TRENTON - Senators heard testimony Thursday on a controversial bill that would impose a 2 percent cap on annual increases in the total cost of a public employee's salary and benefits.

The bill, sponsored by Sen. Michael Doherty (R., Warren), is one of two considered the most provocative in Gov. Christie's property-tax-reform "tool kit." The other concerns civil-service changes.

Christie proposed the "tool kit" over the summer to rein in the state's property taxes, which are among the highest in the nation. He has repeatedly criticized lawmakers for not taking action on the legislation quickly enough and urged them to approve the measures by year's end.

The Senate's State Government, Wagering, Tourism, and Historic Preservation Committee heard testimony from advocates and critics on the legislation, but did not vote.

The bill would limit both interest-arbitration awards, which can apply to police and firefighter contracts, and collective-negotiation agreements.

The bill "really ends collective bargaining as we know it," said Sen. Jim Whelan (D., Atlantic), the committee chairman. "This is not a minor change."

Unions representing police, firefighters, and other government workers harshly criticized the bill.

Had the cap been in place in 1968, when the state passed its first public-sector collective-bargaining law, teachers would earn an average of $20,715 today, Vince Giordano, executive director of the New Jersey Education Association, told the committee.

That figure, he noted, is below the poverty line for a family of four. A family of three earning that amount would qualify for food stamps.

"What sort of schools would we have today if we paid our teachers $20,000 per year?" Giordano said. "What sort of education would our children get if that is the value we placed on educators?"

The binding-arbitration system works, testified Anthony Wieners, president of the Policemen's Benevolent Association. He noted that awards over the last decade had declined in line with the economy.

"It has become easy to scapegoat arbitration as the bogeyman of property-tax increases," Wieners said.

But mayors argued that with the 2 percent cap on property-tax increases to go into effect in January, they needed help from the state to achieve savings without drastic cuts in essential services.

In Rumson, recently arbitrated awards of more than 2 percent for police - before accounting for benefits - mean other personnel would have to be cut, Mayor John Ekdahl told the committee.

"If we have to pay police 2.75 percent, we have to let some of these other employees go, or give them virtually no raise at all to keep them employed," Ekdahl said. "We've created a privileged class of employees, which, on its face, just does not seem fair."

Ken Pringle, mayor of Belmar since 1990, said police compensation had been a key driver in property-tax hikes.

From 1990 to 2010, he said, the tax levy in the town increased 43 percent. But for police salaries and benefits, costs doubled between 1996 and 2009, he said.

Sen. Bob Gordon (D., Bergen), a member of the committee, said at the conclusion of the hearing that the bill was a "complex issue" and would require careful deliberation.