February 27, 2014
Re: Levy Cap Exemption for Snow Emergencies
The Division of Local Government Services has issued guidance regarding the recent executive orders declaring States of Emergency for the response and recovery as a result of the various snow storms. Local Finance Notice 2014-5 provides guidance regarding the appropriation, tax levy cap exemption, financing alternatives and procurement issues.
The appropriation and levy cap laws provide exemptions for expenditures resulting from a state of emergency. Only the portion of costs exceeding the cost of providing services under non-emergency conditions may be granted as property tax levy cap exclusions.
Municipalities may only treat such costs as a one-time (non-permanent) levy cap exclusion after submitting a certification along with the introduced budget describing the expenditures for review by the Director of the Division of Local Government Services. The certification should reflect a reasonable estimate of costs that exceed snow removal costs in an ordinary year. The certification should not seek to include every expense related to every storm. The Division may contact Chief Financial Officers where certified amounts appear unreasonable. The amount excluded may be subject to adjustment to account for the receipt of State or Federal reimbursements. The Local Finance Notice provides the procedure that your finance officer must follow, depending on whether your budget is adopted, or not introduced, or introduced and not adopted.
The Local Finance Notice also provides guidance on funding mechanism that may assist in financing certain infrastructure repair costs resulting from snow or ice damage. N.J.S.A. 40A: 4-55.1 et seq. permits municipalities to adopt “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 can be passed at any time. That section of law provides the details for using the provisions, and requires Local Finance Board approval. Applicants planning to use the three-year provision should introduce their ordinance, and then file an application with the Local Finance Board requesting approval. An application form has been posted on the Local Finance Board website. The application’s Executive Summary must describe the purposes for which the appropriation will be spent. There are no specific Local Finance Board rules addressing this provision. The ordinance can be adopted after the Board approves the introduced ordinance.
You may want to review this Local Finance Notice with your Chief Financial Officer. If you have questions or need additional information please do not hesitate to contact Lori Buckelew, Senior Legislative Analyst, at 609-695-3481 x112 or firstname.lastname@example.org.
Very truly yours,
William G. Dressel, Jr.