(a) The Labor Commissioner shall appoint a Neutral Arbitrator Selection Committee consisting of ten members, five of whom shall represent the interests of employees and employee organizations and five of whom shall represent the interests of municipal employers, provided one of the members representing the interests of municipal employers shall be a representative of the Connecticut Conference of Municipalities. The members of the selection committee shall serve for a term of four years. Arbitrators may be removed for good cause. The selection committee shall appoint a panel of neutral arbitrators consisting of not less than twenty impartial persons representing the interests of the public in general to serve as provided in this section. Each member of the panel shall be a resident of the state and shall be selected by a unanimous vote of the selection committee. The members of the panel shall serve for a term of two years.

(b) (1) If neither the municipal employer nor the municipal employee organization has requested the arbitration services of the State Board of Mediation and Arbitration (A) within one hundred eighty days after the certification or recognition of a newly certified or recognized municipal employee organization required to commence negotiations pursuant to § 7-473a, or (B) within thirty days after the expiration of the current collective bargaining agreement, or within thirty days after the specified date for implementation of reopener provisions in an existing collective bargaining agreement, or within thirty days after the date the parties to an existing collective bargaining agreement commence negotiations to revise said agreement on any matter affecting wages, hours, and other conditions of employment, said board shall notify the municipal employer and municipal employee organization that one hundred eighty days have passed since the certification or recognition of the newly certified or recognized municipal employee organization, or that thirty days have passed since the specified date for implementation of reopener provisions in an existing agreement, or the date the parties commenced negotiations to revise an existing agreement on any matter affecting wages, hours and other conditions of employment or the expiration of such collective bargaining agreement and that binding and final arbitration is now imposed on them, provided written notification of such imposition shall be sent by registered mail or certified mail, return receipt requested, to each party.

(2) Within ten days of receipt of the written notification required pursuant to subdivision (1) of this subsection, the chief executive officer of the municipal employer and the executive head of the municipal employee organization each shall select one member of the arbitration panel. Within five days of their appointment, the two members of the arbitration panel shall select a third member, who shall be an impartial representative of the interests of the public in general and who shall be selected from the panel of neutral arbitrators appointed pursuant to subsection (a) of this section. Such third member shall be the chairperson of the panel.

(3) In the event that the municipal employer or the municipal employee organization have not selected their respective members of the arbitration panel or the two members of the panel have not selected the third member, the State Board of Mediation and Arbitration shall appoint such members as are needed to complete the panel, provided (A) the member or members so appointed are residents of this state, and (B) the selection of the third member of the panel by the State Board of Mediation and Arbitration shall be made at random from among the members of the panel of neutral arbitrators appointed pursuant to subsection (a) of this section.

(c) Within ten days of appointment of the chairperson, the arbitration panel shall, by call of its chairperson, hold a hearing within the municipality involved. At least five days prior to such hearing, a written notice of the time and place of such hearing shall be sent to the municipal employer, the municipal employee organization and the other members of the panel. The chairperson of the panel shall preside over such hearing. Any member of the panel shall have the power to take testimony, to administer oaths and to summon, by subpoena, any person whose testimony may be pertinent to the matters before said panel, together with any records or other documents relating to such matters. In the case of contumacy or refusal to obey a subpoena issued to any person, the Superior Court, upon application by the panel, shall have jurisdiction to order such person to appear before the panel to produce evidence or to give testimony touching the matter under investigation or in question, and any failure to obey such order may be punished by said court as a contempt thereof.

(d) (1) The hearing may, at the discretion of the panel, be continued and shall be concluded within twenty days after its commencement. Not less than two days prior to the commencement of the hearing, each party shall file with the chairperson of the panel, and deliver to the other party, a proposed collective bargaining agreement, in numbered paragraphs, which such party is willing to execute and cost data for all provisions of such proposed agreement. At the commencement of the hearing each party shall file with the panel a reply setting forth (A) those paragraphs of the proposed agreement of the other party which it is willing to accept, and (B) those paragraphs of the proposed agreement of the other party which it is unwilling to accept, together with any alternative contract language which such party would accept in lieu of those paragraphs of the proposed agreement of the other party which it is unwilling to accept. At any time prior to the issuance of a decision by the panel, the parties may jointly file with the panel stipulations setting forth the agreement provisions which both parties have agreed to accept.

(2) Within five days after the conclusion of the taking of testimony, the panel shall forward to each party an arbitration statement, approved by a majority vote of the panel, setting forth all agreement provisions agreed upon by both parties in the proposed agreements and the replies, and in the stipulations, and stating, in numbered paragraphs, those issues which are unresolved.

(3) Within ten days after the conclusion of the taking of testimony, the parties shall file with the secretary of the State Board of Mediation and Arbitration five copies of their statements of last best offer setting forth, in numbered paragraphs corresponding to the statement of unresolved issues contained in the arbitration statement, the final agreement provisions proposed by such party. Immediately upon receipt of both statement of last best offer or upon the expiration of the time for filing such statements of last best offer, whichever is sooner, said secretary shall distribute a copy of each such statement of last best offer to the opposing party.

(4) Within seven days after the distribution of the statements of last best offer or within seven days of the expiration of the time for filing the statements of last best offer, whichever is sooner, the parties may file with the secretary of the State Board of Mediation and Arbitration five copies of their briefs on the unresolved issues. Immediately upon receipt of both briefs or upon the expiration of the time for filing such briefs, whichever is sooner, said secretary shall distribute a copy of each such brief to the opposing party.

