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What do some New Jersey police officers have in common with the U.S. Attorney General? Salary! One manages 160 people, the other 110,000, including the FBI.

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A cap on police and fire salary increases in interest arbitration cases will expire at the end of the year unless it is renewed by the Legislature and governor. The New Jersey State League of Municipalities, which represents all 565 of the state’s municipalities, argues that if the cap isn’t renewed, it will put further upward pressure on the state’s highest-in-the-nation property taxes and force reductions in municipal services. The state Policemen’s Benovolent Association argues that the cap isn’t necessary and that contract settlements should be negotiated between towns and local unions, not bound by an arbitrary cap. State PBA president Pat Colligan and League executive director Michael Darcy offered their differing perspectives on the cap in a Q&A. Colligan responds first. Darcy follows:

Questions for Colligan:

Would you explain for the layman what the 2 percent interest arbitration cap for police and firefighters is and why New Jersey residents should care whether it is extended or allowed to expire?

Since police and firefighters are prohibited by law from striking, binding arbitration was provided to ensure that if our employers failed to negotiate in good faith that we would have the ability to reach a settlement through an independent arbitrator. If a negotiation reaches an impasse, either side can file for arbitration. An arbitrator is selected randomly. Mediation will be recommended as the first step to assist the parties in coming to a mutual agreement. If mediation fails, the arbitrator is given power to draft a binding agreement. The arbitrator must consider multiple factors in their decision, including the 2 percent tax levy cap, the government’s finances and ability to pay and other matters as required by state law. Most contracts are decided mutually and without the need for an arbitrator, which is why demands to permanently cap police salaries in this manner are inappropriate and heavy handed.

The state PBA is lobbying hard for the elimination of the interest arbitration cap. Why?

The vast majority of contracts are decided mutually and without arbitration today. The cap law didn’t change that. In reality, during the decade prior to the arbitration cap law an average of only 18 contracts per year out of the more than 300 potential contracts up for negotiation at the same time were decided through arbitration. In addition, the average negotiated salary for police and firefighters was dropping before the cap was put into place. Even after the cap was passed, average annual raises barely exceeded 2 percent outside of arbitration. The arbitration cap is essentially a permanent 2 percent cap on raises, forever. We now pay 35 percent of the health care premium and our pension contribution was increased 1.5 percent to the highest in the nation at 10 percent. Requiring a permanent cap on raises is a solution in search of a crisis.

New Jersey police officers have the second-highest median salaries in the nation, only behind California. And New Jersey firefighters have the highest median salaries in the U.S. An analysis of state Treasury Department data found that the median police salary last year was about $105,000. By comparison, the median household income in the state is $72,000. The police salary figure doesn’t include overtime, longevity pay, extra duty pay for traffic control and other compensation. Officers also are free to hold second jobs, something that the trend toward four-days-on, four-days-off shifts has facilitated. Yet you maintain that police officers in New Jersey are underpaid and undercompensated? How so?

Let’s not lose sight of the fact that this compensation was negotiated with our respective employers over the years. We live in a state that is consistently ranked among the highest cost of living states in the entire nation. Our members work 24/7 in all weather, on holidays, in the middle of the night and while often dealing with the worst situations our residents are facing (regardless of the town's crime rate!). Our profession is unlike any other and there is no private sector equivalent to compare it to. No other profession faces death, assault, depravity or conflict as frequently as law enforcement. We should not, and I will not, apologize that we are compensated for the risk and for the sacrifices we make and many of our members have died to make. The public also needs to understand that unlike most other services government offers, policing (and paid firefighting) is a 24-hour service.

New Jersey towns with the highest median salaries often are wealthier suburban towns with very little crime. Officers in Saddle River, Bergen County, for instance, were paid a median salary of $155,508, last year —- the highest in the state. Yet, the municipality only had two violent crimes in 2015. Is that fair?

It always amazes me that law enforcement salaries should somehow be tied to a homicide count. The residents of New Jersey move to towns for many reasons but most are seeking services and a quality of life they are willing to pay for, and often the taxes they pay are commensurate. Many see safe streets and a responsive, professional, well-educated police force as a service they are willing to pay for. Suggesting that violent crime be the measuring stick about how much an officer should be paid is ludicrous. Officers throughout this state, despite the socioeconomic status of the community they serve perform services and tasks far beyond the scope of your average employee.

The interest arbitration cap has limited police and fire salary increases to 2 percent a year. But prior to its enactment, officers were receiving annual increases of 5 percent or more, according to the League of Municipalities. Doesn’t that demonstrate that the cap has achieved its main goal of helping to reduce the rate of property tax increases? What impact would allowing the cap to expire have on property taxes and municipal services?

Officers haven’t received arbitrator awards in excess of 5 percent since 1994! That was 23 years ago. Claims that a permanent arbitration cap on law enforcement salary awards is the only thing standing in the way of “5 percent annual raises” for cops is not only false but is dishonest and irresponsible reporting. The League of Municipalities last week spoke of “double digit” increases, which is equally ridiculous. We know from existing data that those towns that mutually negotiated before and during the cap did not give out raises in excess of 5 percent.

