New Jersey Assembly Passes Legislation to Promote Municipal Consolidation

Assemblyman Reed Gusciora is one of the sponsors of bill that would make consolidation easier in New Jersey.
Assemblyman Reed Gusciora is one of the sponsors of bill that would make consolidation easier in New Jersey.

Legislation that would allegedly give towns better tools to pursue municipal consolidation gained final passage in the New Jersey Assembly on Monday, Jan. 11.

The bill, which now heads to the governor’s desk, would promote municipal consolidation by increasing the flexibility, clarity and available tools under the “Uniform Shared Services and Consolidation Act” that was enacted in 2007.

Princeton Borough and Princeton Township, which already shared most of their services, are the only two municipalities that have consolidated since the legislation was enacted.

“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 containing costs,” said Assemblyman Tim Eustace (D-Bergen/Passaic), one of the sponsors of the bill.  “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.”

Assemblyman Joseph Lagana (D-Bergen/Passaic), said while consolidation may not be right for every town, the legislation will make relief more attainable for those municipalities looking to pursue it.

“Local governments are desperately searching for ways to cut taxpayer costs and lower property taxes,” said Assemblyman Reed Gusciora (D-Mercer/Hunterdon), who also sponsored the bill. “Consolidating services just may be the answer for many towns. This legislation gives towns more options and opportunities to figure out what works best for their residents.”

The bill creates greater flexibility in the municipal consolidation process in a number of ways, supporters say:

  • Non-contiguous municipalities would be permitted to consolidate if located within a reasonable distance of one another.
  • 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.
  • 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.
  • 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 measure also requires an open space tax referendum if one or more of the municipalities has adopted an annual open space tax levy, even if all consolidating municipalities have such a tax at the same rate.

Voters in each municipality that is part of a proposed consolidation would still have to approve a consolidation referendum.