S2564

An Act authorizing local units to finance deficits in operation and emergency appropriations attributable to COVID-19 and supplementing chapter 4 of Title 40A of the New Jersey Statutes.

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

1. a. (1) (a) Notwithstanding any provision of law to the contrary, if, after adoption of the annual budget and prior to filing an annual financial statement pursuant to N.J.S.40A:5-12 for a fiscal year during the pendency of a state of emergency or public health emergency declared by the Governor because of the COVID-19 pandemic, the chief financial officer of a local unit anticipates a deficit in operations, the chief financial officer shall deliver to the governing body a certification of the amount of the anticipated deficit in operations.

(b) Notwithstanding any provision of law to the contrary, if an annual financial statement, filed pursuant to N.J.S.40A:5-12 for a fiscal year during the pendency of a state of emergency or public health emergency declared by the Governor because of the COVID-19 pandemic, indicates a deficit in operations for that fiscal year in an amount different than the amount of the anticipated deficit in operations certified pursuant to subparagraph (a) of this paragraph, the chief financial officer shall deliver to the governing body a certification of the adjusted amount of the deficit in operations.

(2) Notwithstanding any provision of law to the contrary, if an annual financial statement, filed pursuant to N.J.S.40A:5-12 for a fiscal year during the pendency of a state of emergency or public health emergency declared by the Governor because of the COVID-19 pandemic, indicates a deficit in operations for that fiscal year, the chief financial officer shall deliver to the governing body a certification of the amount of the deficit in operations.

b. After receipt of a certification pursuant to subsection a. of this section, the governing body of a local unit may, by 2/3 vote of the full authorized membership of the governing body, adopt an ordinance, in the case of a municipality, or resolution, in the case of a county, authorizing funding of a COVID-19 anticipated deficit in operations or deficit in operations, in whole or part.

c. The governing body of a local unit may, by 2/3 vote of the full authorized membership of the governing body, adopt an ordinance, in the case of a municipality, or resolution, in the case of a county, authorizing COVID-19 emergency appropriations for immediate preparation, response, recovery, and restoration of public services during the pendency of a state of emergency or public health emergency declared by the Governor because of the COVID-19 pandemic.

d. After the adoption of an ordinance or resolution, as appropriate, authorizing funding of a COVID-19 deficit in operations, COVID-19 emergency appropriations, or both, the local unit may, by 2/3 vote of the full authorized membership of the governing body, adopt a resolution setting forth:

(1) the total amount to fund a COVID-19 deficit in operations, COVID-19 emergency appropriations, or both.

(2) provision for the borrowing of money and the issuance of COVID-19 emergency notes, which may be renewed from time to time, but at least 1/7 of all such notes, and the renewals thereof, shall mature and be paid in each year, so that all notes and renewals shall have matured and have been paid not later than the last day of the seventh year following the later date of the deficit in operations determination or emergency resolution. The provisions of chapter 4 of Title 40A of the New Jersey Statutes relating to tax anticipation notes shall apply to COVID-19 emergency notes.

e. A local unit may finance a COVID-19 deficit in operations, COVID-19 emergency appropriations, or both, from surplus funds available, or borrow money in the manner prescribed above. If any COVID-19 deficit in operations or COVID-19 emergency appropriation is financed from surplus funds available, at least 1/7 of the amount thereof shall be included in each annual budget until the deficit in operations, emergency appropriations, or both, has been fully provided for.

f. Notwithstanding the provisions of N.J.S.40A:4-47 to the contrary, at least 1/7 of the total amount of a COVID-19 deficit in operations, COVID-19 emergency appropriations, or both, shall be provided in full by the governing body as a deferred charge in each budget over the next seven succeeding fiscal years, except to the extent, if any, that provision for paying, funding or refunding the COVID-19 deficit in operations, COVID-19 emergency appropriations, or both, shall previously have been made by authorization of bonds pursuant to N.J.S.40A:2-3.

g. A local unit shall not borrow moneys under this section that may be considered duplicative of financial assistance provided to the local unit from the federal government, the State, or other sources, to address the COVID-19 deficit in operations or COVID-19 emergency appropriations.

h. (1) Notwithstanding the provisions of this section or of any other provision of law to the contrary, after the filing of the annual financial statement for the fiscal year pursuant to N.J.S.40A:5-12, the governing body of a local unit may, by 2/3 vote of the full authorized membership of the governing body, adopt a COVID-19 refunding bond ordinance to fund the COVID-19 deficit in operations, the COVID-19 emergency appropriations, or both, in accordance with the provisions governing refunding bonds under the “Local Bond Law,” N.J.S.40A:2-1 et seq.

