ASSEMBLY, No. 2384







By Assemblymen BATEMAN and Carroll



An Act concerning limitations imposed upon increases in municipal final appropriations and amending P.L.1976, c.68.


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


    1. Section 3 of P.L.1976, c.68 (C.40A:4-45.3) is amended to read as follows:

    3. In the preparation of its budget a municipality shall limit any increase in said budget to 5% or the index rate, whichever is less, over the previous year's final appropriations subject to the following exceptions:

    a. (Deleted by amendment, P.L.1990, c.89.)

    b. Capital expenditures, including appropriations for current capital expenditures, whether in the capital improvement fund or as a component of a line item elsewhere in the budget, provided that any such current capital expenditure would be otherwise bondable under the requirements of N.J.S.40A:2-21 and 40A:2-22;

    c. (1) An increase based upon emergency temporary appropriations made pursuant to N.J.S.40A:4-20 to meet an urgent situation or event which immediately endangers the health, safety or property of the residents of the municipality, and over which the governing body had no control and for which it could not plan and emergency appropriations made pursuant to N.J.S.40A:4-46. Emergency temporary appropriations and emergency appropriations shall be approved by at least two-thirds of the governing body and by the Director of the Division of Local Government Services, and shall not exceed in the aggregate 3% of the previous year's final current operating appropriations.

    (2) (Deleted by amendment, P.L.1990, c.89.)

    The approval procedure in this subsection shall not apply to appropriations adopted for a purpose referred to in subsection d. or j. below;

    d. All debt service, including that of a Type I school district;

    e. Upon the approval of the Local Finance Board in the Division of Local Government Services, amounts required for funding a preceding year's deficit;

    f. Amounts reserved for uncollected taxes;

    g. (Deleted by amendment, P.L.1990, c.89.)

    h. Expenditure of amounts derived from new or increased construction, housing, health or fire safety inspection or other service fees imposed by State law, rule or regulation or by local ordinance;

    i. Any amount approved by any referendum;

    j. Amounts required to be paid pursuant to (1) any contract with respect to use, service or provision of any project, facility or public improvement for water, sewerage, parking, senior citizen housing or any similar purpose, or payments on account of debt service therefor, between a municipality and any other municipality, county, school or other district, agency, authority, commission, instrumentality, public corporation, body corporate and politic or political subdivision of this State; (2) the provisions of article 9 of P.L.1968, c.404 (C.13:17-60 through 13:17-76) by a constituent municipality to the intermunicipal account; (3) any lease of a facility owned by a county improvement authority when the lease payment represents the proportionate amount necessary to amortize the debt incurred by the authority in providing the facility which is leased, in whole or in part; and (4) any repayments under a loan agreement entered into in accordance with the provisions of section 5 of P.L.1992, c.89.

    k. (Deleted by amendment, P.L.1987, c.74.)

    l. Appropriations of federal, county, independent authority or State funds, or by grants from private parties or nonprofit organizations for a specific purpose, and amounts received or to be received from such sources in reimbursement for local expenditures. If a municipality provides matching funds in order to receive the federal, county, independent authority or State funds, or the grants from private parties or nonprofit organizations for a specific purpose, the amount of the match which is required by law or agreement to be provided by the municipality shall be excepted;

    m. (Deleted by amendment, P.L.1987, c.74.)

    n. (Deleted by amendment, P.L.1987, c.74.)

    o. (Deleted by amendment, P.L.1990, c.89.)

    p. (Deleted by amendment, P.L.1987, c.74.)

    q. (Deleted by amendment, P.L.1990, c.89.)

    r. Amounts expended to fund a free public library established pursuant to the provisions of R.S.40:54-1 through 40:54-29, inclusive;     s. (Deleted by amendment, P.L.1990, c.89.)

