TRENTON - Civil service rules are one of the biggest impediments for New Jersey towns looking to share services to save money, Community Affairs Commissioner Lori Grifa told lawmakers Monday.

Nearly 200 of the state's 566 towns use civil service for hiring employees. The system was created in 1908 to prevent patronage, and its rules require that new hires be chosen according to "merit and fitness," determined partly by competitive exams. But the rules can make it difficult to downsize or combine workforces.

Grifa, testifying before the Assembly Environment and Solid Waste Committee, said the rules most often create "a significant barrier" to sharing services when one town uses them and another does not.

Gov. Christie signed legislation over the summer capping local spending and property tax growth at 2 percent a year. It takes effect in January. The law was designed to slow the rate of property tax increases in a state where the typical household is assessed nearly $7,300 a year, the highest amount in the country.

Lawmakers are considering bills to allow towns to opt out of the regulations. The committee heard testimony Monday from Grifa and several mayors.

Committee Chairman John McKeon, who served as mayor of West Orange, said the Legislature should not be forcing shared service agreements. Grifa agreed it was better to have towns initiate agreements rather than lawmakers' requiring shared services. But she said a lack of political will has been an impediment.

"I've had mayors tell me they can't engage in shared service agreements because it will change the character of their community," she said.

Mayor Samir Elbassiouny of Washington Township, Warren County, questioned whether civil service rules were needed given that most towns must also deal with collective bargaining.

"It was intended for the right reason, for the right time," he said. "I just don't see any reason for it today, especially if we are subsidizing it."

Orange Mayor Eldridge Hawkins, a former police officer, also pushed for the option to opt out. "At the end of the day, we're asking for some flexibility and empowerment," Hawkins said.

Because of civil service, younger police officers who make less are often the first to face layoffs. Because police officers generally make less than other employees, more officers must be laid off to achieve savings, meaning fewer police on patrol.