Institute for Professional Development NJ Division of Local Government Services

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1 Institute for Professional Development NJ Marc Pfeiffer, Deputy Director Tina Zapicchi, Chief, Bureau of Financial Regulation and Assistance

2 About Director Thomas H. Neff Recruiting for Authority Chief and someone with an RMA/CPA Local Finance Board policy issues Board has been scrutinizing requests for approval of capital ordinances that seek to skip down payments or deviate from conforming debt service schedules New project payment schedules should have payments consistent with the law and policy, and projects move forward when advocates are prepared to begin paying for them. Exception: non-conforming schedules may be appropriate when debt service schedules rely on revenues of a project being built over time (i.e., sewer system) and payment schedules revenue flow; or in unique situations to prevent a default. Advice pending written guidelines: comply with down payment requirement and reasonable debt service schedules, or have an exceptionally compelling story that warrants the exception. 10/22/2010 2

3 Starts with CY 2011 budgets Reduced annual percent increase from 4% to 2% Eliminated exceptions: Waivers approved by Local Finance Board only local referendums now voters now approve waivers 50% +1 Automatic add-on for state aid losses Add-on for reserve for uncollected taxes increase Modified exceptions: capital spending and debt service All capital spending is exempt: down payment, direct expense, lease payments (old and new), all Sheet 26 and 26A All debt service is exempt Useful life must be consistent with Bond Law Deferred charges to future taxation unfunded (not emergencies) 10/22/2010 3

4 Created new exceptions for: Levy cap banking (up to 3 years) Extraordinary costs related to a declared emergency as defined by regulation of DCA Commissioner in consultation with Commissioner of Education Maintained exceptions for: Add-on for new ratables Pension increases over 2% Health benefits over 2% up to SHB % increase (16.7%) Transfer of functions to utility or other entities will be an adjustment to both cap calculations 10/22/2010 4

5 LOSAP contributions are treated like pensions Offsetting revenues are taken into consideration when calculating exclusion Exclusion for debt service portion of share of cost appropriation if bill can be itemized Special Emergency Notes per NJSA 40A:4-75 Deduction for canceled or unexpended costs Workbook 10/22/2010 5

6 Appropriation cap COLA rate is 2% Can increase to 3.5% with passage of COLA ordinance increase would be 1.5% above statutory amount Pension appropriations are no longer exempt from appropriation cap Group Insurance exception would be the same as the levy cap exclusion Refunding obligations approved by LFB should be segregated in the AFS so verification of amount to be budgeted can be identified Group 1 is under Division examination Local exam municipalities must mail one copy of introduced budget on introduction Budget forms being updated distribution shortly 10/22/2010 6

7 Pension numbers are out increase over 4% exempt from levy cap Pension appropriations no longer excluded from appropriation cap COLA 0% - COLA ordinance should be for entire 3.5% increase Transitional Aid applications staff is working on reviews. Expect to award in November 10/22/2010 7

8 20 of 51 SFY towns have switched to CY (as of 10/10) Watch out for pending tax appeals when preparing TY budget First year calendar budget levy cap use last full fiscal year budget as the base. Allowed to add 2% for half TY year and 2% for new calendar year Percentage applied to last full fiscal year. For appropriation cap just the 3.5 % by COLA ordinance can be added as the cap percentage was 0% last year. Again use the last full fiscal year as the base. For the first calendar year you cannot apply for Transitional Aid New applications must be approved by the July LFB meeting 10/22/2010 8

9 Impact of retro payments on levy cap If a muni had reserves, good job If none, we have a conflict and service delivery challenge Appropriation Cap and Levy Cap Compliance Municipalities must still comply with appropriation cap (2.5% to 3.5%) and the levy cap Counties must calculate both and meet the one with lower levy New Fees/shared services/contracting out New rush to consider alternatives to take advantage of scale (police dispatch, construction code) Anticipated interest in consolidation which is assumed to lower costs Use of Authority and utility surpluses 10/22/2010 9

