SENATE, No. 3024

STATE OF NEW JERSEY

214th LEGISLATURE

 

INTRODUCED SEPTEMBER 19, 2011

 


 

Sponsored by:

Senator  KEVIN J. O'TOOLE

District 40 (Bergen, Essex and Passaic)

 

 

 

 

SYNOPSIS

     Authorizes additional State oversight of municipalities either in fiscal distress or under State supervision; appropriates $139 million.

 

CURRENT VERSION OF TEXT

     As introduced.

  


An Act authorizing additional State oversight over certain municipalities experiencing fiscal distress, supplementing Title 52 of the Revised Statutes, and making an appropriation.

 

     Be It Enacted by the Senate and General Assembly of the State of New Jersey:

 

     1.    The Legislature finds and declares:

     a.     For 25 years, the State’s distressed municipal centers have received ever increasing State taxpayer subsidies, taking on various names over time, including the Distressed Cities Aid, Municipal Revitalization Aid, Special Municipal Aid, Supplemental Municipal Property Tax Relief Aid, and Transitional Aid to Localities in order to support the operation of government in these distressed areas; and

     b.    In the past, these State taxpayer subsidies have been subject to little or no consequential State oversight, allowing those municipal governments that have exhibited an inability to properly budget for their needs to subsequently waste and abuse these additional State taxpayer subsidies; and

     c.     As a result of this lack of oversight, municipalities began to rely on these State subsidies in their annual budgeting process, treating the temporary aid as a permanent solution to their municipal shortfalls; and

     d.    It is in the best interests of the State and its citizens for all municipalities to become increasingly self-reliant and capable of properly budgeting for their own system of government, in recognition of which the State has replaced the previous aid programs with the Transitional Aid to Localities program, in order to enable municipalities to transition to a self-sufficient status; and

     e.     In order for the Transitional Aid to Localities program to remain successful, the State must continue to maintain oversight of these transitional funds, and work cooperatively with municipalities in order to guide them in their transition off State taxpayer subsidies; and

     f.     This act will allow the State to ensure these State taxpayer subsidies are spent in a manner that is consistent with transparency and effective government practices, by overseeing important municipal spending decisions, including, among others, personnel actions, professional service and related contracts, payment in lieu of tax agreements, acceptance of grants from State, federal, or other organizations, and the creation of new or expanded public services.

 

     2.    As used in this act:

     “Director” means the Director of the Division of Local Government Services in the Department of Community Affairs.

     “State supervision” means supervision pursuant to Article 4 of the “Local Government Supervision Act (1947),” P.L.1947, c.151 (C.52:27BB-54 et seq.).

 

     3.    a.  Notwithstanding any other provision of law, rule, or regulation to the contrary, the director shall have the authority to determine conditions, requirements, orders, and oversight for the receipt of any amount of grants or loans, or any combination thereof, provided to any municipality pursuant to the provisions of the “Special Municipal Aid Act,” P.L.1987, c.75 (C.52:27D-118.24 et seq.), “Supplemental Municipal Property Tax Relief Act,” sections 1 through 12 of P.L.1991, c.63 (C.52:27D-118.32 et seq.), Transitional Aid to Localities, or any similar or successor programs. Any conditions, requirements, or orders deemed necessary by the director may include the implementation of government, administrative, and operational efficiency and oversight measures necessary for the fiscal recovery of the municipality, including but not limited to, requiring approval by the director for personnel actions, professional service and related contracts, payment in lieu of tax agreements, acceptance of grants from State, federal, or other organizations, and the creation of new or expanded public services.

     b.    In addition any other powers provided to the director pursuant to any other provision of law, rule, or regulation, the director shall have the authority to determine conditions, requirements, orders, and oversight for any municipality that is under State supervision.  Any conditions, requirements, or orders deemed necessary by the director may include the implementation of government, administrative, and oversight measures necessary for the fiscal recovery of the municipality, including but not limited to requiring approval by the director for personnel actions, professional service and related contracts, payment in lieu of tax agreements, acceptance of grants from State, federal, or other organizations, and the creation of new or expanded public services.

     c.     The director is authorized to use up to 1% of the total amount of State aid appropriated in a fiscal year for the “Special Municipal Aid Act,” P.L.1987, c.75 (C.52:27D-118.24 et seq.), “Supplemental Municipal Property Tax Relief Act,” sections 1 through 12 of P.L.1991, c.63 (C.52:27D-118.32 et seq.), Transitional Aid to Localities, or similar or successor programs for the administrative costs related to each program and may also use such funds for the administrative costs associated with the oversight of any municipalities that are under State supervision.

 

     4.    There is appropriated $139,000,000 from the General Fund to the Department of Community Affairs for Transitional Aid to Localities to be distributed to municipalities during the current State fiscal year, subject to the provisions of this act and P.L.2011, c.85. Of the amount appropriated for the Transitional Aid to Localities program for this State fiscal year, an amount not to exceed 1% thereof is allocated for the administrative costs of the Transitional Aid to Localities program and for administrative costs associated with the oversight of any municipalities coming under supervision pursuant to Article 4 of the “Local Government Supervision Act (1947),” P.L.1947, c.151 (C.52:27BB-54 et seq.), subject to the approval of the Director of the Division of Budget and Accounting in the Department of the Treasury.

 

     5.    This act shall take effect immediately

 

 

STATEMENT

 

     This bill would supplement current law to provide the State with broader authority to implement certain oversight measures in municipalities that are either in fiscal distress or under State supervision.  It would also supplement the powers granted to the Local Finance Board by the “Local Government Supervision Act (1947),” P.L.1947, c.151 (C.52:27BB-1 et seq.).  Under the bill, the Director of the Division of Local Government Services in the Department of Community Affairs would be permitted to condition the receipt of State Aid on any requirements, orders, and oversight that he deems necessary for the fiscal recovery of the municipality. The director also would be allowed to require State approval of personnel actions, the awarding of professional services and related contracts, the adoption of agreements permitting payments in lieu of taxes, the acceptance of grants from State and federal agencies or other organizations, and the creation of new or expanded public services.

     The bill is intended to provide the State with greater control over administrative and financial affairs of municipalities that receive additional State assistance pursuant to the provisions of the “Special Municipal Aid Act,” P.L.1987, c.75 (C.52:27D-118.24 et seq.), “Supplemental Municipal Property Tax Relief Act,” sections 1 through 12 of P.L.1991, c.63 (C.52:27D-118.32 et seq.), Transitional Aid to Localities, or any other similar or successor programs.  The powers granted to the director would also extend to municipalities that are under State supervision pursuant to Article 4 of the “Local Government Supervision Act (1947),” P.L.1947, c.151 (C.52:27BB-54 et seq.) because they are either in, or in danger of falling into, unsound financial condition.

     This legislation also appropriates $139 million from the State General Fund to the Department of Community Affairs for the Transitional Aid to Localities program.  Transitional Aid to Localities is the State’s only funded discretionary municipal financial assistance program, and is only available to municipalities anticipating difficulties making payments toward nondiscretionary or critical obligations including, but not limited to, debt service, contractual obligations, and public safety payroll.  Applying for aid under this program is a declaration that the municipality is not capable of managing its finances without special State assistance and intervention.  Transitional Aid to Localities replaced three existing municipal aid programs:  Extraordinary Aid, Special Municipal Aid, and Trenton Capital City Aid.