Christie Signs Arbitration Reform Bill

Chris Christie

TRENTON – Gov. Chris Christie signed comprehensive arbitration reform legislation Tuesday, part of an effort to rein in the state’s high property taxes.  The measure is the result of a bipartisan agreement reached on Dec. 9 with legislative leadership.

“Today, Trenton is demonstrating what can be done when we work together to find substantive solutions to the issues facing the hard-working taxpayers of our state,” said Christie. “Working with Senate President Steve Sweeney, Assembly Speaker Sheila Oliver, Senate Minority Leader Tom Kean and Assembly Minority Leader Alex DeCroce, we are delivering meaningful and substantive reform to New Jerseyans, transforming the interest arbitration process and providing a long-term solution that will help local governments keep property taxes down and costs under control.


“Our work, however, is not done, and I urge the legislative leadership to keep the momentum going by acting on other critical pieces of the tool kit of reforms that will ultimately help to keep property taxes low. New Jerseyans can no longer afford inaction and delay which is why the legislature must move on real, comprehensive civil service reform as I have proposed, not a watered-down version,” concluded Christie.

The new law:

  • Provides a cap of 2 percent on arbitration awards that will be applied to all salary items, such as the cost of across the board and cost of living increases, step increment payments and longevity pay.
  • Has no Exceptions for Additional Non-Salary Economic Terms Moving Forward. The agreement prevents arbitrators from awarding any new economic items moving forward. The agreement creates a prohibition on allowing non-salary economic issues to be arbitrated above the cap, unless already included in an existing contract. All salary items are subject to a maximum 2 percent cap. This is an important provision because arbitrators will no longer be able to create new cost items in successor contracts.
  • Eliminates Accruing Labor Costs By Creating a Fast Track Arbitration Process. The agreement transforms the system by putting in place concrete deadlines to help eliminate delays in the arbitration process, from contract negotiation to the receipt of the actual award. Traditionally, once a contract expires, labor costs continue to mount until a new contact is reached. Effective Jan. 1, 2011, there will be a concrete deadline of 45 days from the filing of a request for interest arbitration to the date of award, without any extensions.  All appeals must be decided within 30 days, if arbitrators do not comply with the 45 day deadline, they will be penalized financially.
  • Caps Arbitrator Pay. The agreement will cap arbitrator compensation at $1,000 per day and $7,500 per case. Capping arbitrator pay will further incentivize speedy resolution of arbitration cases.
  • Increases Ethical Standards and Training for Interest Arbitrators.
  • Randomizes the Selection of Interest Arbitrators.

The legislation also creates a Task Force to examine the impact of interest arbitration reform and the effectiveness of the cap on restricting municipal spending. The taskforce will study the impact of the cap on taxes, services, expenditures, public safety, recruitment, retention and professionalism. The Governor will directly appoint four members and two members will be directly appointed by the Senate President and Assembly Speaker. The Task Force will provide its recommendations no later than Dec. 31, 2013.

“We must continue to focus on the other measures in the property tax reform Tool Kit package that will provide further relief to taxpayers,” said Assembly Republican Leader Alex DeCroce (R-Morris and Passaic.) “As we embark on a new year, our top priority remains changing the way government operates. Reforming civil service and addressing the pension and health benefits issue are the next priorities in the effort to make our state a more affordable place to live.”

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