By Pete McDonough, Jr.
NJ Spotlight
July 9, 2010

The bipartisan agreement to cap property tax growth at 2 percent is welcome news for New Jersey’s beleaguered property tax payers, but it’s only the first step. The tactics to make it a reality lie in Governor Christie’s proposed “toolkit” to help municipal leaders control the costs that drive property taxes.

Enacting the reforms in the toolkit posses a difficult challenge for the Democrats and Republicans who joined with Gov. Christie to impose a “hard cap” on spending and taxes at the local level.

Many of the hammers, chisels and hacksaws comprising the kit are ideas that have been around for a long time. They’re powerful tools that will allow mayors and school boards to choke down the cost drivers of local budgets and level the playing field between public sector unions and the taxpayers.

Consider civil service employment. Reforming civil service so that targeted layoffs can occur is essential. The way the system is currently rigged, “bumping rights” assure that seniority is the primary factor in determining which employees are let go and which remain on the payroll. The net effect is that the least expensive employees, often the newest ones and those with the freshest ideas, get terminated. Expensive senior employees stay on the payroll by moving down in the ranks to positions for which they may no longer be qualified. Thus government efficiency suffers and the taxpayers pick up the tab.

The toolkit would change that, allowing for targeted layoffs and letting municipalities to opt out of the civil service system following a referendum by local voters.

Binding arbitration, an essential safeguard for public employees who are prohibited by law from striking, needs to be reformed, as well. The current system dependably leads to higher and higher contract awards because arbitrators make their judgments by comparing awards that were given in similar local units. Arbitrators cannot consider the ability of taxpayers to afford those new contract awards, so they just keep growing and growing.

Capping accrued sick leave and curbing the practice of carrying unused vacation time forward — both of which can lead to six-figure retirement bonuses — would bring public-sector employment more in line with private employment.

The experience of Gov. Christine Todd Whitman in attempting civil service and arbitration reforms is instructive. Both of these efforts were emasculated by legislators in both parties, who pledged their fealty to the public-sector unions over the interests of the taxpayers.

Whitman’s civil service reform package included, among other things, a provision to base layoffs on “merit points.” Under the proposal, employees would earn credit for their length of service and for their most recent performance evaluations. The thought was that the reformed system would keep the best and brightest on the payroll while eliminating deadwood when layoffs were required.

The reform stood no chance when the chairman of the Assembly Labor Committee, a Republican, joined forces with the leaders of the state AFL-CIO, and the public hearings for the reform measure turned into public executions.

The civil service reform effort of 2000 went down in flames.

With respect to binding arbitration, Whitman proposed an initiative similar to that of Gov. Christie, requiring arbitrators to consider economic factors when determining an award. As the vote for the bill inched closer, it was apparent that election politics would win out over the taxpayers’ interest. The Assembly was facing an election year and there was a growing fear among some Republican members that voting for meaningful arbitration reform would cost them seats in the upcoming election.

An amendment was offered to significantly water down the reform measure; it was supported by Republicans and Democrats, and Whitman’s attempt to reform binding arbitration became all gums and no teeth, all bark and no bite.

The situation could be different this time. Senate President Sweeney, himself a labor leader, has joined with the Governor. From Sweeney’s perspective, taxpayers are crying out for reform and he’d rather be part of the solution than a part of the problem.

Upon announcing the agreement on the property tax cap, Sweeney said, “They said it couldn’t be done. We proved them wrong, Governor.”

Gov. Christie added: “We can stop the conversation on whether Republicans and Democrats can work together. This is real property tax reform.”

Can this bipartisan spirit survive the dog days of summer? It has to, since it’s the only way local leaders will get the tools they need to meet the strict limits of the 2 percent hard cap.