Requires public referendum prior to issuance of general obligation bonds by local units.

A5268

ASSEMBLY, No. 5268

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED JUNE 15, 2026

Sponsored by:

Assemblyman� JOHN DIMAIO

District 23 (Hunterdon, Somerset and Warren)

SYNOPSIS

���� Requires public referendum prior to issuance of
general obligation bonds by local units.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act

concerning the issuance of general obligation
bonds by local governments, amending various parts of the statutory law
, and
supplementing P.L.1960, c.169 (C.40A:1-2 et al.)
.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.��� N.J.S.40A:2-12 is
amended to read as follows:

���� 40A:2-12.� A bond ordinance
shall contain in substance the following:

���� a.���� (1)� an authorization
for the issuance of obligations, stating in brief and general terms sufficient
for reasonable identification the purpose or purposes for which the obligations
are to be issued, a statement of the estimated maximum amount of bonds or notes
to be issued, and the estimated cost of such purpose or purposes, but related
improvements or properties may be treated as one improvement or property; or

���� (2)�� an authorization for the
assumption by the local unit of the obligations of the authority sought to be
dissolved pursuant to section 20 of P.L.1983, c.313 (C.40A:5A-20) for which the
local unit is not a guarantor;

���� b.��� a determination of the
period of usefulness of the purpose within the limitations of this chapter or,
if issued for several purposes, a determination of the average period of
usefulness, taking into consideration the respective amounts of obligations authorized
for the said several purposes;

���� c.���� a determination that
(1) the supplemental debt statement has been filed in the office of the clerk,
(2) such statement shows that the gross debt as defined in this chapter is
increased by authorization of such obligations by $����� or is not increased, and
(3) the obligations authorized by the bond ordinance will be within debt
limitations prescribed by this chapter, or the issuance thereof is permitted by
an exception to said limitations naming the particular section, paragraph or
law providing such exception;

���� d.��� a statement of the
aggregate amount for items of expense permitted under 40A:2-20
;

����
e.���� a statement of the
ways and means, exclusive of loans, by which the local unit shall pay the
interest on the bonds as it falls due, and pay and discharge the principal
amount of the bonds
.

(cf: P.L.2001, c.29, s.2)

���� 2.��� N.J.S.40A:2-17 is
amended to read as follows:

���� 40A:2-17.� a.� Introduction.

���� A bond ordinance shall be
introduced in writing at a meeting of the governing body and shall be passed
upon first reading, which may be by title.

���� b.��� Publication, hearing and
adoption.

���� The bond ordinance, or a
summary thereof, in a form prescribed by the Local Finance Board, shall be
published after first reading, together with notice of the introduction thereof
and of the date, which shall be at least 10 days after introduction and first
reading, and the time and place of further consideration for final passage,
which may be at an adjournment of such meeting or another meeting.� If a
summary is published, the summary shall contain a clear and concise statement
prepared by the clerk of the governing body setting forth the purpose of the
ordinance, the amount of indebtedness being authorized and the time and place
when and where a copy of the ordinance can be obtained, without cost, by any
member of the general public residing in the local unit.

���� Such publication shall be at
least one week prior to the date for further consideration.� At the time and
place so advertised, or at any time and place to which such meeting or further
consideration shall from time to time be adjourned, such bond ordinance may be
read by its title, if,

���� (1)�� at least one week prior
to such date or further consideration, there shall have been posted, on the
bulletin board or other place upon which public notices are customarily posted
in the principal municipal building of the municipality,

���� (a)�� a copy of such bond
ordinance or summary, and

���� (b)�� a notice that copies of
such bond ordinance will be made available during such week and up to and
including the date of such meeting or further consideration to the members of
the general public of the municipality who shall request such copies, naming the
place at which such copies will be so made available, and

���� (2)�� such copies of said bond
ordinance shall have been made available accordingly, but otherwise such bond
ordinance shall be read in full.� All persons interested shall then be given an
opportunity to be heard.

���� After the duplicate of the
supplemental debt statement has been filed in the office of the director, and
after such hearing, the governing body may proceed to amend the bond ordinance
and thereupon finally adopt or reject it, with or without amendments.

