Finance director: no big payouts for OC sick time

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OCEAN CITY — Accumulated sick pay is a statewide problem, but one that affects some communities more than others, according to city Finance Director Frank Donato. Donato said some reform is necessary, but Ocean City’s total exposure, $4.96 million, is somewhat misleading.

Acting on what he called a “commitment to deliver property tax relief to New Jersey families,” Gov. Chris Christie unveiled a “tool kit” of proposals he said would help curb the underlying causes of the state’s property tax crisis.

Pension and health benefits reform and a 2 percent cap on spending, he said, were a few of the tools necessary to help municipalities curb spending. To enhance the tool kit, Christie has been pushing the state legislature to eliminate cash payouts to public employees for unused sick time, but thus far legislators have not acted on his proposal.

In December, a bipartisan group of 234 mayors, including Ocean City Mayor Jay Gillian, joined Christie in asking the legislature to end its delays on the reform measures. Last week, Christie took umbrage with the lack of action.

“The legislature must finally embrace and act on a simple principle right now - if you are fortunate enough to work without getting sick, you should not be able to put our state’s property taxpayers on the hook for your unused sick time,” Christie said.  “It’s time to bring this practice to an end and continue passing reforms needed to deliver long-term, sustainable property tax relief to families. There is absolutely no legitimate excuse for not acting to end this practice once and for all.”

A news release from the governor’s office sent last week stated, “These local government obligations have a real and direct cost to property taxpayers, totaling over $1,000 for the average property taxpayer in some municipalities.”

Christie also issued a town-by-town spreadsheet showing the individual liabilities of each community statewide, broken down to what the debt represents for each taxpayer. By Christie’s calculations, Ocean City is liable for $4,963,305 in accumulated sick and vacation pay. The average property owner owes $263 to cover this.

Donato said the calculation was “not a true statement” for two reasons.

“This is an actual calculation, they looked at the totals and divided by the tax base,” he said.

The total includes each of the city’s negotiated union contracts: $1.094 million for the PBA, $991,550 for the FMBA, $1.257 million for the CWA, $93,000 for EMT rescue and $1.527 million for middle management and others.

“While that may be the total exposure, assuming that everyone is eligible, it’s not a true statement,” he said. “If they leave and have accumulated vacation pay, they will be paid for their vacation days. If they leave before they are eligible for retirement, they will not be paid for sick days.”

Donato said that the figures assume that everyone is eligible for retirement right now, but everyone is not.

“In order to qualify, it has to be a bona fide retirement. If you are an employee here for 25 years and you retire, you will be eligible, but not if you have not worked 25 years,” he said.

“For example, I have been here for 11 years,” he said. “If I leave, I am not eligible. A lot of people are not eligible at this moment and that goes for a lot of employees.”

Donato says Christie’s calculations also assume that every employee would get up and leave at once.

“That would assume that the city would just shut down, and go out of business,” he said. “Retirements would be spread out over time.”

Some communities pay out sick time at the employee’s highest salary.

“Say you started at $30,000 and ended your career at $100,000 per year. Some communities would pay your sick days at the highest rate. That’s not right and that needs to be changed,” Donato said.

He said Ocean City does not operate that way. With the union contracts that were in place until the end of December 2011, employees collect sick days over time at the rate at which they were earned.

Sick time is capped at various levels. Police and firefighters, he said, with 160 days of accumulated leave are capped at $22,500. After the cap is reached, they are paid $100 for each day accumulated.

Dividing $22,500 by 160 days yields $140.62 per day, he said.

Paying an employee $100 per day means fewer employees abuse the system, Donato said.

“There is an incentive not to abuse sick time if you’re not sick,” he said. “It’s a waste of taxpayer money to pay all those sick days at a higher rate.”

CWA members, he said, are capped at $16,500, with each day after that worth $95.

“We’re not paying a ton of money compared to other towns,” he said.  “Our payment is based on an entry level salary rather than at the end. I can understand the outrage in some of these towns.”

Christie, he said, wants zero, while the legislature wants the cap at $15,000. Over a year ago, Christie conditionally vetoed legislation that would have provided $15,000 payouts of these benefits, returning the bill with changes to eliminate any cash value for unused sick days moving forward, and limit the ability to carry forward unused vacation days to one year only.

Donato said some employees would use the sick time when they aren’t sick rather than wasting it under Christie’s proposal.

“The responsible thing to do is to hold on to sick days in case of a serious illness,” he said, but some employees would simply use them.

“We want to be fair to the taxpayers, but is it fair to encourage people to abuse sick time?” he asked.

“All of these issues and more will be on the table at contract time,” Donato said.

The city is currently in negotiations with the city’s seven unions, PBA, FMBA, two CWA, two Ocean City Beach Patrol and the Ocean City Pops Orchestra.

 

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