Bill Text: NJ S1726 | 2012-2013 | Regular Session | Introduced
Bill Title: Requires municipality to comply with State audit prior to receiving State aid.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2012-03-05 - Introduced in the Senate, Referred to Senate Community and Urban Affairs Committee [S1726 Detail]
Download: New_Jersey-2012-S1726-Introduced.html
Sponsored by:
Senator ANTHONY R. BUCCO
District 25 (Morris and Somerset)
SYNOPSIS
Requires municipality to comply with State audit prior to receiving State aid.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning auditing and municipal aid and amending N.J.S.40A:5-6 and various sections of statutory law.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. N.J.S.40A:5-6 is amended to read as follows:
40A:5-6. Every such registered municipal accountant shall file the original report of his audit and recommendations with the clerk and shall, within 5 days thereafter, file a certified duplicate copy thereof, over his signature, in the office of the director. The auditor shall highlight for the director recommendations made in the prior year's audit that have not been implemented by the municipality.
(cf: N.J.S.40A:5-6)
2. Section 6 of P.L.1987, c.75 (C.52:27D-118.29) is amended to read as follows:
6. a. The board shall determine the total amounts of grants and loans, or any combination thereof, to be provided to each eligible municipality and the director shall certify that amount to the State Treasurer and the governing body of the eligible municipality. In the case of loans to an eligible municipality, the board shall set forth the terms of the loan agreement, including whether or not any interest shall be paid and, if so, the rate of that interest. The term of a loan authorized under the provisions of P.L.1987, c.75 (C.52:27D-118.24 et seq.) shall not exceed 10 years.
As a condition of receiving assistance under the provisions of P.L.1987, c.75 (C.52:27D-118.24 et seq.), an eligible municipality shall implement any government, administrative and operational efficiency, and oversight measures necessary for the fiscal recovery of the municipality as recommended by the director and approved by the board, and be subject to management and fiscal audit by the director.
The determination of the board pursuant to P.L.1987, c.75 as to the amount of financial assistance to be paid to an eligible municipality shall be final and conclusive, and there shall be no appeal therefrom nor any review thereof.
b. The director may withhold from an eligible municipality any State aid payments that are disbursed by the Division of Local Government Services if the director finds the municipality has failed to implement fiscal recovery measures approved by the board. The director shall withhold aid from an eligible municipality if the municipality fails to implement the suggestions of an audit or financial review conducted by any State department or agency, or the recommendations of an audit conducted pursuant to the "Local Fiscal Affairs Law, N.J.S.40A:5-1 et seq." The director shall provide written notice of the decision to withhold aid to the chief financial officer of the municipality. Upon withholding an aid payment, the director shall report to the board the circumstances surrounding the reasons for withholding aid. The board shall then hold a hearing to give the eligible municipality an opportunity to explain why such aid payments should not continue to be withheld, and what action the eligible municipality plans to take to implement the fiscal recovery measures. Upon completion of the hearing, the board shall determine if State aid payments should continue to be made to the municipality, establish a schedule for such payments when appropriate, and determine what other actions should be taken.
c. If an eligible municipality receives increased amounts of aid under P.L.1987, c.75 (C.52:27D-118.24 et seq.) after January 1, 1999 and continues to receive such aid for two continuous fiscal years, at the end of each second year, or at such other time the board deems appropriate, the board shall hold a hearing for the eligible municipality to demonstrate why the board should not create a financial review board to oversee the fiscal condition of the eligible municipality. If the board finds that the eligible municipality has successfully implemented fiscal recovery measures or has otherwise acted to improve sufficiently its fiscal condition, the board shall permit the eligible municipality to continue to receive aid without the creation of a financial review board and be subject to such other fiscal recovery conditions the board may place on it; otherwise, the board shall order, by resolution, the creation of a financial review board to operate in accordance with the provisions of subsections b. through d. of section 5 of P.L.1999, c.156 (C.52:27D-118.30a).
(cf: P.L.1999, c.156, s.4)
3. Section 5 of P.L.1991, c.63 (C.52:27D-118.36) is amended to read as follows:
5. The director shall select among the municipalities that have applied for extraordinary aid pursuant to section 4 of P.L.1991, c.63 (C.52:27D-118.35) and shall forward to the board the list of selected municipalities along with the amount of financial assistance to be paid to each municipality. The director in selecting among those eligible municipalities for payment of extraordinary aid shall use criteria which shall include:
a. whether a municipality is experiencing fiscal distress, whether the cost of providing municipal services is extraordinarily high, and whether the tax base is inadequate to meet property tax demands;
b. whether a municipality will use the extraordinary aid for costs associated with activities that improve operations and provide short-term and long-term property tax savings, including but not limited to shared and regionalized services, enhanced tax and revenue collection efforts and other activity that can be demonstrated to meet those requirements; [or]
c. whether a municipality has incurred other unusual or atypical expenses; or
d. whether a municipality has implemented the recommendations of an audit conducted by any State department or agency, or the recommendations of an audit conducted pursuant to the "Local Fiscal Affairs Law, N.J.S.40A:5-1 et seq." No Supplemental Municipal Property Tax Relief shall be awarded to any municipality which fails to implement the recommendations of a State audit.
