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Sarlo Bill Limiting Sick Leave Payouts, Vacation Carry-Over For Public Employees Clears Senate Budget Panel

Senator Paul A. Sarlo speaks with municipal officials during the League of Municipalities Mayors Legislative Day at the Statehouse Annex on Wednesday, February 24.

Measure Key Part of Tool Kit to Help Local Governments Meet Property Tax Cap

TRENTON – Legislation Senator Paul Sarlo sponsored to limit the unused sick-leave payouts and vacation carry-over for all public employees was today released by the Senate Budget and Appropriations Committee.

The bill (S-2220) is a key component of the so-called “tool kit” for local officials to use to live within the means of the state’s new two-percent property tax cap.

“One of the fastest growing fiscal concerns for towns is the enormous payouts that need to be given to some retiring employees for unused sick and vacation time,” said Sarlo (D-Bergen). “Left unchecked, these bonuses can easily match the salary of a full-time employee, if not more. If towns are to be able to remain viable under the new property tax cap, these reforms are sorely needed.”

Under the Sarlo measure, all public employees would be brought under the $15,000 cap in unused sick leave that is in effect for workers hired after June 2007. Employees who have not accumulated $15,000 worth of unused leave would be capped once they reach that amount. Employees who have accrued in excess of $15,000 in unused leave would be frozen at their current level.

Vacation carry-forwards would be capped at one year only. Employees who have accrued more than one year’s worth would be able to carry that amount, but could not bank more time.

Sarlo noted how some public employees, by saving their sick and vacation time, have retired with windfalls that can cripple a town’s finances. A December 2009 report from the State Commission of Investigation (SCI) noted that residents of Fort Lee “are on the hook” for municipal employees’ more than 30,000 unused sick and vacation days – equivalent to $7 million, or more than 10 percent of the town budget. The report also highlighted Rockaway Township’s payment of more than $263,000 for accumulated leave time to its retiring police chief in 2008.

“There is nothing wrong with allowing employees to bank unused leave, but there’s a point at which it really becomes absurd,” said Sarlo. “One retirement could easily eat up a community’s space under the tax cap. Our simple goal is to bring these payments back in line with reality, and ensure local officials don’t have to choose between providing essential services or paying out tens, or hundreds, of thousands to one person.”

The bill also would end the practice of “terminal leave” – where employees exhaust sick and vacation time during their last year of employment, allowing them to keep earning a full paycheck – for all future employees.

The bill was released 10-0, and is now poised for a vote in the full Senate.

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