benefit reductions in order to avoid massive layoffs that must even include public safety personnel.  If this goes to binding arbitration, any increase whatsoever will destroy our ability to deliver even the most basic services.

So, while it is important that you design the binding arbitration process to take into account the differences between municipalities, it is equally important that you prevent arbitrators from making contract awards that exceed the 2% cap, inclusive of all salary, benefit and other economic contract provisions.

With the cap, we cannot survive without a binding arbitration process in which arbitrators are required to take into account the impact on property taxes of collective bargaining agreements.

Thank you.

 

At the League of Municipalities News Conference:
Left to Right - Peter Palmer, Somerset County Freeholder, John Ekdahl, Mayor of Rumson,
League President and Mayor of Clifton, Jim Anzaldi, Eldridge Hawkins, Jr, Mayor of Orange
and Kenneth Pringle, Mayor of Belmar