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September 13, 2011

Re:    Budget Issues relating to Hurricane Irene

Dear Mayor:

The Division of Local Government Services has recently issued Local Finance Notice 2011-26 regarding emergency appropriations related to the emergency response and funding for long term recovery from Hurricane Irene.  Since the Governor declared a State of Emergency, funds appropriated and expended for emergency responses are treated as levy cap exclusions upon submission and review of certification to the Division of Local Government Services.

Emergency expenses are those related to the response, recovery and restoration of services due to the hurricane that were not anticipated in the current year’s budget.  Only the portion of costs that exceed the cost of providing services under non-emergency conditions may be granted as levy cap exclusions.

Municipalities that have not adopted their budgets may use the emergency temporary appropriations provisions of N.J.S.A. 40A:4-20 to provide appropriations directly associated with the emergency.  These appropriations will be outside the cap for the current year.

Municipalities that have adopted their budgets an emergency resolution, as permitted by N.J.S.A. 40A:4-46, may be adopted by approval of 2/3 vote of the full membership of the governing body.  The amount of the emergency appropriation shall be fully funded as a deferred charged in next year’s budget but will be excluded from the cap levy.  Please note that emergency resolutions that exceed the 3% expenditure limit require approval of the Director.  However, for this emergency, the Director is granting a blanket approval.  Formal approval of the resolution is not required in order to authorize spending but you must still submit the appropriate paperwork to the Division.

In addition to the emergency options, State law permits two other funding mechanisms that may assist in financing certain infrastructure repair costs resulting from flooding. When used for the recovery of Hurricane Irene created purposes, these appropriations will be treated as cap exemptions.

The first option is the adoption of a five year “special emergency” funding, pursuant to N.J.S.A. 40A:4-54, however, this can only be used after the budget is adopted.  The “special emergency” can be used to address the “repair, reconstruction of streets, roads or bridges, or other public property” damaged by flooding.

The second option is the adoption, at anytime, “special emergency ordinances” to allow a three year funding cycle for the “extraordinary expenses for the repair or reconstruction of streets, roads or bridges damaged by snow, ice, frost or flooding.”  This option requires the approval of the Local Finance Board.

A copy of the full Local Finance Notice is available at www.nj.gov/dca/lgs/lfns/11lfns/2011-26.doc

If you have any questions or need additional information please do not hesitate to contact Lori Buckelew at lbuckelew@njslom.com or 609-695-3481 x112.

Very truly yours,

 

William G. Dressel, Jr.
Executive Director

 

 

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