SENATE BILL NO. 956
To the Senate:
Pursuant to Article V, Section I, Paragraph 14 of the New Jersey Constitution, I am returning Senate Bill No. 956 with my recommendations for reconsideration.
Municipal consolidation is an underutilized mechanism for reducing local government costs. This bill encourages municipal consolidation by providing an avenue for municipalities to facilitate the consolidation process and more readily realize the savings associated with consolidation. Specifically, the bill would enable municipalities to authorize special emergency appropriations for payment of non-recurring expenses incurred by that municipality to implement a consolidation, which would be spread out over five years through special emergency notes. In addition, it would exempt these non-recurring costs from the two percent property tax levy cap so that the cap does not cause short-term expenses to prevent the long-term savings that could be realized upon consolidation.
Consistent with a central aim of my Administration, municipal consolidations can ease the burden on local property taxpayers. As a result, I wholeheartedly endorse the sponsors’ efforts to create an environment that enhances municipalities’ ability to consolidate and removes potential roadblocks in the process. However, I am concerned that this bill’s provisions could inadvertently be utilized to circumvent the cost-savings that municipal consolidation is designed to achieve.
In 2010, I signed landmark legislation capping property tax increases at two percent and drastically reducing exemptions and waivers to the cap. Since then, my Administration has consistently opposed efforts to add new exemptions that allow a municipality to increase its expenditures beyond the cap. I cannot support creating additional loopholes that allow municipalities to evade fiscal responsibility. This bill’s exemption is particularly unnecessary because the bill’s special emergency appropriations provision will enable municipalities to ensure that the cap does not allow short-term expenses to frustrate long-term cost savings. Because municipalities would be permitted to spread the non-recurring consolidation costs over five years, there is no need to exempt these costs from the two percent cap. Accordingly, I am recommending this exemption be removed from the bill.
In addition, the authorization of special emergency appropriations for non-recurring consolidation expenses should be subject to the approval of the Director of the Division of Local Government Services. This change will strengthen the bill by providing reasonable oversight over municipal action, while ensuring that municipalities can take advantage of the bill’s special emergency appropriations mechanism in circumstances where consolidation will achieve cost savings.
Accordingly, I herewith return Senate Bill No. 956 and recommend that it be amended as follows:
Page 2, Title, Line 2: Delete “and P.L.2007, c.62”
Page 2, Section 1, Line 38: Delete “Non-recurring” and insert “Subject to approval by the Director of the Division of Local Government Services, non-recurring”
Page 3, Section 1, Line 3: After “municipality.” insert “The director shall approve the ordinance if he or she determines that the non-recurring expenses are reasonable and permissible by law and that the consolidation will result in long-term savings for the municipality.”
Page 3, Section 2, Lines 8-48: Delete in their entirety
Page 4, Section 2, Lines 1-14: Delete in their entirety
Page 4, Section 3, Line 16: Delete “3.” and insert “2.”
[seal] /s/ Chris Christie
/s/ Gregory L. Acquaviva
Chief Counsel to the Governor