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S441CV

S441CV

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Published by: Governor Chris Christie on Jan 09, 2012
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01/09/2012

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January 9, 2012
SENATE BILL NO. 441(First Reprint)
To the Senate:While I appreciate the intent of the sponsors of thislegislation, I cannot approve of a law that would potentiallyserve as a disincentive to local units seeking to enter intoshared service agreements. Accordingly, pursuant to Article V,Section I, Paragraph 14 of the New Jersey Constitution, I amreturning Senate Bill No. 441 (First Reprint) with myrecommendations for reconsideration.I consider the enactment of Cap 2.0, as the key first stepin controlling the State’s crushing property tax burden, to beone of the most important achievements of my Administration thusfar. This bill would explicitly provide that shared servicesagreements may not call for an annual cost increase in excess oftwo percent unless approved by the voters at public referendum.While this would advance the worthwhile public policy goal ofpreventing local units from exceeding the statutorily mandatedtwo percent property tax levy cap, it may also have theunintended consequence of impeding shared services agreementsbetween local governmental entities.I believe that shared services and consolidationagreements are critical tools in reining in property taxincreases at the local level. Such agreements not only helplocal units constrain costs by eliminating duplication andimplementing economies of scale, these arrangements also oftenlead to improved quality in the delivery of governmentalservices through the marshalling of resources. We mustencourage, rather than impose a disincentive for, local unitsto enter these arrangements. Indeed, there are times when ashared service agreement, even with annual increases in excessof two percent, still may be the most cost-effective manner to
 
 
2proceed. This legislation would remove that option from localunits.However, I share the sponsors’ concern that some localunits may abuse their negotiating leverage in order to seekunfair increases from their partners in shared servicearrangements. I believe the best way to address this issue isto ensure that local units are properly advised regarding thepotential pitfall of excessive fee increases. Accordingly, I amreturning this legislation with a recommendation to require theDivision of Local Government Services in the Department ofCommunity Affairs to issue guidance on the adoption of sharedservice agreements, which guidance shall recommend appropriateconsiderations regarding future cost increases.I am also returning this legislation today to addressanother local finance issue, which I have been advised is inneed of legislative correction. Under current law,municipalities may bond, with the approval of the Local FinanceBoard, to cover cash payments for tax appeal settlements andadjudications. However, if a municipality pays the tax appealsimmediately, it is no longer able to bond for those expenses.As such, current law actually incentivizes towns to act in afiscally irresponsible manner by issuing debt for these taxappeals immediately, rather than paying the appeals fromexisting funds. Therefore, I am also returning this legislationwith my recommendation to correct that issue.Accordingly, I herewith return Senate Bill No. 441 (FirstReprint) and recommend that it be amended as follows:Page 2, Title, Line 1: After “concerning” insert“local budgets, financesand”Page 2, Title, Line 2: After “c.63” insert “andsupplementing N.J.S. 40A:4-1 et seq”

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