    t. Amounts expended in preparing and implementing a housing element and fair share plan pursuant to the provisions of P.L.1985, c.222 (C.52:27D-301 et al.) and any amounts received by a municipality under a regional contribution agreement pursuant to section 12 of that act;

    u. Amounts expended to meet the standards established pursuant to the "New Jersey Public Employees' Occupational Safety and Health Act," P.L.1983, c.516 (C.34:6A-25 et seq.);

    v. (Deleted by amendment, P.L.1990, c.89.)

    w. Amounts appropriated for expenditures resulting from the impact of a hazardous waste facility as described in subsection c. of section 32 of P.L.1981, c.279 (C.13:1E-80);

    x. Amounts expended to aid privately owned libraries and reading rooms, pursuant to R.S.40:54-35;

    y. (Deleted by amendment, P.L.1990, c.89.)

    z. (Deleted by amendment, P.L.1990, c.89.)

    aa. Extraordinary expenses, approved by the Local Finance Board, required for the implementation of an interlocal services agreement;

    bb. Any expenditure mandated as a result of a natural disaster, civil disturbance or other emergency that is specifically authorized pursuant to a declaration of an emergency by the President of the United States or by the Governor;

    cc. Expenditures for the cost of services mandated by any order of court, by any federal or State statute, or by administrative rule, directive, order, or other legally binding device issued by a State agency which has identified such cost as mandated expenditures on certification to the Local Finance Board by the State agency;

    dd. Expenditures of amounts actually realized in the local budget year from the sale of municipal assets if appropriated for non-recurring purposes or otherwise approved by the director;

    ee. Any local unit which is determined to be experiencing fiscal distress pursuant to the provisions of P.L.1987, c.75 (C.52:27D-118.24 et seq.), whether or not a local unit is an "eligible municipality" as defined in section 3 of P.L.1987, c.75 (C.52:27D-118.26), and which has available surplus pursuant to the spending limitations imposed by P.L.1976, c.68 (C.40A:4-45.1 et seq.), may appropriate and expend an amount of that surplus approved by the director and the Local Finance Board as an exception to the spending limitation. Any determination approving the appropriation and expenditure of surplus as an exception to the spending limitations shall be based upon:

    1) the local unit's revenue needs for the current local budget year and its revenue raising capacity;

    2) the intended actions of the governing body of the local unit to meet the local unit's revenue needs;

    3) the intended actions of the governing body of the local unit to expand its revenue generating capacity for subsequent local budget years;

    4) the local unit's ability to demonstrate the source and existence of sufficient surplus as would be prudent to appropriate as an exception to the spending limitations to meet the operating expenses for the local unit's current budget year; and

    5) the impact of utilization of surplus upon succeeding budgets of the local unit;

    ff. Amounts expended for the staffing and operation of the municipal court;

    gg. Amounts appropriated for the cost of administering a joint insurance fund established pursuant to subsection b. of section 1 of P.L.1983, c.372 (C.40A:10-36), but not including appropriations for claims payments by local member units;

    hh. Amounts appropriated for the cost of implementing an estimated tax billing system and the issuance of tax bills thereunder pursuant to section 3 of P.L.1994, c.72 (C.54:4-66.2);

    ii. Amounts expended for volunteer emergency services.

(cf: P.L.1994, c.72, s.6)


    2. This act shall take effect immediately.





    This bill would remove from the spending limitations imposed under section 3 of P.L.1976, c.68 (C.40A:4-45.3), commonly referred to as the “cap law,” those amounts expended by a municipality for volunteer emergency services.

    Current law authorizes municipal governing bodies to appropriate funds to volunteer fire companies (See: N.J.S.40A:14-34 and N.J.S.40A:14-35) and to make voluntary contributions to volunteer ambulance or rescue squads (see R.S.40:5-2). Many municipalities, however, are unable to provide financial support to volunteer emergency service organizations because of the strictures of the “cap law.” Municipal support for volunteer emergency service organizations is particularly crucial at this time due to a marked decline in private contributions to such organizations.




Provides “cap” exception for amounts expended by municipalities for volunteer emergency services.