Bill Text: NJ S970 | 2016-2017 | Regular Session | Introduced
Bill Title: The "Municipal Stabilization and Recovery Act."
Spectrum: Slight Partisan Bill (Democrat 2-1)
Status: (Introduced - Dead) 2016-01-12 - Introduced in the Senate, Referred to Senate Budget and Appropriations Committee [S970 Detail]
Download: New_Jersey-2016-S970-Introduced.html
Sponsored by:
Senator STEPHEN M. SWEENEY
District 3 (Cumberland, Gloucester and Salem)
Senator KEVIN J. O'TOOLE
District 40 (Bergen, Essex, Morris and Passaic)
Senator PAUL A. SARLO
District 36 (Bergen and Passaic)
SYNOPSIS
The "Municipal Stabilization and Recovery Act."
CURRENT VERSION OF TEXT
As introduced.
An Act concerning certain municipalities confronted by severe fiscal distress and supplementing Title 52 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. This act shall be known and may be cited as the "Municipal Stabilization and Recovery Act."
2. The Legislature finds and declares that:
a. The short- and long-term fiscal stability of local government units is essential to the interests of the citizens of this State to assure the effective and efficient provision of necessary governmental services vital to public health, safety, and welfare.
b. In certain extreme cases, local governments that experience severe fiscal distress become incapable of addressing the circumstances that led to that extraordinary distress or of developing a comprehensive plan of rehabilitation.
c. It is necessary and appropriate for the State to take action to assist such local governments experiencing severe budget imbalances and other conditions of severe fiscal distress or emergency by requiring prudent fiscal management and operational efficiencies in the provision of public services.
d. As the State entity primarily responsible for the financial integrity and stability of all local government units, the Local Finance Board should be authorized, under certain limited circumstances, to develop a comprehensive rehabilitation plan for local governments that are experiencing severe fiscal distress, and to act on behalf of such local government units to remedy the distress.
e. In 1976, the voters of the State approved an amendment to the New Jersey Constitution (Article IV, Section VII, paragraph 2, subparagraph D), which authorized casino gaming in Atlantic City.
f. For over 30 years, casinos grew and profited in Atlantic City, until competition from other states in our region, particularly Pennsylvania, siphoned off much of the out-of-State and foreign gamblers who had frequented Atlantic City casinos for many years.
g. The regional competition in casino gaming has had a deleterious effect on Atlantic City in several ways, including: an increase in unemployment due to the recent closing of four casino properties, representing fully one-third of the number of casinos operating in Atlantic City in 2013; a strain on Atlantic City's municipal budget due to property tax refunds required by successful assessment appeals of casino gaming properties; and an increased property tax burden on Atlantic City and Atlantic County residents based on the decreasing value of casino gaming properties.
h. It is appropriate for the Legislature to address the extraordinary financial distress in Atlantic City by devising a program in Atlantic City to authorize and empower State officials to act to restore the fiscal integrity of the municipality as expeditiously as possible.
i. It is constitutional to classify Atlantic City, the only municipality wherein casino gaming is authorized, as a special class unto itself for economic purposes related to casino gaming, to which the solvency of Atlantic City government is inextricably linked. Courts have routinely concluded that the Legislature has the ability to address the concerns of Atlantic City and the casino industry separately from other local entities and industries due to the unique role casino gambling plays in Atlantic City and the State. The fact that, even though almost 40 years have passed since the approval of casino gambling in New Jersey, Atlantic City remains the only municipality wherein casino gaming is authorized, proves that its unique classification continues to allow the Legislature to treat it as a special case under State law, and permits granting State officials extraordinary power to address unique fiscal circumstances in Atlantic City.
j. In the interest of the economic stability and revitalization of Atlantic City and its associated economic benefits to the State, it is reasonable that the Legislature, in seeking to revitalize the city, should choose to permit the State to take control of the city's fiscal operations for a determinate period of time in order to ensure the continued operation of government for the benefit of city residents and the State economy.
3. As used in P.L. , c. (C. ) (pending before the Legislature as this bill):
"Commissioner" means the Commissioner of Community Affairs.
