SENATE BUDGET AND APPROPRIATIONS COMMITTEE

STATEMENT TO

SENATE COMMITTEE SUBSTITUTE FOR

SENATE, No. 422

STATE OF NEW JERSEY

DATED: JANUARY 14, 1997

      The Senate Budget and Appropriations Committee reports favorably Senate Bill No. 422 (SCS) of 1996.

      Senate Bill No. 422 (SCS) amends and supplements the "Water Supply Bond Act of 1981," P.L.1981, c.261, to allow the Department of Environmental Protection (DEP) and the New Jersey Environmental Infrastructure Trust (Trust) to utilize bond moneys made available therefrom for loans to local governments for the development of water supply facilities to comply with the federal "Safe Drinking Water Act Amendments of 1996," Pub.L.104-182, and the "Safe Drinking Water Act," P.L.1977, c.224 (C.58:12A-1 et seq.). To qualify for financing, a project must be identified in the water supply project priority list adopted by the Commissioner of Environmental Protection pursuant to section 7 of this bill.

      The 1981 bond act was approved in November 1981 (and amended in November 1983 pursuant to P.L.1983, c.355) by the voters of New Jersey. The proposed revisions to the "Water Supply Bond Act of 1981" embodied in this bill must also be approved by the electorate.

      The bill authorizes the use of bond act moneys to capitalize two separate nonlapsing revolving funds: the "Water Supply Fund" and the "Water Supply Trust Fund."

      The moneys in the "Water Supply Fund" would be used by the DEP for the purposes of:

      (1) covering the department's costs for planning and feasibility studies for ground and surface water programs, water delivery and treatment programs, the analysis and implementation of water conservation practices, or for updating the New Jersey Statewide Water Supply Plan;

      (2) planning, designing, and constructing State water supply facilities;

      (3) providing loans to local governments to plan, design, and construct water supply facilities, as identified by the DEP; and

      (4) the rehabilitation, repair or consolidation of antiquated, damaged or inadequately operating water supply facilities.

      Projects must be identified pursuant to the water supply project priority list adopted by the commissioner. Of these projects, only the provision of loans to local government units by the trust is a new power being authorized by this bill.

      Payments of principal and interest on loans returned to the "Water Supply Fund" may be made available to the Trust, with the concurrence of the department, for temporary use by the Trust in establishing a reserve account for loans made by the Trust, and a guarantee account to secure debt issued by local governments in connection with the financing of a water supply project. A maximum of $50,000,000 may be made available to the Trust for these purposes.

      Any moneys made available to the Trust would be deposited in a separate nonlapsing revolving fund known as the "Water Supply Trust Fund." The Trust would have to repay to the "Water Supply Fund" any moneys made available for temporary use.

      The bill also provides that if the "New Jersey Environmental Infrastructure Trust Act" (a companion measure pending before the Legislature) has not been enacted into law by the date of the approval of this act by the voters, the amendments made to the 1981 bond act pertaining to the Trust would remain inoperative.

      As reported, this bill is identical to Assembly Bill No. 156 (4R) of 1996 (Bucco/Cohen).

FISCAL IMPACT

      This bill has not been certified as requiring a fiscal note. The amendments to the bond act made by this bill (if approved by the voters) allow, but do not require, the use of previously authorized bonded indebtedness for the development of water supply facilities.

      The bill appropriates from the General Fund to the Department of State $5,000 for the cost of publishing notice of the bond question.