New Jersey property taxes will likely resume the double digit annual growth that occurred under the McGreevey, Codey and Corzine Administrations if Assembly Speaker Vincent Prieto’s version of the of the Interest Arbitration extension becomes law. Either that, or municipal governments as we know them will cease to exist, succumbing to a long and painful death of higher crime and reduced services and capital improvements.
A 2% cap on interest arbitration awards in labor disputes was a key component of the 2% property tax cap negotiated between Governor Chris Christie, Senate President Steve Sweeney and Prieto’s predecessor, Sheila Oliver in 2010. It worked. Arbitrators made awards of less that 2% to police and fire fighters unions and property taxes rose less than 2% per year over the last four years.
The problem is Oliver insisted that the arbitration cap expire on April 1, 2014. Now, we’re a week before the arbitration cap expires and Prietro is gutting the cap by passing an extension of the law that exempts contracts that were awarded less than 2% during the last three years from any future caps and raises the cap to 3% on contracts that have not been negotiated since 2010.
The math will never work. If property taxes stay capped at 2% but the primary cost of property taxes, salaries, are not capped or are capped at 3%, municipal services will disappear. Police will be laid off, with the junior, lower paid officers being let go first, leaving the older and more highly paid officers to run drown the inevitable increase in crime. Towns will go bust. The state will take over municipal governments and force consolidations.