���� If any amendment is adopted
substantially altering matters required by this chapter to be contained in the
bond ordinance, such amended bond ordinance shall not be finally adopted until
at least one week thereafter and until the bond ordinance or a summary of it
shall have been published once at least two days prior to the date for further
consideration, together with notice of the date, time and place at which it
will be further considered for final adoption.� At the time and place so
advertised, or at any time and place to which such meeting or further
consideration shall from time to time be adjourned, such amended bond ordinance
may be read by its title, if,

���� (1)�� at least one week prior
to such date or further consideration, there shall have been posted, on the
bulletin board or other place upon which public notices are customarily posted
in the principal municipal building of the municipality,

���� (a)�� a copy of such bond
ordinance or summary, and

���� (b)�� a notice that copies of
such bond ordinance will be made available during such week and up to and
including the date of such meeting or further consideration to the members of
the general public of the municipality who shall request such copies, naming the
place at which such copies will be so made available, and

���� (2)�� such copies of said bond
ordinance shall have been made available accordingly, but otherwise such bond
ordinance shall be read in full.� All persons interested shall again be given
an opportunity to be heard.� After such� hearing, the governing body may proceed
to reject, finally adopt or further amend such bond ordinance.

���� A bond ordinance shall be
finally adopted by the recorded affirmative votes of at least 2/3 of the full
membership of the governing body.� In a local unit in which the approval of any
officer is required to make an ordinance or resolution effective, such bond
ordinance shall be so approved, or passed over veto before it shall be
published after final adoption.

���� c.���� Final publication with
statement.

���� Every bond ordinance shall be
published either in full or in summary form after final adoption, together with
a statement in substantially the following form:

����������������������������������������������� STATEMENT

���� The bond ordinance published
herewith has been finally adopted and the 20-day period of limitation within
which a suit, action or proceeding questioning the validity of such ordinance
can be commenced, as provided in the Local Bond Law has begun to run from the
date of the first publication of this statement.

����������������������������������������������� -------------------------------------------

����������������������������������������������� Clerk

����
d.��� Referendum before
taking effect.

����
The bond ordinance shall
not take effect until it has been submitted to the voters of the local unit, at
the general election occurring at least 70 days next following its final adoption
by the governing body.� Approval shall be by a majority of the legally
qualified voters of the local unit voting thereon.

(cf:� P.L.2000, c.126, s.14)

���� 3.��� (New section)� The bond
referendum question submitted to the voters pursuant to the requirements of
N.J.S.40A:2-17 shall be submitted in the following form:

���� �Shall the bond ordinance,
approved by the governing body, which authorizes the governing body to issue
bonds in the amount of $������� to provide moneys for (insert purpose of
bonds), and providing the ways and means to pay the interest on the debt and
also to pay and discharge the principal of the bonds, which ways and means
shall be (insert funding sources to be used to pay principal and interest on
bonds), be approved?�

���� 4.��� N.J.S.40A:2-18 is
amended to read as follows:

���� 40A:2-18.� A bond ordinance
shall
[
take
effect 20 days after the first publication of the ordinance or of a summary
thereof after final adoption.� A bond ordinance which authorizes obligations to
fund, refund, renew, extend or retire obligations issued or authorized pursuant
to this chapter, or notes or bonds issued or authorized pursuant to any act of
which this chapter is a revision shall not be subject to referendum
]

be
submitted to the voters of the local unit at the general election next
following by at least 70 days the final adoption of the ordinance by the
governing body.� A bond ordinance shall take effect upon its approval by a
majority of the legally qualified voters of the local unit voting thereon
.

(cf: P.L.2000, c.126, s.15)

���� 5.��� N.J.S.40A:2-49 is
amended to read as follows:

���� 40A:2-49.� After 20 days
after publication after final passage of a bond ordinance,
but subject to
the referendum requirement of subsection d. of N.J.S.40A:2-17, and
N.J.S.40A:2-18,
the following shall be conclusively presumed:

���� a.���� the accuracy,
correctness and sufficiency of any annual or supplemental� debt statement filed
in connection therewith;

���� b.��� any recitals or
statements of fact contained in such ordinance or preamble or recital thereof;

���� c.���� determinations in said
ordinance as to purposes for which said obligations are authorized, the period
or average period of usefulness, the maturities of any obligations, and the
validity of the purpose or purposes for which authorized;

���� d.��� the due and regular
introduction, publication and final passage and adoption of such ordinance;

���� e.���� the compliance with the
provisions of this chapter and every other law of such ordinance and all
matters in connection therewith, and the issuance of obligations authorized
thereby or pursuant thereto by the local unit.

