A legislation that would cap salaries for public sector workers at 2 percent has stalled in the NJ Assembly.

Governor's Office, Tim Larsen

On April 1, a law expired that was holding salary increases for public sector workers in New Jersey to 2 percent when their union contracts were renegotiated. The state Senate has reached an agreement to reinstitute the law, but the measure remains stalled in the Assembly.

The head of the New Jersey League of Municipalities said if the issue isn't addressed quickly in the Lower House, it could be very bad news for taxpayers.

"If that is not addressed soon and we don't have that cap back in place, we're going to see even a greater burden on the property tax," said the executive director of the New Jersey League of Municipalities, Bill Dressel.

He said it will also mean "reductions of quality of life services, and reductions of employee staffing levels.Things are bad now but things could get a lot worse if the Legislature doesn't come back and deal with the 2 percent cap on arbitration awards."

So what's caused the crisis?

"There definitely is a lot of pressure being exerted by the fire and police unions." Dressel said. "It is making it difficult for some legislators to support the governor's and the senate president's recommendations on how to deal with this problem. One can suspect that it was the influence of the fire and police unions that created this situation."

Dressel said the bottom line here is the cap - when it was in effect for four years - "did more to reduce property taxes than anything else, in that fire and police costs make up the lion's share of the property tax burden. About 60 percent of the municipal budget is made up of emergency services costs for your fire and your police personnel. The biggest culprit on why property taxes are high in local government is increases for fire and police contracts. You lift the lid - the 2 percent lid on that cap - then you got a real problem."