(5) Within five days after the distribution of the briefs on the unresolved issues or within five days after the last day for filing such briefs, whichever is sooner, each party may file with said secretary five copies of a reply brief, responding to the briefs on the unresolved issues. Immediately upon receipt of the reply briefs or upon the expiration of the time for filing such reply briefs, whichever is sooner, said secretary shall simultaneously distribute a copy of each such reply brief to the opposing party.

(6) Within twenty days after the last day for filing such reply briefs, the panel shall issue, upon majority vote, and file with the State Board of Mediation and Arbitration its decision on all unresolved issues set forth in the arbitration statement, and said secretary shall immediately and simultaneously distribute a copy thereof to each party. The panel shall treat each unresolved issue set forth in the arbitration statement as a separate question to be decided by it. In deciding each such question, the panel agreement shall accept the final provision relating to such unresolved issue as contained in the statement of last best offer of one party or the other. As part of the arbitration decision, each member shall state the specific reasons and standards used in making a choice on each unresolved issue.

(7) The parties may jointly file with the panel stipulations modifying, deferring or waiving any or all provisions of this subsection.

(8) If the day for filing any document required or permitted to be filed under this subsection falls on a day which is not a business day of the State Board of Mediation and Arbitration then the time for such filing shall be extended to the next business day of such board.

(9) In arriving at a decision, the arbitration panel shall give priority to the public interest and the financial capability of the municipal employer, including consideration of other demands on the financial capability of the municipal employer. There shall be an irrebuttable presumption that fifteen per cent of the municipal employer’s budget reserve is not available for payment of the cost of any item subject to arbitration under this chapter. The panel shall further consider the following factors in light of such financial capability: (A) The negotiations between the parties prior to arbitration; (B) the interests and welfare of the employee group; (C) changes in the cost of living; (D) the existing conditions of employment of the employee group and those of similar groups; and (E) the wages, salaries, fringe benefits, and other conditions of employment prevailing in the labor market, including developments in private sector wages and benefits.

(10) The decision of the panel and the resolved issues shall be final and binding upon the municipal employer and the municipal employee organization except as provided in subdivision (12) of this subsection and, if such award is not rejected by the legislative body pursuant to said subdivision, except that a motion to vacate or modify such decision may be made in accordance with sections 52-418 and 52-419.

(11) In regard to all proceedings undertaken pursuant to this subsection the secretary of the State Board of Mediation and Arbitration shall serve as staff to the arbitration panel.

(12) Within twenty-five days of the receipt of an arbitration award issued pursuant to this section, the legislative body of the municipal employer may reject the award of the arbitrators or single arbitrator by a two-thirds majority vote of the members of such legislative body present at a regular or special meeting called and convened for such purpose. If the twenty-fifth day specified in this subdivision falls on a weekend or a holiday, such deadline shall be extended through the next business day following the twenty-fifth day.

(13) Within ten days after such rejection, the legislative body or its authorized representative shall be required to state, in writing, the reasons for such vote and shall submit such written statement to the State Board of Mediation and Arbitration and the municipal employee organization. Within ten days after receipt of such notice, the municipal employee organization shall prepare a written response to such rejection and shall submit it to the legislative body and the State Board of Mediation and Arbitration.

(14) Within ten days after receipt of such rejection notice, the State Board of Mediation and Arbitration shall select a review panel of three arbitrators or, if the parties agree, a single arbitrator who are residents of Connecticut and labor relations arbitrators approved by the American Arbitration Association and not members of the panel who issued the rejected award. Such arbitrators or single arbitrator shall review the decision on each such rejected issue. The review conducted pursuant to this subdivision shall be limited to the record and briefs of the hearing pursuant to subsection (c) of this section, the written explanation of the reasons for the vote and a written response by either party. In conducting such review, the arbitrators or single arbitrator shall be limited to consideration of the criteria set forth in subdivision (9) of this subsection. Such review shall be completed within twenty days of the appointment of the arbitrators or single arbitrator. The arbitrators or single arbitrator shall accept the last best offer of either of the parties.

(15) Within five days after the completion of such review the arbitrators or single arbitrator shall render a decision with respect to each rejected issue which shall be final and binding upon the municipal employer and the employee organization except that a motion to vacate or modify such award may be made in accordance with sections 52-418 and 52-419. The decision of the arbitrators or single arbitrator shall be in writing and shall include specific reasons and standards used by each arbitrator in making a decision on each issue. The decision shall be filed with the parties. The reasonable costs of the arbitrators or single arbitrator and the cost of the transcript shall be paid by the legislative body. Where the legislative body of a municipal employer is the town meeting, the board of selectmen shall perform all of the duties and shall have all of the authority and responsibilities required of and granted to the legislative body under this subsection.

(e) The cost of the arbitration panel shall be distributed among the parties in the following manner: (1) The municipal employer shall pay the costs of the arbitrator appointed by it, (2) the municipal employee organization shall pay the costs of the arbitrator appointed by it, (3) the municipal employer and the municipal employee organization shall equally divide and pay the cost of the chairperson, and (4) the costs of any arbitrator appointed by the State Board of Mediation and Arbitration shall be paid by the party in whose absence the board appointed.

(f) A municipal employer and a municipal employee organization may, at any time, file with the State Board of Mediation and Arbitration a joint stipulation modifying, deferring or waiving any or all of the provisions of this section, or modifying, deferring or waiving any or all of the provisions of a previously filed stipulation, and any such stipulation shall be controlling over the provisions of this section or of any previously filed stipulation.

(g) No party may submit for binding arbitration pursuant to this section any issue or proposal which was not presented during the negotiation process, unless the submittal of such additional issue or proposal is agreed to by the parties.