"Director" means the Director of the Division of Local Government Services in the Department of Community Affairs.
"Fiscal distress" means a fiscal condition based on an eligible municipality's tax rate, cash deficit, insufficient percentage of tax collections, insufficient collection of other revenues, over-anticipation of the revenues of prior years, non-liquidation of interfund transfers, reliance on emergency authorizations, continual rollover of tax anticipation notes, or other factors indicating a constrained ability to meets its budgetary requirements.
"Municipality in need of stabilization and recovery" means an eligible municipality that on or after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill): (1) has experienced a decrease of more than 50 percent in its total assessed property values during the immediately preceding five-year period, as determined by the director, and, upon the recommendation of the director finding that the eligible municipality is experiencing fiscal distress, the commissioner determines it should appropriately be subject to the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill); or (2) has experienced an increase in outstanding debt exceeding 50 percent during the immediately preceding five-year period, as determined by the director, and upon the recommendation of the director finding that the eligible municipality is experiencing fiscal distress, the commissioner determines it should appropriately be subject to the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill).
"Governing body" means the municipal council, committee, board, or other entity having control of the finances of an eligible municipality, and shall include the mayor.
"Local Finance Board" means the Local Finance Board in the Division of Local Government Services in the Department of Community Affairs.
"Eligible municipality" means a municipality in which casino gaming is authorized by the voters of the State on the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill).
4. Within 30 days of the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), or at such other time as the director in his discretion deems appropriate, the director shall ascertain whether an eligible municipality should be deemed a "municipality in need of stabilization and recovery" as defined in section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), and if so, shall recommend that the commissioner make such a determination. The commissioner shall make the final determination of whether to deem an eligible municipality a "municipality in need of stabilization and recovery" and subject to the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill). The commissioner shall then notify the Governor, the State Treasurer, and the director when an eligible municipality has been deemed to be subject to the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill). The director shall then notify the municipal clerk, or other appropriate municipal official of the eligible municipality, in writing. An eligible municipality deemed to be a "municipality in need of stabilization and recovery" pursuant to this section shall be subject to the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill) for a period of 15 consecutive years, which period shall not be extended or renewed.
The Local Finance Board shall review the performance of a municipality in need of stabilization and recovery at the end of every fifth year following designation, and shall determine whether its fiscal condition is improving or declining while subject to the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill). The Local Finance Board shall report its findings to the Governor and the Legislature pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), which shall be available to the public. The report may contain suggestions for recommended actions by the director or recommend any changes that should be made to P.L. , c. (C. ) (pending before the Legislature as this bill).
5. a. (1) Upon the determination by the commissioner that an eligible municipality is a "municipality in need of stabilization and recovery" for the purposes of P.L. , c. (C. ) (pending before the legislature as this bill), and notwithstanding the provisions of any law, rule or regulation to the contrary, any of the functions, powers, privileges, immunities, and duties of the governing body of such an eligible municipality set forth in any statute, regulation, ordinance, resolution, charter, or contract that are or may be substantially related to the fiscal condition or financial recovery of that eligible municipality may, at the discretion of the director, be reallocated to, and vested exclusively in, the Local Finance Board or its designee. The director shall include the rationale for the reallocation of every particular function, power, privilege, immunity, or duty pursuant to this section. The authorities of the Local Finance Board, or its designee, in this regard shall extend to any and all actions that, in the discretion of the director, may help stabilize the finances of the eligible municipality, and shall include, but not be limited to, the implementation of governmental, administrative, and operational efficiency and oversight measures, the authority to dissolve, terminate, transfer, or dispose of any municipal authority, board, commission, or department, and the authority to sell, convey, lease, or otherwise dispose of any interest in any municipally-owned assets, including but not limited to, any water, sewer, wastewater, and stormwater infrastructure, equipment or facilities, and any real property, including any improvements thereon.