Salary awards were already dropping prior to the imposition of an arbitration cap. From 2006 to 2011, the average for salary increases for all contract awards fell nearly a full 2 percentage points on its own, from 3.95 percent to 2.05 percent. During the same period, voluntary contract settlements dropped even more to 1.87 percent. The true facts (and not League rhetoric) actually prove our point.

Police contribute about 10 percent of their salaries to their pensions. But they retire earlier than other public employees — thus drawing pensions for far more years — and receive larger pensions because of their higher salaries and higher-percentage pension payouts than most other public employees. Does the 10 percent contribution come close to paying for police officers’ pensions over 25 or 35 years of retirement, even when factoring in revenue accrued from investments?

The Police and Firemen’s Retirement System (PFRS) is healthy and would be funded at nearly 100 percent according to the state’s own actuaries if the state and local governments hadn’t been irresponsible by skipping nearly a decade’s worth of pension contributions. The law enforcement officers and firefighters have made every single payment, every single month of their careers without fail. Unfortunately, the same cannot be said of our local, county and state employers. So yes, the system works when we follow the rules.

WATCH: N.J. Tax Crisis: Part 3: Police salaries

MORE: Editorial: Cops sticking up taxpayers

Most police officers are eligible for lifetime health benefits. Do the increased contributions they have been required to make for their health insurance in recent years come close to paying for their coverage over the course of their retirement?

Health care costs are a universal concern in every profession and the benefits provided to law enforcement are no different. Unfortunately for all of us, government and the health care industry have simply failed to control costs. This failure is passed on to everyone. A large number of officers pay more than $1,000 per month for their benefits but there are no cost controls on the provider side. We have taken proactive steps educating our members about how to reduce their costs as a union and through the SHBP Plan Design Committee. We have led the charge to lower costs for our members and taxpayers. It is now time for the industry and the government to do the same.

You have stated that police recruitment has been negatively affected by the 2 percent cap, a contention the state League of Municipalities disputes. What is the basis for your claim?

I suppose the League will tell us there is no national recruiting problem either. I prefer dealing in facts rather than offering anecdotal information because someone may have asked a mayor or two. Police departments throughout the state are seeing a reduction in the quantity and quality of applications for law enforcement jobs. Camden Metro Police is an excellent example. Despite the hype and public relations spin provided after the creation of the department, Camden has never reached its goal of full staffing (and never will) because the salary and benefits offered are so low compared to surrounding towns that they can’t recruit and retain enough officers. A permanent cap on raises for every town in New Jersey will only exacerbate our recruiting and retention problem. I hope the League can do some actual research next time before it releases an irresponsible opinion again.

If the 2 percent cap on interest arbitration awards for police and fire is allowed to expire, and the overall 2 percent cap on municipal property taxes remains in force, won’t that likely reduce salaries and benefits of other municipal workers or lead to a reduction in services? Or both?

There is no evidence to support the claim by the League of Municipalities that the cap must be made permanent for property taxes to be controlled. First, if that claim were true, then every contract since 2010 would have been settled by arbitration as towns would have seen the value in not settling a contract mutually. Second, if that claim were true then every town that settled a police or fire contract outside of arbitration would have experienced program cuts, tax increases and levy cap referendums. None of that occurred anywhere in New Jersey. Third, if that claim were true then towns that received an arbitration award under the cap law would have been able to lower property taxes. There is no town in New Jersey that can show that happened. Can the League point to one town that saw a reduction in taxes because of the cap? There is simply no evidence to support the suggestion that caps on police salary awards prevents an unseen property tax disaster.

Questions for, and answers from, Michael Darcy of the state League of Municipalities:

Please describe what interest arbitration is, and why taxpayers should care whether the 2 percent arbitration cap is extended or allowed to expire.

Interest arbitration is a process, available only to police and fire employee unions, to settle collective bargaining disputes between local governments and unions. When a public employer can’t reach a contract agreement with a police or fire union, an arbitrator is called in to decide the terms of the contract.

When the 2 percent property tax cap was enacted, a 2 percent cap on interest arbitration awards followed, forcing arbitrators to take property taxes into account and providing local officials with a tool to contain property tax increases. The arbitration cap expires on Dec. 31. History shows that if the cap on interest arbitration expires while the 2 percent property tax levy is permanent, arbitrator contract awards will exceed 2 percent and municipalities will be forced to reduce or eliminate municipal services or will need to seek voter approval to exceed the 2 percent property tax cap in order to fund an arbitration award.

The League of Municipalities, which represents all 565 towns in the state, is pushing hard for the extension of the interest arbitration cap. Why?

Because the interest arbitration cap works. Without the interest arbitration cap, the math simply does not work. The interest arbitration cap is about budgeting within our means, keeping a control on local taxes and providing a level playing field at the bargaining table. The 2 percent interest arbitration cap has controlled one of the largest municipal expenses — public safety salaries — not only through arbitration awards but also by encouraging contract negotiations. It has been proven to be an effective control on the rate of property tax increases, which remain the number-one concern of our taxpayers. Now is certainly not the time to turn back the clock.