In the event the director determines a municipality is not entitled to aid pursuant to subsection d. of this section, the director shall provide written notice of the decision to withhold aid to the chief financial officer of the municipality. If aid is withheld pursuant to subsection d. of this section the municipality may request a hearing before the Local Finance Board to determine if the municipality will receive State aid.
(cf: P.L.1999, c.156, s.7)
4. Section 2 of P.L.1999, c.168 (C.52:27D-442) is amended to read as follows:
2. a. In each State fiscal year, each municipality shall receive Consolidated Municipal Property Tax Relief Aid equal to the amount of Consolidated Municipal Property Tax Relief Aid received in the prior State fiscal year multiplied by the sum of 1.0 and the index rate or zero, whichever is greater. However, any municipality that did not receive a distribution of Consolidated Municipal Property Tax Relief Aid during fiscal year 1999 shall receive aid equal to the amount of Consolidated Municipal Property Tax Relief Aid received in the prior State fiscal year plus the product of the base year amount and the index rate or zero, whichever is greater. As used in this section, "base year amount" means the sum of aid received by the municipality in fiscal year 1995 under those State aid programs which were consolidated in P.L.1995, c.164, the fiscal year 1996 annual appropriations act, under the Consolidated Municipal Property Tax Relief Aid distribution. As used in this section, "index rate" means the rate of annual percentage increase, rounded to the nearest half-percent, in the Implicit Price Deflator for State and Local Government Purchases of Goods and Services, computed and published quarterly by the United States Department of Commerce, Bureau of Economic Analysis, calculating the annual increase therein at the second calendar quarter which occurred in the next preceding State fiscal year. The Director of the Division of Local Government Services shall promulgate annually the index rate to apply in the next following State fiscal year which shall be the same as the index rate determined pursuant to section 4 of P.L.1983, c.49 (C.40A:4-45.1a).
Any amount of aid distributed to a municipality in excess of the amount distributed to the municipality for Consolidated Municipal Property Tax Relief Aid during the State fiscal year 1999 shall be used solely and exclusively by each municipality for the purpose of reducing the amount the municipality is required to raise by local property tax levy for municipal purposes. If the amount of the increased distribution exceeds the amount required to be raised by local property tax levy for municipal purposes, the balance of the increased distribution shall be used to reduce the amount the municipality is required to collect for county purposes, notwithstanding the provisions of this or any other law to the contrary. The Director of the Division of Local Government Services in the Department of Community Affairs shall certify annually that each municipality has complied with the requirements set forth herein.
b. The amount appropriated for Consolidated Municipal Property Tax Relief Aid in a State fiscal year shall be sufficient to fully fund the distribution to municipalities as determined pursuant to subsection a. of this section.
c. Not withstanding the provisions of subsection a. of this section, the Director of the Division of Local Government Services shall withhold the distribution of Consolidated Municipal Property Tax Relief Aid to any municipality which has failed to implement the recommendations of an audit by any State department or agency, or the recommendations of an audit conducted pursuant to the "Local Fiscal Affairs Law N.J.S.40A:5-1 et seq." Upon determining that a municipality shall not receive State aid, the director shall provide written notice of the decision to the chief financial officer of the municipality. Upon the withholding of the aid payment, the Local Finance Board of the Division of Local Government Services shall hold a hearing to give the municipality an opportunity to explain why such aid payments should not be withheld. Following the hearing, the Local Finance Board may determine that a municipality is entitled to aid, even if the auditing recommendations in this subsection have not been met.
(cf: P.L.1999, c.168, s.2)
5. This act shall take effect immediately.
STATEMENT
This bill requires municipalities that receive State aid in the form of Special Municipal Aid, Extraordinary Aid, or Consolidated Municipal Property Tax Relief aid to implement the recommendations of a State audit prior to receiving the State aid. The bill amends the 'Local Fiscal Affairs law to require a municipal auditor to inform the director of the Division of Local Government Services in the Department of Community Affairs of any concerns or recommendations in the prior years audit that have not been corrected. The director will not distribute State aid to these municipalities until the problem identified in the audit has been rectified. The director of the division of Local Government Services in the Department of Community Affairs must provide written notice to the chief financial officer of the municipality that the State intends to withhold aid. The municipality may request a hearing before the Local Finance Board to explain why the recommendations of the audit have not been implemented. Following the hearing, the Local Finance Board may determine that the municipality is entitled to receive the aid.
The sponsor recognizes that a significant portion of the State budget is allocated to the various municipal aid programs. While these programs are vital to providing property tax relief to New Jersey taxpayers, it is equally important that scarce State funds are not squandered by irresponsible fiscal management at the local level.
