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S3500
SENATE, No. 3500
STATE OF NEW JERSEY
222nd LEGISLATURE
�
INTRODUCED FEBRUARY 12, 2026
Sponsored by:
Senator� JAMES BEACH
District 6 (Burlington and Camden)
SYNOPSIS
���� Reduces allowed diversion of funds from stormwater,
water, and sewer purposes to municipal and county budgets; requires
municipalities and counties to notify Division of Local Government Services of
diversions.
CURRENT VERSION OF TEXT
���� As introduced.
��
An Act
concerning the diversion of funds from stormwater,
water, and sewer purposes, and amending P.L.1983, c.111 and P.L.2004, c.87.
����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:
���� 1.��� Section 5 of P.L.1983,
c.111 (C.40A:4-35.1) is amended to read as follows:
���� 5.���
a.
� To the extent
there is available surplus revenue collected by a municipality pursuant to
chapter 62 of Title 40 of the Revised Statutes for supplying a utility service
which is regulated by the Board of Public Utilities pursuant to subsection d.
of N.J.S.40A:31-23, or to the extent there is available surplus revenue
collected by a county or municipality from a stormwater utility established
pursuant to P.L.2019, c.42 (C.40A:26B-1 et al.), an amount not to exceed
[
five
]
three
percent of the annual costs of operation of the utility may be transferred
annually from the accounts of the municipal utility or county utility, as
appropriate, and included in the local budget pursuant to N.J.S.40A:4-35.�
����
b.��� A municipality or
county that transfers surplus revenue pursuant to subsection a. of this section
shall provide written notice of the transfer, including the amount transferred,
to the Division of Local Government Services in the Department of Community Affairs.
(cf: P.L.2019, c.42, s.20)
���� 2.��� Section 1 of P.L.2004,
c.87 (C.40A:5A-12.1) is amended to read as follows:
���� 1.���
[
To
]
a.� Except
as provided in subsection b of this section, to
the extent there is
available an undesignated fund balance or unreserved retained earnings held by
an authority that is subject to the provisions of the �Local Authorities Fiscal
Control Law,� P.L.1983, c.313 (C.40A:5A-1 et seq.), excluding a fire district,
a regional authority or a housing authority, an amount in that undesignated
fund balance or unreserved retained earnings, not to exceed
[
5 %
]
five
percent
of the annual costs of operation of the authority may be
appropriated for use in the local budget of the municipality or county that
created the authority unless otherwise restricted by bond covenants.
����
b.��� Undesignated funds or
unreserved retained earnings held by a sewerage authority established pursuant
to P.L.1946, c.138, (C40:14A-1 et seq.), an authority operating a stormwater
utility pursuant to P.L.2019, c.42 (C.40A:26B-1 et al.), or an authority
operating a water system or sewerage system pursuant to P.L.1957, c.183 (C.40:14B-1
et seq.) may be appropriated for use by the municipality or county that created
the authority in an amount not to exceed three percent of the annual costs of
operation of the authority.
����
c.���� A municipality or
county that appropriates undesignated funds or unreserved retained earnings
pursuant to subsection b. of this section shall provide written notice of the
appropriation, including the amount appropriated, to the Division
of Local Government Services in the Department of
Community Affairs.
(cf: P.L.2004,
c.87, s.1)
���� 3.��� This act shall take
effect immediately.
STATEMENT
���� This bill would reduce the
amount of funds that counties and municipalities may divert from stormwater,
water, and sewer utilities and authorities to county and municipal budgets.
���� Under current law,
municipalities may transfer available surplus revenue that was collected to
fund a utility to other expenditures made by the municipality, in an amount up
to five percent of the utility's annual operating costs.� This bill would
reduce the allowed transfer for stormwater, water, and sewer utilities to three
percent of the utility's annual operating costs.� Similarly, current law allows
counties and municipalities to appropriate undesignated funds and unreserved
retained earnings held by an authority that was created by the county or
municipality, in an amount up to five percent of the authority's annual
operating costs.� This bill would reduce the allowed appropriation for water
and sewer purposes to three percent of the authority's annual operating costs.
���� This bill would also require
counties and municipalities to notify the Division of Local Government Services
in the Department of Community Affairs whenever the county or municipality: (1)
transfers funds from a stormwater, water, or sewer utility, or (2) appropriates
funds from a water or sewer authority.