���� The local unit and all other
persons interested shall forever be stopped from denying that such ordinance or
its final adoption or issuance of obligations thereunder do not comply with the
provisions of this and every other law, or from questioning in any manner the
validity of such ordinance or any obligations issued thereunder in any action
or proceeding commenced after 20 days shall have elapsed from publication of
such ordinance after final passage.

(cf: N.J.S.40A:2-49)

���� 6.��� N.J.S.40A:2-51 is
amended to read as follows:

���� 40A:2-51.� Any local unit may
incur indebtedness, borrow money, authorize and issue� refunding bonds,
notwithstanding any provision or limitation contained in this chapter or in any
other law, and in any amount determined to be necessary by the governing body
of the local unit and approved by the Local Finance Board, except as provided
in subsection c. of this section, to effect the refunding for the purpose of:

���� a.���� Paying, funding or
refunding outstanding bonds of the local unit, including emergency
appropriations, temporary emergency appropriations, advance funding of pension
obligations as part of an early retirement program offered by the State, and
amounts owing to others for taxes levied in the local unit, or any renewals or
extensions thereof, or any bonds issued to fund or refund the same and whether
or not prior to the maturity or earliest redemption date of the bonds to be
refunded.

���� b.��� Paying the cost of the
issuance of such refunding bonds, including printing, advertising, accounting
and financial and legal expenses.

���� c.���� Issuance of refunding
bonds to realize debt service savings on outstanding obligations without the
approval of the local finance board when authorized by conditions set forth in
rules and regulations of the local finance board and upon a resolution adopted
by 2/3 vote of the full membership of the governing body.

���� d.��� The sale and award of
bonds by a finance officer who has been delegated that responsibility by
resolution of the governing body in accordance with the advertised terms of
public sale.� The finance officer making any such sale shall report in writing
to the governing body at the next meeting thereof as to the principal amount,
interest rate and maturities of the bonds sold, along with the price obtained
and the name of the purchaser.

����
e.���� Bonds issued by a
local unit pursuant to this section shall not be subject to the referendum
requirements of subsection d. of N.J.S.40A:2-17 and N.J.S.40A:2-18.

(cf:� P.L.2003, c.15, s.9)

���� 7.��� N.J.S.40A:2-52 is
amended to read as follows:

���� 40A:2-52.� Refunding bonds
shall be authorized by a refunding bond ordinance which shall be adopted in the
manner prescribed for adoption of a bond ordinance, except that no down payment

or voter referendum
shall be required.� Bonds to be paid, funded or
refunded with respect to which a refunding bond ordinance has been adopted
pursuant to the provisions of this chapter and not otherwise deductible shall
be deducted from the gross debt of the local unit.� To the extent such
refunding bonds are authorized for purposes other than the refunding of
outstanding bonds, such refunding bonds shall be deductible from gross debt.

(cf: P.L.2003, c.15, s.10)

���� 8.��� N.J.S.40A:4-51 is
amended to read as follows:

���� 40A:4-51. Any local unit may
borrow money and issue its negotiable notes to meet an emergency
appropriation.� Each such note shall be authorized by resolution of the
governing body, shall be designated an� "emergency note" , and may be
renewed from time to time.� All such notes, and any renewals thereof, shall
mature not later than the last day of the fiscal year next succeeding the
fiscal year in which such notes were issued and the emergency appropriation
authorized.� The provisions of this chapter relating to tax anticipation notes
shall apply to emergency notes except for limitations as to maturity and
renewals.

����
Bonds issued by a local
unit pursuant to this section shall not be subject to the referendum
requirements of subsection d. of N.J.S.40A:2-17 and N.J.S.40A:2-18.

(cf: N.J.S.40A:4-51)

���� 9.��� Section 5 of P.L.1961,
c.22 (C.40A:4-55.5) is amended to read as follows:

���� 5.��� No such ordinance or
resolution shall be valid unless it is approved by the� Local
[
Government
]

Finance

Board and a copy thereof shall be filed forthwith after it is adopted with the
Director of the Division of Local Government
Services
in the Department
of
[
the
Treasury
]

Community Affairs
for that purpose.�
An ordinance or resolution so
approved by the director shall not be subject to the referendum requirements of
subsection d. of N.J.S.40A:2-17 and N.J.S.40A:2-18.

