Bill > S2637

Introduced Session

The bill makes certain changes to the statutory limitations on municipal appropriations. Current law, under section 3 of P.L.1976, c.68 (C.40A:4-45.3), requires that a municipality limit appropriation increases to 2.5 percent or the cost-of-living adjustment, whichever is less, over the previous year's final appropriations, but provides for certain exceptions. The bill would add increases in pension contributions and accrued liability for pension contributions in excess of 3.5 percent to an existing list of allowable exceptions That statute also currently allows municipalities that are experiencing fiscal distress to appropriate and expend an amount of surplus approved by the Director of the Division of Local Government Services (director) in the Department of Community Affairs and the Local Finance Board (board) as an exception to the spending limitation. Under certain circumstances, the bill would allow the board to authorize a municipality to permanently add to its appropriation cap base an amount of surplus as approved by the director. The bill also requires approval of the director for a municipality participating in an interlocal or shared services agreement to add the amount of projected annual savings to the amount of final appropriations upon which its permissible expenditures are calculated. Additionally, section 5 of P.L.1990, c.89 (C.40A:4-45.3d) currently allows the board to grant exceptions upon a finding of extraordinary circumstances that result in an unanticipated increase in expenditures for a service essential to the health, safety and welfare of the residents of the State. The bill also allows such exceptions for goods essential to the health, safety and welfare of the residents of the State. The bill also increases the total health care costs available for an exemption under current law, section 13 of P.L.2007, c.62 (C.40A:4-45.3e), for amounts in excess of 3.5 percent above, rather than four percent above, total health care costs in the prior year. Finally, the bill provides for adjustment of county and municipal cap bases to reflect transfers of financing responsibility for a service or function previously funded, in whole or in part, by a private entity or a non-profit entity. The bill would take effect immediately and apply to municipal budget years beginning after that date.

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Vin Gopal (D)*, 

Introduced in the Senate, Referred to Senate Community and Urban Affairs Committee (on 01/13/2026)

Official Document