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Bill

A 3456

Relates to transition and inauguration receipts and expenditures

2025 Regular Session Introduced by John McDonald

Limits how much surplus or undesignated funds from local utilities and authorities can be diverted to general budgets, with 3% caps and mandatory DLGS notice.

REFERRED TO ELECTION LAW
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Bill Summary · A 3456

Summary of Assembly Bill A-3456

Overview

Assembly Bill No. 3456, introduced February 5, 2024, and reported favorably by the Assembly State and Local Government Committee (dated January 23, 2025), is currently referred to the Election Law Committee. The bill would reduce the share of surplus funds that counties and municipalities may divert from stormwater, water, and sewer utilities and from related authorities to their general budgets. It also enhances reporting requirements to the Division of Local Government Services (DLGS) in the Department of Community Affairs.

Primary goal: restrict the degree to which local governments may transfer or appropriate funds from utility operations to local budgets, increasing oversight and transparency in these financial decisions.

Key Provisions

  • Lowered transfer/appropriation caps:

    • For surplus revenue transferred from a municipal or county utility (stormwater, water, or sewer) to the local budget, the cap is reduced from 5% to 3% of the utility’s annual operating costs.
    • For undesignated funds or unreserved retained earnings held by an authority created by a county or municipality (excluding fire districts, regional authorities, or housing authorities), the appropriation cap is reduced from 5% to 3% of the authority’s annual operating costs.
    • For sewerage authorities, stormwater utilities, or water/sewer authorities operating under specified statutes (e.g., sewerage authorities, stormwater authorities, water/sewer authorities), the 3% cap applies where applicable.

  • Notice and reporting requirements:

    • Counties and municipalities must provide written notice to the DLGS when they (1) transfer surplus revenue from a utility or (2) appropriate undesignated funds or unreserved retained earnings from a water/sewer authority.
    • The notice must include the exact amount transferred or appropriated.

  • Statutory amendments:

    • Amends P.L.1983, c.111 (C.40A:4-35.1) to implement the 3% cap and notification requirement.
    • Amends P.L.2004, c.87 (C.40A:5A-12.1) to implement the 3% cap for undesignated/unreserved funds in certain authorities and the corresponding notice requirement.

  • Effective date: Immediate.

Who Is Affected

  • Municipalities and counties with stormwater, water, or sewer utilities, as well as entities operating authorities created by counties/municipalities (e.g., water, sewer, or stormwater authorities).
  • Divisions/Departments: Division of Local Government Services (DLGS) within the Department of Community Affairs receives required notices.

Procedural and Timeline Considerations

  • Status: Referred to Election Law (as of January 27, 2025); previously referred to Assembly State and Local Government and reported favorably in January 2025.
  • Legislative sponsors: Primary sponsor John T. McDonald III.
  • Related/companion measures: S 2307 (companion), and prior-session A bills (A 5490, A 6268, A 7213).
  • The bill would take effect immediately upon enactment, with ongoing compliance through annual operating cost baselines for utilities and authorities.

Potential Impact

  • Reduces local flexibility to divert surplus or designation funds for non-utility expenses.
  • Increases transparency by mandating DLGS notification for transfers and appropriations.
  • May affect budgeting strategies for municipalities/counties that rely on utility-derived funds to support general operations or capital programs.

Compiled from official sources — confirm details with the bill’s official record.

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