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January 5, 2012

Re:      Division of Local Government Services Issues Guidance on CY 2012 Transitional Aid Process

Dear Mayor:

The Division of Local Government Services issued Local Finance Notice 2011-39 which explains the criteria and application process for CY 2012 municipalities to be considered for Transitional Aid, which is the only discretionary aid available for CY municipal budgets.  Aid will only be available to CY municipalities that anticipate difficulties in making payments towards nondiscretionary or critical obligations including, but not limited to, debt service, contractual obligations and public safety payroll.

Applying for aid under this program is considered by the Division a declaration that the municipality is incapable of meeting its obligations and managing its finances without special state assistance, oversight and intervention. 

Receipt of this aid will be condition on the municipality meeting the following requirements:

  • Submitting to broad State controls over hiring, procurement, and other matters
  • Enacting or strengthening comprehensive pay-to-play ordinances
  • Performing reasonable revaluations or reassessments of property as required by law
  • Submitting to such additional fiscal control measures as may be directed by the Division of Local Government Services

Applicants that receive Transitional Aid will be required to sign a Memorandum of Understanding (MOU) with the Division acknowledging state controls and committing to compliance with the MOU

The application, evaluation and award process is rigorous and developed to apply to municipalities that have severe structural financial problems.  Only municipalities demonstrating substantial actions to become self-sufficient by increasing revenues or reducing costs will be awarded funds.

Labor cost reductions and changes in service delivery are general pre-conditions for receipt of aid.  Applications must show that the municipality has moved beyond planning for operational efficiency and has begun to reduce costs.  Maintenance of the “status quo” will not suffice. 

The application and introduced budget should reflect only funding for essential services.  Budgets must eliminate discretionary spending funded by property taxes, such as discretionary accounts for elected officials, non-essential funding of non-profit agencies, and budgeting for non-essential personnel vacancies.

Additionally, applicants shall demonstrate that user fees have been, or will be, created for appropriate services that reasonably offset the costs of services that are provided.  

Any Calendar Year municipality that is not currently receiving Transitional Aid intending to apply for CY 2012 Transitional Aid must notify the Division by e-mailing the information set forth in the “Notice of Intent to Apply” (on page 7 of Local Finance Notice) to dlgs@dca.state.nj.us by noon on January 31, 2012.

The Mayor or Chief Administrative Officer of each CY municipality who is applying for 2012 aid and is not currently receiving Transitional Aid must attend a mandatory orientation meeting to discuss the application and conditions of award.  The meeting is scheduled for Monday, February 13, 2012, at 1:00 p.m., in Conference Room 129 of the Department of Community Affairs located at 101 South Broad Street, Trenton.  Orientation meeting attendance is not required for municipalities currently receiving Transitional Aid. 

The Division must receive applications and related material, including introduced budgets, for CY 2012 budgets by February 29, 2012.  Budgets must be introduced by the application deadline or no aid will be provided.   Awards are expected to be as soon as possible thereafter, so that municipalities may plan for a levy cap referendum if necessary.

Please review Local Finance Notice 2011-39 for the full details on applying for Transitional Aid.  The application can be downloaded from the Division website.  Contact the Division at dlgs@dca.state.nj.us with any questions.

Very truly yours,

 

William G. Dressel, Jr.
Executive Director

 

 

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