(cf: P.L.1961, c.22, s.5)

���� 10.� Section 1 of P.L.1965,
c.87 (C.40A:4-55.8) is amended to read as follows:

���� 1.��� Upon the receipt of a
certification from the board of school estimate of the board of trustees of a
county college, a county may by a 2/3 vote of its� entire governing body, adopt
a resolution authorizing a special emergency appropriation to provide for funds
expected to be received as State or Federal aid for the establishment of a
county college.� Such resolution shall:

���� (a)�� State the amount needed
to provide for said State or Federal share based� upon the certification of the
board of school estimate.

���� (b)�� Set forth the amount
appropriated, which shall not be in excess of the amount requested by the board
of trustees.

���� (c)�� Provide for the
borrowing of any amount required in anticipation of the� receipt of State or
Federal aid which may subsequently become available, said� borrowing to be by�
"special county college emergency notes."�
Emergency notes issued
pursuant to this section shall not be subject to the referendum requirements of
subsection d. of N.J.S.40A:2-17 and N.J.S.40A:2-18.

(cf: P.L.1965, c.87, s.1)

���� 11.� Section 4 of P.L.1968,
c.194 (C.40A:4-55.16) is amended to read as follows:

���� 4.��� When any such
appropriation is to be financed by borrowing money, the governing body of the
local unit shall, by a�� 2/3�� vote of the full membership thereof, adopt a
resolution:

���� a.���� Setting forth the
amount appropriated, and

���� b.��� Making provision for the
borrowing of money by the issuance of "special� emergency notes"�
which may be renewed from time to time, but at least 1/3 of all such notes, and
the renewals thereof, shall mature and be paid in each� succeeding year so that
all notes and renewals shall have matured and have been� paid not later than
the last day of the third year following the date of the special emergency
resolution.

����
The issuance of �special emergency
notes� pursuant to this section shall not be subject to the referendum requirements
of subsection d. of N.J.S.40A:2-17 and N.J.S.40A:2-18.

(cf: P.L.1968, c.194, s.4)

���� 12.� Section 2 of P.L.1982,
c.66 (C.40A:4-55.19) is amended to read as follows:

���� 2.��� a.� The governing body
of a distressed municipality may by resolution approved by not less than
two-thirds vote of its full membership provide for the payment of any judgment
against it resulting from an order of the court by providing an appropriation therefor,
and financing such from surplus funds or by borrowing through issuance of notes
or other obligations in the name of the municipality.

���� b.��� Any resolution adopted
under the provisions of this act shall provide that in the case of any notes
issued to finance appropriations, at least one-fifth of all such notes, and any
renewals thereof, shall mature and be paid� each year, so that all notes and
renewals shall have matured and have been paid not later than the last day of
the fifth year following the date of the resolution.

����
The issuance of notes or
other obligations issued pursuant to this section shall not be subject to the
referendum requirements of subsection d. of N.J.S.40A:2-17 and N.J.S.40A:2-18.

(cf: P.L.1982, c.66, s.2)

���� 13.� This act shall take
effect immediately.

STATEMENT

���� This bill would amend current
statutory provisions of the �Local Bond Law,� N.J.S.40A:2-1 et seq., and the
�Local Budget Law,� N.J.S.40A:4-1 et seq., to require that prior to the
issuance of general obligation bonds by a county or municipality, the bond ordinance
authorizing the obligation must be submitted to the voters of the county or
municipality, as appropriate, at the general election next following by at
least 70 days the final adoption of the ordinance by the local governing body.�
The bond ordinance must contain a statement of the ways and means, exclusive of
loans, by which the local unit shall pay the principal and interest on the
bonds, and would take effect upon its approval by a majority of the legally
qualified voters voting on the ordinance.� The provisions of the bill would not
apply to the issuance of �special emergency notes,� refunding bonds, bonds
issued by a distressed municipality to pay a judgment resulting from a court
order, or borrowing by a county in anticipation of State or federal aid for the
establishment of a county college.� The bill also contains the language for the
bond referendum question to be submitted to the voters.

���� Under current law, local
voters do not have the right to vote on the issuance of general obligation
bonds, but are required to repay those bonds through their property taxes.� The
provisions of this bill would allow the voters of a municipality or county to
vote to approve, or disapprove, the issuance of bonds, and thereby exercise
some control over their local property taxes.