Governor Murphy’s proposed $58.1 billion FY2026 budget recommends $1.86 billion in appropriations for the Department of Community Affairs (DCA) with a decrease of $243 million from the FY2025 budget.
The DCA Commissioner, Jacquelyn Suárez, testified before the Senate Budget and Appropriations and Assembly Budget Committees on the department's budget and provided detailed budget responses to the Office of Legislative Services.
The DCA budget highlights the following items of municipal interest.
Division of Local Government Services (DLGS)
Municipal Funding: The proposed FY2026 budget recommends an appropriation of $649.3 million for Consolidated Municipal Property Tax Relief Aid (CMPTRA) and $805.6 million for Energy Tax Receipts (ETR). As in past years, the proposed CMPTRA appropriation remains flat and is transferred to ETR as to avoid the “poison pill” provision of ETR. As a result, no municipalities will receive CMPTRA, and there is no increase in ETR from the FY2025 budget.
The continuation of flat funding is recommended for Open Space PILOTs and Highland Protection Fund Aid and provides for no allocation for Municipal Relief Funding.
The budget proposal does provide for an increase of $35 million in Transitional Aid to Localities funding with a recommended appropriation of $161.9 million. Concurrently, it reduced the Local Recreation Improvement Grant funding from $20 million to $10 million. The DCA awarded 480 grants in FY2025; however, it is expected that approximately 360 grants will be awarded in FY2026.
Shared Services: There is a recommended 66% decrease in funding for the Local Efficiency Achievement Program (LEAP) from $6 million to $2 million. In FY2026, the department expects to award 36 grants.
Online Notices:
S-3905/A-3905 would require DCA to establish a Statewide online database of local government legal publications. The cost estimate is not known by DCA at this time however, DCA did indicate that it may require the hiring of additional staff at an estimated cost of $100,000 to $200,000 annually. DCA is supportive of the League’s position that legislation should be enacted to allow local governments to post legal publications on the municipality's website.
Division of Housing & Community Resources
Housing: The DCA will continue to spend down the Affordable Housing Trust Fund fund balances built since the Covid-19 pandemic. The Affordable Housing Trust Fund expenditures are expected to total $114.5 million.
The budget proposal includes $40 million for the NJHMFA’s Down Payment Assistance Program and $5.5 million from the Affordable Housing Trust Fund for the Statewide Continuum of Care Homelessness Initiative.
The Neighborhood Preservation Program budget is recommended to decrease from $5 million to $2.5 million with a recommendation that the funding be dedicated from the Affordable Housing Trust Fund.
The DCA launched the New Jersey Housing Opportunities for Municipal Equity and Success (NJHOMES) to assist in the planning and development of affordable housing projects. As part of the program, the DCA has developed a web-based tool to allow municipalities to review various types of housing projects. The NJHOMES Launchpad Pre-development Fund will allocate $10 million to assist in funding projects that will likely be developed in the next two years. It is designed as an opportunity for municipalities to gain resources and technical assistance in the planning of development and implementation of affordable housing projects. To participate in the program, DCA has issued an RFP and requests that municipalities provide a Letter of Intent by July 1.
The budget proposal recommends an allocation of $1.3 million for local planning services for affordable housing and will be payable from receipts of the portion of the realty transfer fee credited to the Affordable Housing Trust Fund.
It is recommended that three lead abatement programs be reduced by 50% from $12.9 million to $6.4 million. Proposed budget language includes the ability to allow allocations to be transferred to the Revolving Housing Development and Demonstration Grant Fund to provide for no-interest loans for non-profit housing sponsors for lead remediation.
The NJ Healthy Homes Initiative Program is a NJ Department of Health Initiative in collaboration with the DCA for NJ Family Care members who are at risk of homelessness or institutionalization by providing, rehabilitating or managing permanent affordable housing options. $95 million in funding is available through DCA housing programs to provide up to 200 low-rent units.
Division of Codes and Standards
Uniform Construction Code: The dedicated, off-budget funding that supports the Division of Codes and Standards is recommended to be decreased by 22.4% from $9.6 million to $7.4 million. Revenues from enforcement from the Bureau of Rooming and Boarding Housing Standards are projected to increase by 11%.
Division of Fire Safety
Wildfire Response: With respect to wildland fires, the Division of Fire Safety works with the New Jersey Forest Fire Service to coordinate and deploy municipal fire assets. In response to the uptick in wildfires in the state, the proposed budget allocates an additional $1 million to enhance resources for forestry firefighting.
Government Records Council: Due to the changes effective by P.L.2024, c.16, $10 million was appropriated out of the General Fund in FY2025 to the Government Records Council to facilitate the implementation of the law. The $10 million was divided into two supplemental appropriations to provide operations/administrative responsibilities and grants to make records available electronically. The proposed budget does not recommend the continuation of the supplemental appropriations but would authorize any carryover of unexpended funds.