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Measure Would Cap Annual Fee Increases For Shared Service Agreements

Legislation sponsored by Assemblywoman Linda Stender that would help promote cost-savings between local governments by holding the line on the annual fees charged for shared service agreements received final legislative approval from the full Assembly on Thursday and now heads to the Governor’s desk.

“We all want to see shared services agreements to help control property taxes and help communities fit within the new two-percent cap, but we also know that these agreements can cost money upfront in many cases,” said Stender (D-Union/Middlesex/Somerset). “With this simple change, we can increase the reliability of shared service agreements and provide more incentives for local officials to consider this measure as a way to streamline costs. That’s good news for taxpayers.”

The bill (S-441/A-3625) would cap the annual fee increases for a shared service agreement at 2 percent, the same cap that is in place for local property tax levy increases. An increase in a shared services agreement could only exceed the two percent cap if the increase has been approved by the voters of each local unit that is a party to the agreement.

Under current law, local units of government are allowed to enter into a shared service agreement with another local unit(s) in an effort to reduce administrative expenses and save money through efficiencies of scale. For example, two neighboring municipalities that provide trash removal for their respective residents might enter into a shared service agreement that allows one of the municipalities to provide trash removal for the residents of both.

The bill was approved by the Senate last December and passed the Assembly by a vote of 42-26-3 today.