The bill amends New Jersey's municipal budget appropriation laws, maintaining the existing requirement that budget increases be limited to 2.5% or the cost-of-living adjustment, whichever is lower. However, it introduces new exceptions, allowing municipalities to include increases in pension contributions and accrued liabilities exceeding 3.5% as allowable exceptions. Additionally, municipalities facing fiscal distress may permanently add certain approved surplus amounts to their appropriation cap base with the approval of the Director of the Division of Local Government Services. The bill also permits municipalities engaged in interlocal or shared services agreements to factor projected annual savings into their final appropriations calculations, contingent upon the Director's approval.

Moreover, the bill expands the criteria for exceptions to include unanticipated increases in expenditures for essential goods, alongside essential services, thereby enhancing flexibility in budget management. It also lowers the threshold for health care cost exemptions from four percent to 3.5% above the previous year's total health care costs. Furthermore, provisions are introduced to adjust county and municipal cap bases to reflect changes in financing responsibilities for services previously funded by private or non-profit entities. The bill is set to take effect immediately and will apply to municipal budget years commencing thereafter.

Statutes affected:
Introduced: 40A:4-45.3, 40A:4-45.13