Bill Text: NJ S3836 | 2020-2021 | Regular Session | Introduced
Bill Title: Prohibits transfers from local authority's undesignated fund during public health emergency and state of emergency in response to COVID-19 pandemic.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2021-06-01 - Introduced in the Senate, Referred to Senate Community and Urban Affairs Committee [S3836 Detail]
Download: New_Jersey-2020-S3836-Introduced.html
Sponsored by:
Senator JOSEPH P. CRYAN
District 20 (Union)
SYNOPSIS
Prohibits transfers from local authority's undesignated fund during public health emergency and state of emergency in response to COVID-19 pandemic.
CURRENT VERSION OF TEXT
As introduced.
An Act prohibiting transfers from local authority's undesignated fund during public health emergency and state of emergency in response to COVID-19 pandemic.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. To the extent there is available an undesignated fund balance or unreserved retained earnings held by an authority that is subject to the provisions of the "Local Authorities Fiscal Control Law," P.L.1983, c.313 (C.40A:5A-1 et seq.), excluding a fire district, a regional authority, or a housing authority, no amount in the undesignated fund balance or unreserved retained earnings may be appropriated for use in the local budget of the municipality or county that created the authority for the duration of the public health emergency and state of emergency declared by the Governor in Executive Order No. 103 of 2020 in response to the COVID-19 pandemic.
2. This act shall take effect immediately and shall expire upon rescission of Executive Order No. 103 of 2020 by the Governor or upon the expiration of the public health emergency and state of emergency declared in response to the COVID-19 pandemic, whichever occurs first.
STATEMENT
This bill would temporarily supersede a provision of the "Local Authorities Fiscal Control Law" to prohibit municipalities and counties from diverting funds from certain sewerage authorities and municipal and county utilities authorities for other purposes for the duration of the public health emergency and state of emergency declared by the Governor in Executive Order No. 103 of 2020 in response to the COVID-19 pandemic.
The vast majority of New Jersey's drinking water and wastewater systems are municipal utilities and utilities authorities governed by elected and appointed officials. These publicly-owned systems determine their own rates and service, are closer to their individual communities, and are free of the requirement to ensure a profit margin for their shareholders. These systems need revenues to make necessary investments, while additionally keeping rates low. One substantial obstacle to obtaining more robust funding of water and sewer infrastructure is a provision of the "Local Authorities Fiscal Control Law" that allows municipalities and counties to divert up to five percent of water and sewer funds for other purposes. According to the Association of Environmental Authorities, in one set of 100 New Jersey municipal and authority budgets, approximately $80 million had been transferred in a three-year period. That translates into $80 million that was not invested in improving infrastructure, and acts as a type of tax on ratepayers to subsidize local budgets. The COVID-19 pandemic has caused unemployment and imposed economic hardships on businesses. As a result, authorities are experiencing significant revenue shortfalls because some customers cannot pay their water, sewer and solid waste fees. At the same time, municipalities and counties are eligible for recently enacted federal aid to address their own revenue shortfall. This bill would allow authorities to use the full undesignated fund balance, funds which were specifically collected to support water, wastewater and solid waste services, in order to cope with these shortfalls for as long as the public health emergency and state of emergency declared in response to COVID-19 exists.
