On January 23, 2026, Governor Sherrill declared a state of emergency via Executive Order 8 in response to the storm on January 24 and 25. The Division issued Local Finance Notice 2026-04 to provide guidance on budgetary and procurement issues related to the storm response.
LFN 2026-04 establishes the process by which municipal and county officials can make unplanned appropriations and expenditures for weather-related emergencies. Such emergency expenses are those related to storm response, recovery, and restoration of services not anticipated in the current year’s budget.
Counties and calendar year municipalities may utilize the provisions of N.J.S.A. 40A:4-20 to make emergency temporary appropriations directly associated with storm response efforts. Expenditures resulting from a state of emergency are treated as an exception to the municipal appropriations cap (N.J.S.A. 40A:45.3(bb)), county levy cap (N.J.S.A. 40A:4-45.4(q)) and the 2% levy cap (N.J.S.A. 40A:4 45.45(b)).
Expenditures resulting from a state of emergency are treated as an exception to the municipal appropriations cap (N.J.S.A. 40A:45.3(bb)), county levy cap (N.J.S.A. 40A:4-45.4(q)) and the 2% levy cap (N.J.S.A. 40A:4 45.45(b)). See N.J.A.C. 5:30-3.9 for the process and terms under which emergency-related levy cap exceptions are permissible.
Subject to the Director’s review of the local unit’s certified description of the expenditures, levy cap exceptions are only available for "extraordinary costs" incurred for the immediate preparation, response, recovery, and restoration of public services due to extreme weather conditions or other catastrophic events not anticipated in the current budget year and subject to the terms of a gubernatorial emergency declaration. The Chief Financial Officer must certify that the excluded appropriations are permitted exclusions pursuant to N.J.S.A. 40A:4-45.45(b) and 40A:4-45.3(bb), respectively. The Director is required to approve proposed budget amendments prior to budget adoption. (N.J.S.A. 40A:4-10)
Emergency resolutions that exceed the 3% percent expenditure limit require approval of the Director ( N.J.S.A. 40A:4-49). If emergency appropriations are paying for disaster-related costs that exceed the cost of providing services under non-emergency conditions, the deferred charge to be raised in the following year’s budget would be an eligible levy cap exception and municipal appropriations cap exception.
Municipalities and counties are permitted to spread the costs of an emergency temporary appropriation or emergency appropriation over a period of years, subject to Local Finance Board approval. (N.J.S.A. 40A:2-51(a)) The Local Finance Board has historically considered applications where emergency-related costs are very substantial in comparison with the annual municipal budget, and spreading the cost would result in a minimum $50 annual increase to the average residential taxpayer over a minimum of a three-year period.
N.J.S.A. 40A:4-55.1 through 55.6 establishes the process by which municipalities can adopt, regardless of budget process stage, a special emergency ordinance to facilitate a three-year funding cycle for extraordinary expenses for the repair or reconstruction of streets, roads, or bridges damaged by snow, ice, frost, or floods. If a municipality seeks to issue special emergency notes for such extraordinary expenses, the governing body must adopt a resolution pursuant to 40A:4-55.4. Local Finance Board approval is required before the ordinance (and financing resolution if applicable) can be adopted; the application’s Executive Summary must describe the purposes for which the appropriation will be spent. A copy of the adopted ordinance and resolution, if applicable, must be filed with the Director to become effective.
Municipalities and counties with a Storm Recovery Reserve are permitted, by resolution, to use those reserve funds for any purpose related to storm recovery, including, but not limited to, snow, ice, and debris removal after current budget appropriations meant for storm recovery have been expended. Any reimbursement of these expenditures shall be deposited back into the reserve.
In circumstances where an emergency affecting the public health, safety or welfare requires the immediate delivery of goods or the performance of services, a contract may be awarded without public bidding regardless of the bid threshold. (N.J.S.A. 40A:11-6 (Local Public Contracts Law); N.J.S.A. 18A:18A-7 (Public School Contracts Law) and N.J.A.C. 5:34-6.1) . Emergency contracts awarded for purposes of storm response are excepted from Pay-to-Play due to public exigency. (N.J.S.A. 19:44A-20-12) Please note that, pursuant to the State Treasurer’s November 4, 2016, directive, contracting units awarding contracts that fall under the “public exigency” exception to Pay-to-Play are no longer required to file an “emergency procurement report.”
Regarding the Business Registration Certificate (BRC), contracting units may award emergency contracts without obtaining a vendor’s or contractor’s BRC, so long as the vendor or contractor agrees to provide their BRC within two weeks of the contract’s execution. The contracting unit, which should inform the vendor or contractor of the BRC requirement upon awarding an emergency contract, cannot make payment until a copy of the BRC is provided to the contracting agency. (N.J.S.A. 52:32-44)
Contractors awarded public works contracts under emergency procedures must be notified of applicable Public Works Contractor Registration (PWCR) and prevailing wage requirements at time of award. The contracting unit must confirm compliance prior to making payment for completed work. A similar practice is recommended for truly emergent contracts requiring Russia-Belarus and Iran certifications (Local Finance Notices 2023-11 and Local Finance Notice 2024-04 provide further explanation).
We suggest you review this Local Finance Notice with your municipal manager, chief financial officer, and purchasing agent.
Contact: Erin Knoedler, Legislative Analyst, eknoedler@njlm.org, 609-695-3481, x116.