New Jersey Assembly Democrats:Eustace & Houghtaling Bill to Encourage Municipal Consolidation, Rein in Property Taxes Heads to Governorís Desk

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Eustace & Houghtaling Bill to Encourage Municipal Consolidation, Rein in Property Taxes Heads to Governorís Desk

Legislation sponsored by Assembly Democrats Tim Eustace and Eric Houghtaling to give towns better tools to pursue municipal consolidation and ultimately rein in property taxes gained final legislative approval from the full Assembly by a vote of 51-21-2 on Thursday.

The bill (S-690/A-2921) would promote municipal consolidation by increasing the flexibility, clarity and available tools under the "Uniform Shared Services and Consolidation Act" enacted in 2007. Although one of the primary purposes of this law is to promote consolidation by providing more procedural flexibility, to date, only one municipal consolidation has been effectuated since its enactment.

"With property taxes ranking among one of the foremost concerns of residents throughout New Jersey, consolidation should be weighed more seriously as a long-term solution to contain costs," said Eustace (D-Bergen/Passaic). "In order for this to be a viable option for more municipalities, we need to make the process less cumbersome so it's not a deterrent for many towns.

"While each town is unique, most share the same concerns about cutting taxpayer costs and lowering property taxes," said Houghtaling (D-Monmouth). "For the sake of beleaguered homeowners, this bill is designed to encourage more municipal consolidations in order to help achieve greater efficiencies in local government and ultimately rein in property taxes."

The bill creates greater flexibility in the municipal consolidation process in a number of ways:
- Non-contiguous municipalities would be permitted to consolidate if located within a reasonable distance of one another.
- The applicants for consolidation would be allowed to develop their own process for the equalization of property assessments in the new municipality, subject to the approval of the Director of the Division of Taxation in the Department of the Treasury, which must be undertaken before an application for approval of a consolidation plan is submitted to the Local Finance Board or before a Municipal Consolidation Study Commission votes on its final report.
- A consolidation plan and a Municipal Consolidation Study Commission report must address the projected property tax impact resulting from consolidation.
- The Director of the Division of Taxation, under certain circumstances, may waive any law, rule or regulation concerning the assessment of property that may not have anticipated a phase-in or consolidation of services.
- Districts based on old or newly established boundaries with unique planning mechanisms, services, and ordinances would be permitted in the new municipality.
- Existing debt, or debt newly created by any financial arrangement between any or all of the former municipalities, may be apportioned among the taxpayers of the consolidating municipalities as debt within special taxing districts in any manner that the parties mutually agree upon in the consolidation plan.
- Severance pay may be authorized, subject to state review, for employees of the consolidating municipalities who are to be terminated by the new municipality in order to encourage them to stay in their positions until the consolidation is effectuated.
- Consolidating municipalities would be permitted to enter into any financial or other agreement to adjust benefits between the municipalities, provide indemnification from legal actions stemming from a consolidation or provide incentives or other acts to facilitate consolidation.
- The required joint public hearing on applications for consideration of a consolidation plan or to create a Municipal Consolidation Study Commission may be held at the same time as one of the individual municipal public hearings.
- An application to create a Municipal Consolidation Study Commission would be required to include the proposed means of funding the commission.
- The fiscal study of a consolidation currently required to be prepared by the Department of Community Affairs would be made discretionary.
- Require voter approval at a referendum for all consolidations, regardless of the process used for pursuing such consolidation.
- A local unit would be permitted to adopt an ordinance authorizing special emergency appropriations for the authorized expenses of a Municipal Consolidation Study Commission.

The bill also provides greater clarity with respect to the petition process for the creation of a Municipal Consolidation Study Commission, by providing specifics as to the form of the petition, its filing, and verification, consistent with the requirements for a petition proposing the formation of a joint municipal consolidation study commission. The bill also lays out specific requirements with regard to the composition, meetings and responsibilities of the study commission.

The bill now heads to the governor's desk.

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