The Division of Local Government Services (Division) has issued Local Finance Notice 2021-15 on Storm Response & Recovery. The notice addresses: emergency appropriations for storm response and recovery; storm recovery reserves; emergency procurement; and overtime pay prohibition for elected officials and managers.
Emergency Appropriations for Storm Response and Recovery
Municipalities may make emergency appropriations for unplanned appropriations and expenditures for weather-related emergencies related to storm response, recovery, and restoration of services that were not anticipated in the current year’s budget.
Municipal Budget Adopted
If the municipal budget has been adopted:
- The chief financial officer must certify that the resolution covers expenses incurred during the emergency response.
- An emergency resolution that exceeds the 3% expenditure limit requires approval of the Division of Local Government Services.
- For disaster-related costs that exceed the cost of providing services under non-emergency conditions, the deferred charge to be raised in the following year’s budget would be an eligible exception to both the levy cap and appropriations cap.
- A municipality may adopt a resolution to use the special emergency funding to cover extraordinary expenses for repair and reconstruction of streets, roads, bridges, or other public property damaged by flood (or hurricane) where such expenses were unforeseen at the time of budget adoption.
Municipal Budgets Not Adopted
If the municipal budget has not been adopted:
- An emergency temporary appropriations directly associated with storm response efforts (N.J.S.A. 40A:4-20) may be used.
- Expenditures resulting from a state of emergency are treated as an exception to the appropriations cap and levy cap.
- As a reminder, levy cap exceptions are only available for "extraordinary costs" incurred for the immediate preparation, response, recovery, and restoration of public services due to extreme weather conditions or other catastrophic events not anticipated in the current budget year and subject to the terms of a gubernatorial emergency declaration.
- Only the portion of costs exceeding the cost of providing services under non-emergency conditions may be granted as property tax levy cap exclusions.
- To spread the emergency-related costs over a period of years on a non-conforming maturity schedule the municipality must first seek Local Finance Board approval. The Board has historically considered applications where emergency-related costs are very substantial in comparison with the annual municipal budget and spreading the cost would result in a minimum $50 annual increase to the average residential taxpayer.
- Municipalities can adopt, regardless of budget process stage, a special emergency ordinance to facilitate a three-year funding cycle for extraordinary expenses for the repair or reconstruction of streets, roads, or bridges damaged by flooding (snow, ice, and frost are also eligible).
- If a municipality wishes to finance over three years an appropriation by special emergency ordinance, the governing body must adopt a resolution pursuant to 40A:4-55.4. Local Finance Board approval is required before the ordinance (and financing resolution if applicable) can be adopted. The application’s Executive Summary must describe the purposes for which the appropriation will be spent. A copy of the adopted ordinance and resolution, if applicable, must be filed with the Director to become effective.
Storm recovery reserves
A municipality may utilize storm recovery reserve funds for any purpose relating to storm recovery after current budget appropriations utilized for that purpose have been expended.
Any reimbursement of these expenditures shall be deposited back into the reserve.
Unexpended balances for storm recovery expenses may be lapsed into the reserve on an annual basis.
To establish a storm recovery reserve or convert a preexisting snow removal reserve to storm recovery, the governing body must adopt a resolution establishing the reserve and submit the resolution to the Division. Please note: You do not need to have a snow removal reserve to establish a storm recovery reserve.
A municipality may award a contract with public bidding, regardless of the bid threshold, in circumstances where an emergency affecting the public health, safety or welfare requires the immediate delivery of goods or the performance of services.
It is important to note that the emergency contract can only address the immediate need for the emergency, rather than encompass everything having to do with emergency.
Contracts awarded under these circumstances are exempt to Pay-to-Play.
A Business Registration Certificate (BRC) is not required at time of award, but the contracting unit cannot make a payment until a copy of the BRC is provided to the contracting agency. The contacting unit should inform the vendor or contractor of the BRC requirement upon awarding an emergency contract.
Contractors awarded public works contracts under emergency procedures must also be notified of applicable Public Works Contractor Registration and prevailing wage requirements at the time of award. The contracting unit shall confirm compliance with these requirements prior to making payment for completed work.
All State cooperative purchasing contracts available to local governments can be accessed through the Department of Treasury’s Division of Purchase and Property website. Please review the department’s FAQ page for answers to questions on how to search State contracts.
Overtime pay prohibition for elected officials & managers
As a reminder overtime pay is prohibited for elected officials and management.
Management employees, such as business administrators, municipal clerks, chief financial officers, public works superintendents, police chiefs, and other department heads, are typically classified as exempt under the federal Fair Labor Standards Act and therefore not entitled to overtime pay.
Compensated leave time in lieu of cash payments is considered a form of overtime pay unless such leave is utilized in the same pay period.
We suggest you review this Local Finance Notice with your municipal administrator and chief financial officers.
Contact: Lori Buckelew, Assistant Executive Director, firstname.lastname@example.org, 609-695-3481, x112.