10 Referendum in lieu of waiver no appeals from the vote Date modifications: likely to be end of April/early May; likely to be combined with other election/referenda Timing relates to HAVA and issues with absentee ballots Budget decisions will have to be made between 50 days or, most likely 30 days in advance of ballot. To be determined in election reform legislation this fall. Single question will cover levy and appropriation cap referendums Referendum must include cost 10/22/

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12 Generally, moving slowly, Democratic majority is creating their own bills in lieu of some of Administration s bills Interest arbitration (S-2310/A-3283) and now A A-3393 brings back last best offer as process for finality. Change in selection of arbitrators and fee limits, ethics standards Impact of contracts on property taxes Cap on costs of contracts No change to criteria May impose a 2% cap on economic costs 10/22/

13 Cap sick leave and vacation carryover (A-3392 and others) $15K for sick leave now or after contracts expire Current plus one year of vacation Proof of sick needed for more than 6 days in year before retirement Civil Service/furlough ( reform still unclear) A-2954/S-2039 no action yet Opt out via petition or ordinance Preserves tenure unless cause Eliminates Department only furlough issue in Civil Service munies 10/22/

14 Discipline reform (A-2955) no action yet Turns many major actions to minor good for management Shared services reform (A2953/S2024) Civil service and buyout issues Layoff to modify bumping (A2956/S-2011) Seasonal appointments for 9 months and increase Civil Service fees (A2954/S2039) Election reform uncertain- not introduced and A-2143 for schools which has problems 10/22/

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16 Uncompensated Absence Payments PL 2010, C.46, approved 7/29/2010 Allows 5 year special emergency for contractually required severance liabilities resulting from layoffs or retirement of employees Some question over whether the repayment over 5 year language relates to the employee as well as the internal financing. 10/22/

17 Reserve for Uncollected Taxes Calculation PL 2010, C.56, approved 8/19/2010 Permits adjustment of collection rate be deducting impact of tax appeal judgments from the levy Eliminated previous.75% threshold Can be for any amount: dollar amount threshold was deleted from old law Resolution of governing body must be passed prior to the introduction of the budget 10/22/

18 Library Surplus Transfer Law A2911/S-2070 Original bill eliminated state oversight of amounts to be transferred was vetoed by Governor Revision maintains State Library approval of amount New amount is undesignated general fund balance in excess of 20% of the audited operating expenditures for the preceding budget year. Minimum library standards (state aid) must be met Funds are revenue only no offset or cap adjustment Passed by both houses waiting for Governor to approve Immediate effect 10/22/

19 P.L.2010, c.39 Makes position of treasurer of school moneys optional If the district determines not to have a treasurer of school moneys, the duties would be carried out by the board secretary, since many of the secretary's functions already overlap those of the treasurer. Provision is made in the bill for checks to be co-signed by the chief school administrator or a board appointee if the district does not have a treasurer of school moneys 10/22/

20 P.L.2010, c.43. Extends time period during which Civil Service fire departments may hire certain laid off firefighters. Permits a paid or part-paid municipal fire department to hire a laid off fire fighter without utilizing any Civil Service lists provided, in part, that the termination occurred within 60 (from 36 months) months prior to appointment with the new fire department. Same with a laid off civilian federal firefighter without utilizing any Civil Service lists Already in existence for police 10/22/

21 P.L.2010, c.52. Authorizes director of board of freeholders to exercise veto power over proposed actions of county authorities Requires consent of a majority of the Board 10/22/

22 P.L.2010, c.55. Requires Division of Taxation to regularly provide certain information to municipalities concerning hotel occupancy taxes. Muni has to provide list of hotels and addresses when adopting All have to provide a list each year by January 1, and whenever there is a new one Taxation will provide a list of hotels/motels that made tax payments with distribution Annual Taxation written notification of nonpayment by a hotel or motel of taxes Failure to pay can be assessed as a lien BUT there are some conflicts with existing law the Division of Law and Taxation have to work out, so nothing will be happening right away. You will get advised. 10/22/

