The Local Finance Board of the Division of Local Government Services (DLGS) recently adopted N.J.A.C. 5:30-3.8, which requires New Jersey municipalities to incorporate a user-friendly budget into all introduced (approved) and adopted annual municipal budgets. The goal is to increase the financial transparency of local government and enhance everyday citizens’ ability to understand their municipality’s fiscal condition.
The new budget friendly rule is required under a state law passed in 2007. N.J.S.A. 40A:5-48 requires the Local Finance Board to promulgate a plain language budget summary that both summarizes the annual municipal budget and provides additional information useful for public understanding of the municipality’s fiscal matters.
As detailed in a Local Finance Notice published on April 8, 2015, starting with Adopted Calendar Year 2015 budgets, each municipality must complete the User-Friendly Budget form as part of the annual municipal budget. Calendar Year municipalities do not have to complete the form for their introduced (approved) 2015 budgets, but must do so for each introduced as well as adopted budget moving forward.
For those CY2015 municipalities that adopt their budgets by April 10, 2015, the User-Friendly Budget Form must be submitted to the Division after transmittal of the adopted CY2015 budget, but no later than May 10, 2015. Municipalities with State Fiscal Year budgets must complete a User-Friendly Budget for both their introduced and adopted SFY2016 municipal budgets.
The User-Friendly Budget Form is an Excel-based spreadsheet. Information that is required includes: the tax rate and levy by each taxing entity, and the amount that the average residential taxpayer pays toward each; summary of anticipated revenue for all operating funds and appropriations by service type; current year health benefit costs for active employees, elected officials and retirees, along with the extent of employee cost sharing contributions; and gross and net debt for current and future budget years.
The introduced and adopted User-Friendly Budget forms must be submitted to the Division of Local Government Services in both electronic and hard copy formats. Once submitted, the budgets will be posted for the public to view on the DLGS website.
In addition, when making the introduced (approved) budget available to the public for the public hearing, the municipality must provide the completed User-Friendly Budget form along with the annual municipal budget, including when posted on a municipality’s website. Pursuant to N.J.S.A. 40A:4-10, municipalities that don’t yet have their own websites must have their adopted budgets for the current year and three prior years posted on the DLGS website.
The User-Friendly Budget Form only applies to municipalities. According to the Local Finance Notice, a similar form will be developed for counties in the near future.
For more information about the new budget rules or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Government Law Group.