Analysis: Towns are Giving Big Salary Perks, Driving Up Taxes

New Jersey taxpayers already wither under among the most suffocating property taxes in the nation. A scathing new report from the State Commission of Investigation called "The Beat Goes On and On" finds many local towns continue to allow municipal employees to cash out with huge checks for unused sick and vacation time.

The costs incurred by taxpayer, the report notes, are one of the factors driving up municipal budgets and property taxes.

Efforts to curb these payouts have been going on for years, and while the SCI notes state and local regulations have had some positive impact, "many local government units continue to engage in questionable benefit practices that needlessly cost taxpayers."

Investigators also noted some towns were openly defying regulations, through loopholes that enable worker to openly circumvent benefit restrictions.

The cost to taxpayers in not insignificant. In Lodi, for example, the SCI audit found annual sick leave sellbacks cost local taxpayers a total of nearly $822,000 between 2013 and 2018. Many local governments, the SCI said, continue to provide "longevity pay" that can boost a workers annual salary by as much as 18%. Such payments are particularly insidious for taxpayers because the bonus pay can be used to determine the workers' "pensionable salary," or the amount used to calculate the amount of lifetime benefits.

The report also singled out Toms River for creatively getting around a payout cap by allowing workers to sell back their unused sick leave before they retire. It essentially allows workers to cash out time that would fall outside the municipality's self-imposed $15,000 cap, and still take the maximum payout when they retire. The cost to Toms River taxpayers was nearly $731,000 between 2014 and 2018. The SCI says such practices have the effect "of thoroughly undermining the limits for payouts at retirement."

There seems to be no end to the creativity some towns will use to funnel more taxpayer dollars to municipal employees to boost their salaries. The SCI noted some towns even give bonuses for not using sick time. Among the more egregious policies:

At the Long Branch Sewerage Authority, all employees remain eligible for an extra day’s pay if, on an annual basis, they are not involved in any accident that results in a cost to the authority and/or its insurance carriers.
Some employees in Hoboken receive a paid day off for donating blood or participating in a wedding or Bar Mitzvah.
In Maywood, all police officers of the small Bergen County community are gifted with their service weapons at retirement.
In Willingboro, Burlington County, certain employees may earn up to five additional paid personal days for using less than four sick days during the prior year.
In Elizabeth, Incentive payments of $1,500 are given to police officers and firefighters who do not use a sick day for an entire calendar year. Other employees get a check for $550.
In Franklin Township, Somerset County, police officers who accumulate more than 150 hours of unused sick time can redeem that leave time for 85 percent of its value.

The SCI is recommending a series of reforms that include state laws that uniformly regulate and/or eliminate such perks as well as a removing any such payments from the calculations of a worker's pension.

Trenton lawmakers, public employee unions, have been opposed to such changes in the past.