(2) A local unit may, in anticipation of the issuance of COVID-19 refunding bonds, borrow money and issue negotiable notes from time to time, at public or private sale and may, from time to time, renew these notes in accordance with the provisions of section 11 of P.L.2003, c.15 (C.40A:2-8.1), however, notwithstanding that provision of law, a note issued in anticipation of the issuance of COVID-19 refunding bonds may be issued for a period not exceeding two years.

i. Amounts borrowed pursuant to this section shall be applied only to purposes provided for in the budget of the local unit, or for which taxes are levied or to be levied, and shall not be applied to any other purpose.

j. The Division of Local Government Services shall issue guidelines necessary or appropriate to implement the provisions of this section.

k. As used in this section:

“COVID-19” means the coronavirus disease 2019, as announced by the World Health Organization on February 11, 2020.

“Deficit in operations” means a deficit balance reported on a local unit’s “Results of Operation” schedule of the annual financial statement and shall be treated as a cash deficit pursuant to N.J.S.40A:4-42, except as otherwise provided in this section, and as an emergency for refunding bond purposes under N.J.S.40A:2-51.

"Full authorized membership of the governing body" means the number of members of the body when all the seats are filled.

“Public health emergency” means an emergency declared by the Governor pursuant to the “Emergency Health Powers Act,” P.L.2005, c.222 (C.26:13-1 et seq.).

“State of emergency” means an emergency declared by the Governor, pursuant to P.L.1942, c.251 (C.App.A.9-33 et seq.).

2. This act shall take effect immediately.

STATEMENT

This bill would authorize local units to borrow money to address deficits and appropriations related to the COVID-19 pandemic and to either spread out repayment of amounts borrowed over seven years or over longer periods of time.

Under the bill, for a fiscal year during a state of emergency or public health emergency declared by the Governor because of the COVID-19 pandemic, a chief financial officer of a local unit would deliver to the governing body a certification of the amount of an anticipated deficit in operations, an actual deficit in operations, or both. The bill defines the term “deficit in operations” as a deficit balance reported on a local unit’s “Results of Operation” schedule of its annual financial statement, to be treated as a “cash deficit” under N.J.S.40A:4-42, except as otherwise provided in the bill, and as an emergency for refunding bond purposes under N.J.S.40A:2-51. After receipt of a chief financial officer’s certification, the governing body of a local unit may, by 2/3 vote of its full authorized membership, authorize funding of a COVID-19 anticipated deficit in operations or deficit in operations, in whole or part.

The bill also allows the governing body of a local unit, by 2/3 vote of its full authorized membership, to authorize COVID-19 emergency appropriations for immediate preparation, response, recovery, and restoration of public services during the pendency of a state of emergency or public health emergency declared by the Governor because of the COVID-19 pandemic.

After the adoption of an ordinance or resolution authorizing funding of a COVID-19 deficit in operations or COVID-19 emergency appropriations, or both, a local unit may, by 2/3 vote of its full authorized membership of the governing body, adopt a resolution setting forth:

· the total amount to fund a COVID-19 deficit in operations, COVID-19 emergency appropriations, or both; and

· provision for the borrowing of money and the issuance of COVID-19 emergency notes, which may be renewed from time to time. Under the bill, at least 1/7 of all such notes, and the renewals thereof, must mature and be paid in each year, so that all notes and renewals will have matured and have been paid by the last day of the seventh year following the later date of the deficit in operations determination or emergency resolution.

The bill allows a local unit to finance a COVID-19 deficit in operations and COVID-19 emergency appropriations from surplus funds available or to borrow money. If any deficit in operations or emergency appropriation is financed from surplus funds available, at least 1/7 of the amount of the deficit in operations or emergency appropriations must be included in each annual budget until the deficit in operations or emergency appropriation has been fully provided for.

The bill would prohibit a local unit from borrowing moneys that may be considered duplicative of financial assistance provided to the local unit from the federal government, the State, or other sources to address the COVID-19 deficit in operations or COVID-19 emergency appropriations.

As an alternative to the seven-year funding mechanism described above, the bill allows the governing body of a local unit that would like to spread out repayment of amounts borrowed beyond seven years to, by 2/3 vote of its full authorized membership, adopt a COVID-19 refunding bond ordinance to fund the COVID-19 deficit in operations, the COVID-19 emergency appropriations, or both, in accordance with the provisions governing refunding bonds under the “Local Bond Law,” N.J.S.40A:2-1 et seq. Under this alternative, the bill allows a local unit, in anticipation of the issuance of COVID-19 refunding bonds, to borrow money and issue and renew negotiable notes in accordance with the provisions of section 11 of P.L.2003, c.15 (C.40A:2-8.1), however, notwithstanding that provision of law, a note issued in anticipation of the issuance of COVID-19 refunding bonds may be issued for a period not exceeding two years.

The bill specifies that amounts borrowed under the bill may be applied only to purposes provided for in the budget of the local unit, or for which taxes are levied or to be levied, and shall not be applied to any other purpose.

The bill authorizes the Division of Local Government Services to issue guidelines necessary or appropriate to implement the bill’s provisions.