Only a small percentage of contract disputes between police and fire and municipalities end up in interest arbitration. So why is the cap important?

The cap encourages serious collective bargaining. Arbitration filings decreased from typically over 100 per year to 26 in 2013. In 2014, the Legislature and governor agreed on a bipartisan extension of this 2 percent cap on arbitration awards. After an increase in filings in 2014 because of the potential expiration, the 2014 extension decreased the number of fillings to just 9 in 2016.

There is also a precedent factor. If an unelected arbitrator grants an award over 2 percent, it will be used as precedent in future arbitrations and contract negotiations in surrounding and similar communities, driving up costs. The interest arbitration cap leveled the playing field so that collective bargaining was once again a “give and take.” There are many examples where municipalities negotiated contracts with significant savings: steps were lengthened, sick leave incentives were reduced or eliminated, and vacation time was reduced, providing savings to taxpayers.

What portions of police and fire compensation does the interest arbitration cap cover? Just base salary?

Yes, however, base salary is defined by statute (NJSA 34:13A-16.7) to include significant cost drivers such as longevity, salary increments and any other item agreed to by the parties or in previously negotiated contracts.

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EDITORIAL: Murphy's arbitration cap copout:

The interest arbitration cap has limited police and fire salary increases to 2 percent a year. But prior to its enactment, officers were receiving annual increases of 5 percent or more. Doesn’t that demonstrate that it has achieved its goal of helping to reduce the rate of property tax increases? What impact would allowing the cap to expire have on property taxes and municipal services?

Yes, we believe the 2 percent interest arbitration cap has achieved its goals of reducing the rate of property tax increases. However, the regressive nature of the property tax still makes it the number one concern of our taxpayers, and a particular burden for working families and seniors on fixed incomes.

Now is not the time to declare victory. Without the interest arbitration cap, excessive awards would force local governments, still be bound by the 2 percent levy cap, to make significant budget cuts in other service areas, be it public works, recreation or even public safety. Infrastructure investments may be delayed. We will also likely see another impact: referendums to exceed the levy cap as soon as 2018.

Police contribute about 10 percent of their salaries to their pensions. But they retire earlier than other public employees – thus drawing pensions for more years – and receive larger pensions because of their higher salaries and higher percentages of their final salary than most other public employees. Does the 10 percent contribution come close to paying for their pensions over 25 or 35 years of retirement, even when factoring in revenue accrued from investments?

The pension contribution for police and fire employees is statutorily fixed at 10 percent of their salary. The employer contribution, which is based on actuary reports, is currently at 27.35 percent. Since the plan is a defined contribution plan, any shortfall in a return from investments or underfunding must be made up by the employers, in this case, municipalities, counties and their property taxpayers.

This was the main reason the League, as well as the Association of Counties and the Conference of Mayors opposed legislation to allow the police and fire unions to have majority control of the board overseeing the plan, which was fortunately vetoed by the governor.

Most police officers are eligible for lifetime health benefits. Do the increased contributions they have been required to make for their health insurance in recent years come close to paying for their coverage over the course of their retirement?

It is difficult to quantify in the aggregate, as not all municipalities provide health benefit coverage for their retired employees. For police officers working in those municipalities that do provide post-retirement coverage, they may be eligible to be enrolled in the State Health Benefits Program, with part of the cost paid by the state. Anecdotally, we know that the employee contributions toward health benefits have assisted in defraying the costs. And remember: police officers tend to retire in their mid-40s, typically with dependents, versus other public employees who will retire in their 60s with no dependents.

The head of the state PBA has stated that police recruitment has been negatively affected by the 2 percent cap. Do you agree with that contention? What is the basis for your position?

No, we do not agree. Recruitment has not been negatively affected by the 2 percent interest arbitration cap. While there is no definitive data available, we do know that the number of resumes that have been submitted has been consistent, pre and post the interest arbitration cap. There is no reason to believe that recruitment has suffered, as our police and fire employees remain among the best paid in the country.

If the 2 percent cap on interest arbitration awards for police and fire is allowed to expire, and the overall 2 percent cap on municipal property taxes remains in force, won’t that likely threaten raises for other municipal workers or lead to a reduction in services? Or both?

Yes, likely both. Under these circumstances, in a zero sum budget environment, a local government will need to fund the percentage increases over 2 percent ordered by an arbitrator. To keep under the permanent levy cap, local elected officials will be forced to make cuts elsewhere. All line items will come under scrutiny and local elected officials will be forced to consider reduction of services, furloughs and even layoffs to fund one line item in the budget, mandated by the decision of an unelected arbitrator. At some point, local budget balancers could even need to lay off some police and fire personnel to pay the raises mandated by an unelected arbiter. As noted above, we are also likely to see an increase in 2018 and 2019 of ballot referendums in which voters will be asked to authorize exceeding the 2 percent levy cap.

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