Governor Christie: Budgets, Arbitration and Cap 2.5

Governor Chris Christie gives remarks regarding budgets and arbitration and how Property Tax Reform Cap 2.5 will help fix the high taxes during a Town Hall Meeting in Robbinsville, N.J. on Thursday, June 3, 2010. (Transcript Below)

Question: Why do we need to include school budgets within the property tax?
Governor Christie: Here's why. Here's why, because when we vote on school budgets, and 59% of the school budgets got voted down in April, most of the time the local councils do nothing in response to that or very little. I've been outraged watching across the state as so many municipal bodies did nothing or near nothing in response to a clear repudiation of the school board's budget by the voters. The current system we have is not workable. The second thing is the cap will not further hamstring you. The cap will force you to make choices and force your employees to make choices which you are not now forced to make. Now 2 ½% will be an all in concept, so I've heard people say well why don't we have exemptions for health insurance? Because health insurance is rising at a rate that's much greater than that, but let me tell you what happens in the private sector. In the private sector—and let's talk about in a unionized setting in the private sector so we can be as analogous as we can be. Let's take the building trades unions, the carpenters, the ironworkers, the pipefitters who are unionized and negotiate collective bargaining agreements. You know what they're doing now, and what they've always done? Let's say they get a 2 ½% increase. 2 ½% is all in, all in. It's not just the raise. It is how much more my health benefits are going to cost, how much more my employer has to contribute to the pension, all has to fit inside that number. Only in the public sector where the public sector believes that it's a bottomless pit of money because you're supplying it. Do they say I get my 2 ½% raise plus I get step increments, plus I get whatever my health insurance costs and I don't want to pay anything for it, plus I get my pension, and I'm not going to change how much I contribute to my pension whether the pension fund goes up or down or whether the costs increase for me getting that pension or whether more people are pulling that pension out so that the balance of the pension goes lower. This system is not working. If you believe that the fact that people vote on school budgets is somehow placing some control over it then let me ask you: why are property taxes going up 70% in the last ten years? And why is the majority of that increase geared towards school spending? I will suggest to you it is because town by town, school district by school district, the union picks off school districts, plays them against each other, gets arbitration rulings that they use to go and use against you in the district next door and the district north of there and the district west of there, and it goes on and on and on, and if you want an example—I came with an example today, OK? I came with a recent example that has nothing to do with schools, OK? Just today in Belleville in Essex County, an arbitrator came down with an award for the firefighters in Belleville. Here's the deal the arbitrator gave the firefighters in Belleville, in an atmosphere where there is zero inflation, and they hadn't had a contract since 2007 so it's a five-year deal for 2007, 2008, 2009, 2010, and 2011. Here are their salary increases: 4%, 4%, 4 ½%, 3%, and 3%. Now that's crazy first off. In an area with no inflation they're getting raises four and 3 ½ times the rate of inflation. But here's the best part, and why the arbitration system is part of the problem. It was issued today, June 3rd. The arbitrator backdated the award to May 20th. Now why? Why May 20th?Because on May 21st the pension and benefit reform legislation that I signed that requires that every public employee pay at least 1 ½% of their health benefits, it went into effect on May 21st. So the arbitrator backdated the award to May 20th to avoid the firefighters paying their 1 ½% of their salary for their health benefits. So now it's not only 4, 4, 4 ½, 3, and 3, but on the 3 and 3 add another 1 ½ and 1 ½ to that that they would have had to pay of their salary otherwise, but now are going to get their health benefits free. Now if you think that this system that permits that type of abuse is going to prevent anybody from paying higher property taxes in this state then you and I live in a different world. This is the stuff that the tool kit will stop. This is a discipline that the cap will place on it, because arbitration reform will include arbitrators have to adhere to the cap. They have no choice. They have to adhere to the cap.