A3744

An Act concerning the purchase of motor fuel and fuel credit card services by local units pursuant to State contract, and the payment therefore, and amending N.J.S.40A:5-16.

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

1. N.J.S.40A:5-16 is amended to read as follows:

40A:5-16. The governing body of any local unit shall not pay out any of its moneys

a. unless the person claiming or receiving the same shall first present a detailed bill of items or demand, specifying particularly how the bill or demand is made up, with the certification of the party claiming payment that it is correct. The governing body may, by resolution, require an affidavit in lieu of the said certification, and the clerk or disbursing officer of the local unit may take such affidavit without cost, and

b. unless it carries a written or electronic certification of some officer or duly designated employee of the local unit having knowledge of the facts that the goods have been received by, or the services rendered to, the local unit.

c. Notwithstanding the provisions of subsection a. of this section, upon adoption by the Local Finance Board of rules adopted pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) that provide for procedures to be followed by local units and under those circumstances deemed appropriate by the board, a local unit shall be permitted to pay out its moneys without requiring a certification of the party claiming payment as otherwise required by subsection a. of this section. Such circumstances may include, but shall not be limited to:

(1) when payment to vendors is required in advance of the delivery of certain materials or services that cannot be obtained from any other source at comparable prices; or

(2) when ordering, billing and payment transactions for goods or services are made through a computerized electronic transaction; or

(3) when claim or demand is less than a threshold set by the board and the certification is not readily obtainable by the contracting unit; but such exceptions shall not include reimbursement of employee expenses or payment for personal services.

d. (1) Nothing in this section shall be interpreted as prohibiting a local unit from:

(a) purchasing gasoline and related items and services and fuel credit card services pursuant to section 12 of P.L.1971, c.198 (C.40A:11-12), under a contract or cooperative purchasing agreement entered into on behalf of the State; and

(b) paying out its moneys for those purposes.

(2) The Local Finance Board shall adopt rules pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) that it deems appropriate to effectuate the provisions of this subsection.

(cf: P.L.2000, c.126, s.21)

2. This act shall take effect immediately.

STATEMENT

This bill would clarify that local units may purchase gasoline and related items and services and obtain fuel credit card services under a State contract or cooperative purchasing agreement and make payments for those goods and services. Although N.J.S.A. 40A:11-12 clearly authorizes local units to “piggy-back” on State contracts, N.J.S.A. 40A:5-16 has been interpreted as precluding local units from using credit cards because that section requires the person claiming payment to present a detailed bill and a certification of the party claiming payment that the bill is correct. Credit card transactions generally do not comply with these requirements.

N.J.S.A. 40A:5-16 authorizes the Local Finance Board to adopt rules to permit local units to pay out monies without requiring a certification of the party claiming payment. Pursuant to this authority, the Local Finance Board has adopted rules permitting local units to use procurement cards and electronic fund transfers under specific circumstances. This bill would resolve the conflicting provisions of law by amending N.J.S.A. 40A:5-16 to provide that local units may purchase gasoline and related items and services and obtain fuel credit card service under a State contract and make payments for those goods and services. The bill directs the Local Finance Board to adopt rules pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) that it deems appropriate to effectuate these provisions.

This bill will enable municipalities and other local units subject to the "Local Fiscal Affairs Law," N.J.S.40A:5-1 et seq., to obtain fuel and common motor vehicle-related goods and services at local service stations. Many municipalities purchase motor fuel in bulk and then fuel municipal vehicles at municipally-run fueling stations. The sponsor believes that this practice may not be the best alternative for all municipalities for a variety of reasons.

The sponsor believes that the actual and potential costs of operating a municipally-run fueling station often outweigh the benefits of purchasing fuel in bulk. Careful consideration of the costs of capital construction, operation, maintenance, and insurance may cause many municipalities to opt to purchase fuel at local service stations. The cost of procuring insurance to cover risks of environmental contamination at filling stations can be particularly onerous. However, without adequate insurance coverage, the cost of environmental cleanup can be staggering.

The sponsor believes that careful consideration of the overall costs of establishing, maintaining, and insuring a municipal fueling station may lead many municipalities to choose to purchase gasoline at local filling stations.