(2) Any function, power, privilege, immunity, or duty of the governing body not reallocated to and vested exclusively in the Local Finance Board or its designee shall remain allocated to and vested in that governing body.
b. (1) Notwithstanding the provisions of any law, rule, or regulation to the contrary, including without limitation, any requirements set forth in R.S.40:49-1 et seq. or R.S.10:4-6 et seq., the Local Finance Board, or its designee, shall have the exclusive authority to pass, adopt, repeal, or amend, any ordinance or resolution, or to enter into any contract or agreement, for the purpose of carrying out any action authorized under subsection a. of this section, for so long as the director determines is necessary, within the 15-year period, to rectify the eligible municipality's fiscal distress.
(2) When exercising powers under paragraph (1) of this subsection, the Local Finance Board or its designee shall, to the extent practicable, comply with all notice, hearing, and public bidding requirements to which the governing body of the eligible municipality is generally subject.
6. a. The municipal portion of the equalized general tax rate within a municipality in need of stabilization and recovery shall not increase over the rate established for the year during which the commissioner's recommendation took effect, notwithstanding the spending limitations set forth in P.L.1976, c.68 (C.40A:4-45.1 et seq.) and the limitations on increases to the tax levy pursuant to sections 9 through 13 of P.L.2007, c.62 (C.40A:4-45.44 through C.40A:4-45.47 and C.40A:4-45.3e), except upon application to the Local Finance Board or its designee in the case of extraordinary conditions.
b. The Local Finance Board, or its designee, shall, in consultation with the mayor, annually prepare a budget pursuant to the provisions of the "Local Budget Law," N.J.S.40A:4-1 et seq. This budget shall conform in all respects with the requirements of the "Local Budget Law," N.J.S.40A:4-1 et seq. and shall be subject to the limitations on spending by municipalities set forth in P.L.1976, c.68 (C.40A:4-45.1 et seq.). The Local Finance Board, or its designee, may grant exceptions to the spending limitations set forth in P.L.1976, c.68 (C.40A:4-45.1 et seq.) if the Local Finance Board, or its designee, finds such exceptions to be necessary for the stabilization and recovery of the municipality.
c. Upon the preparation of the budget, the Local Finance Board or its designee, in consultation with the mayor, shall fix: a date, place and time for the holding of a public hearing upon the budget; the amounts of money necessary to be appropriated for the use of the municipality for the ensuing year; and the various items and purposes for which the same are to be appropriated. The hearing shall be held in accordance with the provisions of the "Local Budget Law," N.J.S.40A:4-1 et seq.; however, the hearing shall be held at least 28 days after the date on which the budget is advertised. Notice of hearing, contents of the notice and the format and purpose of the hearing shall be as provided in that law. As part of the budget request, the Local Finance Board, or its designee, may include provision for anticipation of State aid if other revenues are insufficient to meet the revenues needed to offset total appropriations.
d. Following the hearing or hearings on the budget pursuant to subsection c. of this section, the governing body shall vote upon the proposed budget. Failure to adopt the budget shall be communicated to the Local Finance Board or its designee along with the reasons for each line item that is rejected. If the Local Finance Board or its designee does not approve those alternatives proposed by the governing body, any disputed line item shall be considered an impasse and subject to determination by the Commissioner of Community Affairs.
e. During the period that the municipality is in need of stabilization and recovery, the Local Finance Board, or its designee, shall ensure that those appropriations in the municipal budget necessary for the improvement of internal audit mechanisms and controls are present on an annual basis.
7. Notwithstanding the provisions of section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill), or of any law, rule or regulation to the contrary, the authority to file a petition with any United States court or federal bankruptcy court for the purpose of effecting a plan of readjustment or composition of debts as set forth in R.S.52:27-40, and the authority to adopt an ordinance authorizing the filing of such a petition under R.S.52:27-41, shall remain with the governing body of the municipality in need of stabilization and recovery and shall not be reallocated to the Local Finance Board or its designee.
8. This act shall take effect immediately.
STATEMENT
This bill, designated the "Municipal Stabilization and Recovery Act," would empower the Director of the Division of Local Government Services and the Local Finance Board to assist certain municipalities deemed to be in fiscal distress and in need of stabilization and recovery.
