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Jan 19

Division Issues Guidance on Levy Cap Referendums

Posted on January 19, 2023 at 4:27 PM by Legislative Staff

The Division of Local Government Services has issued Local Finance Notice 2023-02 providing specific instruction and direction to municipalities considering holding a public referendum on exceeding the 2% Levy Cap or the 2.5% Appropriation Cap. If your municipality is considering a public referendum, we suggest that you review this Local Finance Notice with your professional staff. 

 

The various deadlines for the referendum process are determined by the date the election is held. If the municipality has a Type II board of education, the election is held on April 25, regardless of when the school board elections are held. If the municipality holds a non-partisan election in May and has an upcoming election, then the election is held on May 9. If there is no upcoming non-partisan election, then the referendum election is held on April 25. Referendums for State fiscal year municipalities will be at the November General Election. Please note that municipalities with a population under 500 can choose to have a vote-by-mail election pursuant to N.J.S.A. 19:62-1 et seq.

 

It is important to also note that there are various deadlines for municipalities considering a levy cap referendum. The first deadline is the publication of a display advertisement announcing that a referendum may be held. The deadlines are February 28 for April levy elections and March 14 for May levy elections. 

 

Throughout the process the governing body must take the following action:

 

  • Pass a resolution by simple majority authorizing a “Notice of Availability of Mail-In Ballots.” Please note that due to time constraints, the Division of Local Government Services suggests that if the governing body is considering a public question but has not yet made a final decision, the notice should be published. Please note that the publication of the notice does not bind the municipality to holding an election, and the amount of the referendum does not need to be included in the notice. 
  • Introduce the municipal budget no later than March 31 for the April vote and April 19 for the May vote. The budget must reflect tax levies and provisions of a planned referendum.
  • Publication of the introduced budget must be no later than April 13 for the April vote and April 27 for the May vote.
  • Pass a resolution by full majority authorizing the referendum question no later than the close of business on March 31 for the April election and April 19 for the May election. All referendum questions and explanatory statements must be consistent with the model ordinance included in the Local Finance Notice. The county clerk must receive a copy of this resolution by close of business on March 31 for the April vote and April 19 for the May vote. 
  • Pass a resolution and publish a legal notice if the municipality has published the Notice of Availability of Mail-In Ballots but chooses not to have the referendum. This resolution must be given to the county clerk no later than the close of business on March 31 for the April election and April 19 for the May election.
  • Submit a request for a narrative explanatory statement to the Director of the Division of Local Government Services by close of business on March 17 for the April election and April 6 for the May election. Please note that you can contact the Division either in writing or by calling the Division at 609-913-4417 to request a conference call. Any written request must include the proposed language and an explanation of circumstances of why identifying changes in appropriations or revenues is not sufficient. 
  • Adopt the final budget by May 19 for April election and June 2 for May election. 

 

The referendum must be approved by 50% plus one vote cast to pass; otherwise, the question fails. If the referendum fails, the governing body has the flexibility to amend the budget to meet current needs, provided that the governing body initially acted in good faith. It is recommended that the municipality should plan in advance what actions it will take if the referendum is defeated and be prepared to take immediate action to adopt a budget within the 2% levy cap.

 

The Local Finance Notice also highlights the following:

 

  • Referendum costs are excluded from the cap if the question passes and were built into the amount proposed in the referendum. If the referendum fails, election costs must be absorbed in the budget within the levy cap. 
  • Referendum question must include the amount of increase above the cap and a statement explaining the circumstances that identify the changes in appropriations or revenues that warrant the asking of the public question. The narrative cannot include discussions of actions, other than in general terms, that will be taken if the referendum fails. 
  • Municipal resources (newsletters, mailings, websites) may be used to inform the public about the referendum, but those resources must be strictly informational.
  • Nothing prohibits individual public officials from offering their personal opinions through other means (e.g., personal contacts, press interviews, letters to the editor, etc.)
  • If a referendum is necessary on both caps, a single ballot question will be used to meet the statutory requirements. 

 

If your municipality is considering holding a referendum, we suggest you review the Local Finance Notice with your administrator, chief financial officer, and municipal clerk. 

 

Contact Lori Buckelew, Deputy Executive Director, lbuckelew@njlm.org, 609-695-3481, x112.