TRENTON – An appellate court has overturned a ruling that said the state had to make up the shortfall in arbitration-awarded raises to Camden firefighters.
The court this morning vacated a decision by the Public Employee Relations Commission that affirmed that award, and ordered a different arbitrator to handle the case.
The matter goes back years and involves the fact that the state had come to the financial rescue of Camden, which has been in “dire financial circumstances.’’
The amount of state aid has declined in recent years, and when an agreement between the city and the International Association of Fire Fighters, Local 788 expired at the end of 2008 the parties entered into arbitration.
The resulting decision led to a salary hike that Camden could not pay, and the arbitrator’s solution was to mandate the state make up the rest.
In 2006, the Legislature had enacted the Municipal Rehabilitation and Economic Recovery Act to help towns such as Camden that were “economically impoverished.’’
On Nov. 17, 2010, the arbitrator issued a proposed settlement, which included wage increases of 2.5 percent for the year beginning Jan. 1, 2009; 2.0 percent beginning Jan. 1, 2010; 2.0 percent beginning Jan. 1, 2011; and 2.0 percent beginning Jan. 1, 2012.
The union accepted the recommendation but the city rejected it on the grounds that it was unable to fund the proposed settlement.
In January 2011 Camden, as part of its financial problems, instituted a layoff plan that involved a substantial number of firefighters.
For fiscal year 2010, the city’s total budget was $185 million, $125 million of which came from state-controlled aid, according to the court.
From fiscal year 2010 to fiscal year 2011, the total amount of all forms of aid from the state decreased, and it was noted that the governor announced he was reducing the state aid pool from $750 million to approximately $250 million, the court stated.
Also, the police and fire pension obligation was $12 million for 2010, $17.7 million for fiscal year 2011, and was projected to be $19.3 million for 2012.
The court recognized that “it was undisputed that the city was unable to fund the award from its own tax base. As the arbitrator acknowledged, state aid was shrinking at the time of the award. The Governor’s exercise of a line-item veto to strike the Transitional Aid Program for the state’s budget for fiscal year 2012 eliminated approximately 40% of the city’s budget for that year.”
But in reviewing the matter, the court decided the arbitrator exceeded its authority and said the state was not a party to the original contract.
Recognizing there was a “fiscal Gordian knot,’’ the court said “it was not within the arbitrator’s authority to sever that knot by usurping both the authority granted by the New Jersey Constitution to the Legislature and Governor and governmental policy-making authority.”