Under the bill, the director would have the power to ascertain whether an eligible municipality is experiencing fiscal distress and therefore should be deemed a "municipality in need of stabilization and recovery," and if so, to recommend that the Commissioner of Community Affairs make such a determination. The bill defines "eligible municipality" as a municipality in which casino gaming is authorized by the voters of the State.
Under the bill, "fiscal distress" means a fiscal condition based on an eligible municipality's tax rate, cash deficit, insufficient percentage of tax collections, insufficient collection of other revenues, over-anticipation of the revenues of prior years, non-liquidation of interfund transfers, reliance on emergency authorizations, continual rollover of tax anticipation notes, or other factors indicating a constrained ability to meets its budgetary requirements.
The bill defines a "municipality in need of stabilization and recovery" as one that, on or after the bill's effective date, has experienced a decrease of more than 50 percent in its total assessed property values during the immediately preceding five-year period, as determined by the director, or has experienced an increase in outstanding debt exceeding 50 percent during the immediately preceding five-year period, as determined by the director.
The Commissioner of Community Affairs would make the final determination of whether an eligible municipality should be deemed to be a municipality in need of stabilization and recovery and should be subject to the provisions of the bill. The commissioner would then notify the Governor, the State Treasurer, and the director that the eligible municipality is subject to the provisions of the bill, and the director would notify the municipal clerk or other appropriate municipal official of the eligible municipality in writing of the determination. An eligible municipality deemed to be a municipality in need of stabilization and recovery pursuant to the bill would be subject to the provisions of the bill for a period of 15 consecutive years. This period could not be extended or renewed.
Under the bill, upon the determination by the commissioner that an eligible municipality is a municipality in need of stabilization and recovery for the purposes of the bill, and notwithstanding the provisions of any law, rule, or regulation to the contrary, any of the functions, powers, privileges, immunities, and duties of the governing body of such an eligible municipality set forth in any statute, regulation, ordinance, resolution, charter, or contract that are or may be substantially related to the fiscal condition or financial recovery may, at the discretion of the director, be reallocated to, and vested exclusively in, the Local Finance Board, or its designee. The bill requires the director to include his rationale for the reallocation of every of every particular function, power, privilege, immunity, or duty. The authority of the Local Finance Board, or its designee, shall extend to any and all actions that, in the discretion of the director, may help stabilize the finances of the eligible municipality, and shall include, but not be limited to, the implementation of governmental, administrative, and operational efficiency and oversight measures, the authority to dissolve, terminate, transfer, or dispose of any municipal authority, board, commission, or department, and the authority to sell, convey, lease, or otherwise dispose of any interest in any municipally-owned assets of the eligible municipality, including but not limited to, any water, sewer, wastewater, and stormwater infrastructure, equipment or facilities, and any real property, including any improvements thereon.
The bill requires that the municipal portion of the equalized general tax rate within a municipality in need of stabilization and recovery shall not increase over the rate established for the year during which the commissioner's recommendation took effect, except upon application to the Local Finance Board or its designee in the case of extraordinary conditions.
The Local Finance Board, or its designee, shall, in consultation with the mayor, annually prepare a budget and in consultation with the mayor, shall fix a date, place and time for the holding of a public hearing on the budget. Following the hearing or hearings on the budget, the governing body shall vote upon the proposed budget. Failure to adopt the budget shall be communicated to the Local Finance Board or its designee along with the reasons for each line item that is rejected; and if the Local Finance Board or its designee does not approve those alternatives proposed by the governing body, any disputed line item shall be considered an impasse and subject to determination by the Commissioner of Community Affairs.
The bill would require the Local Finance Board to review the performance of a municipality in need of stabilization and recovery at the end of every fifth year, and shall determine whether its fiscal condition is improving or declining while subject to the provisions of the bill. The Local Finance Board must report its findings to the Governor and the Legislature, and the report may contain suggestions for recommended actions by the director or recommend any changes that should be made to the "Municipal Stabilization and Recovery Act."