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24 A911 - Authorizes public providers of utility services to bill customers electronically upon customers' request. Agency may, upon the request of a customer: (i) to offer the customer the ability to receive or access, in electronic format, any periodic bill for service sent by the sewerage authority to its customers and any additional information sent by the sewerage authority to its customers as required by law, provided that any notice of disconnection, discontinuance or termination of sewerage service shall be sent to a customer in written form at the customer s legal mailing address in addition to being sent or being made available in electronic format; and (ii) to provide the customer the option of paying any such periodic bill via electronic means. 10/22/

25 A-2679/S-2068 Library tax line Provides dedicated line item on property tax bill to fund municipal free public libraries and joint free public libraries Separate line item will remove 1/3 mil from levy cap Supplemental in budget and part of levy cap A Purchasing subcontractor clarification Provides that subcontractors who furnish non-specialty trade work shall not be named in local public bid documents. 10/22/

26 A Digital copier storage Requires destruction of records stored on digital copy machines under certain circumstances. Requires that a business destroy, or arrange for the destruction of, all records stored on a digital copy machine, which is no longer to be retained by that business, by erasing or otherwise modifying those records to make them unreadable, undecipherable, or non-reconstructable through generally available means. 10/22/

27 S Eliminates five percent down payment requirement for bond ordinances approved by counties and municipalities. A-2900/S-1248 Litigation reporting Requires local unit or authority to provide director of the with report concerning law suits to which it is a party before budget is approved. 10/22/

28 Permits bid for public works contract to be withdrawn due to mistake in certain circumstances. Adapts our law to national standards when bids can be withdrawn The request shall include evidence, including any pertinent documents, demonstrating that a mistake was made and was of so great a consequence that: the enforcement of the contract, if actually made, would be unconscionable; the mistake relates to a material feature of the bid; the mistake occurred notwithstanding the fact that the bidder exercised reasonable care in preparation of the bid; and the bidder making the mistake is able to get relief by way of withdrawing the bid without serious prejudice to the contracting unit, except for the loss of the bargain to the contracting unit. 10/22/

29 S2208 Allows certain organizations to file complaints with Council on Local Mandates in certain circumstances. Permits fire districts to file complaints with Council Permits filing for at least two named members: New Jersey Conference of Mayors, New Jersey State League of Municipalities, New Jersey School Boards Association, New Jersey Association of Counties, the New Jersey Council of County Colleges, New Jersey Association of Fire Districts New Jersey Career Fire Chiefs Association New Jersey State Association of Chiefs of Police New Jersey First Aid Council 10/22/

30 Homestead credit status 2 nd quarter credit applications being filed now Collectors notified in March of eligible parcels and amount of credit Adjusted bills mailed by muni on/about April 1 State to reimburse cost of adjusted bill: forms, print, postage, envelope Best Practices All but one muni submitted - Seaside Heights Pro-rated based on total less N/A Scoring now answers in November 10/22/

31 We ve Got Conflicting Laws Levy cap and binding arbitration Management actions to lower costs vs. CSC vs. PERC Public vs. Labor expectations Generally: current laws and many proposed bills do not address the complexity of the labor environment in context of budgeting and imposition of the new levy cap. There s a lot of belief going on. Furloughs, layoffs, and demotions Serious conflicts of lawful jurisdiction; Civil Service vs. non Civil Service Need for negotiation in context of budget savings 10/22/

32 Keyport decision: PERC holds that the reduction of work hours in a Civil Service jurisdiction is mandatorily negotiable Lots of case laws that hours are mandatorily negotiable, regardless of layoff procedures vs. right to layoff Oddity that reduced work hours require negotiations but layoffs do not. Trying to help employees by providing part-time work could result in the cost of a negotiated solution. 10/22/

33 Key elements of Chapter 2 Minimum Employee Contribution for Medical Benefits SHBP Multiple Coverage Restrictions (SHBP Employers Only) Reduction in Waiver Amount non SEHBP district issue Employee eligibility for health benefits in SHBP/SEHBP Post 5/21/10 hired employees must work minimum of 25 hours (up from 20) per week New full time elected or appointed must work 35 hours We don t know what full-time in context of elected officials really means Problem of impact of determinations on non-shbp prescription unbundled at 1.5% 1.5% hits Collective Negotiation Agreements when they expire after 5/21/10 10/22/