The original item was published from 2/12/2025 2:47:31 PM to 2/13/2026 12:00:03 AM.

News Flash

Local Administration & Operations

Posted on: February 12, 2025

[ARCHIVED] DLGS Announces Notice of Intent to Apply for Transitional Aid

On February 7, the Division of Local Government Services (DLGS) released Local Finance Notice 2025-03, providing guidance on the Notice of Intent to apply for the Transitional Aid to Localities program. Municipalities that intend to apply for CY 2025/SFY2026 Transitional Aid must notify the Department of Local Government Services no later than February 21 for CY2025 applicants and August 25 for SFY2026 applicants. The Notice of Intent to Apply must be sent to DLGS via email to dlgs@dca.nj.gov.

Transitional Aid to Localities is discretionary aid available for municipalities that have severe structural difficulties and anticipate difficulties making payments toward critical obligations including, but not limited to, debt service, contractual obligations, and payroll.

Any mayor and chief administrative officer for each municipality that is currently not receiving Transitional Aid and wishes to apply for aid must attend an orientation meeting to discuss the application process and criteria for aid. The orientation meeting will be an agreed upon time with the applicant and DLGS. Applicants currently receiving Transitional Aid will not need to attend an orientation meeting. The current application deadline is March 7 for CY2025 applicants and September 29 for SFY2026 applicants.

New Applicants

For a municipality to apply it must meet the submit to the following criteria:

Submitting to State oversight on the date of application;
Submitting to broad State oversight of hiring, procurement, and other matters;
Performing reasonable revaluations or reassessments of property as required by law; and
Submitting to such additional fiscal control measures as may be directed by the DLGS.

All applicants must meet the following minimum criteria to be considered for the award of transitional aid:

The municipality received Transitional Aid during CY2024/SFY2025. For municipalities seeking Transitional Aid for the first time, please see the requirements above for new applicants.
All financial documents must be received by the Division on or before March 7 for calendar year applicants and September 29 for State fiscal year applicants. For the purposes of budget introduction only, municipalities may anticipate 85% of transitional aid funds received in CY2024/SFY2026. This level of funding is not a guarantee and is only permitted for the limited purpose of advancing a budget for introduction. The budget will be subject to Division review. Municipalities that have adopted their budget are not eligible for aid.
The municipality must demonstrate reductions or limited increases in salary and wage costs. The Division of Local Government Services expects that the municipality shall have engaged with its unions and non-union employees to effectuate savings through reduced salary costs, reduced staffing levels, modified work rules, modified controllable benefits costs, or other efforts to mitigate salary and wage costs.
The introduced budget must contain a 2% increase over the prior year’s tax levy if it does not exceed the maximum permitted by the levy cap workbook. It should be noted that this requirement is for planning purposes only and will not prohibit aid from being awarded, allowing for a final budget with different levy.
The municipality must demonstrate severe fiscal distress that will result in a constrained ability to raise sufficient revenues to meet budgetary requirements. If such fiscal distress was created by the municipality, with examples being deliberately deferring costs, issuing debt with balloon payments, or imprudently using one-time resources without taking steps to plan loss of the revenue, the applicant’s chance of success will be substantially diminished.
The budget must show spending restraint from CY224/SFY2025. This must include documented efforts to share municipal services, including public safety dispatch, code enforcement, public health services, and other services offered by neighboring municipalities, area boards of education, local authorities, or the county, if those costs are less than the current full cost of providing equivalent service. Municipalities should document demonstrated efforts to reduce energy costs, including bidding for electricity and natural gas, and implementation of renewable energy systems.
The municipality must provide an assessment of existing local revenues, including whether rates or collections can be increased, and a plan to implement potential changes. The municipality must demonstrate that user fees have been established where practicable for discretionary services to avoid taxpayer subsidy of non-essential programs.
For applicants not currently receiving Transitional Aid, the municipal governing body must adopt a resolution authorizing application to the Division and acknowledging that upon submission of the application, State oversight shall begin immediately and will be terminated only upon one of the following conditions: 
- The application for aid is withdrawn.
- Notice is received that no funds will be awarded. If aid is awarded, then supervision is memorialized pursuant to the terms of an MOU executed as a condition of award.
Applicants not currently receiving transitional aid may apply if they meet the criteria above and must have suffered an extraordinary revenue loss or extraordinary appropriation increase.

Together with the application, the municipality shall provide the following to DLGS in electronic format:

For new applicants only: In Excel format, separate files for each of the last four years showing the name of each officer and employee as of the first payroll period of the calendar year together with their annual salary, title, department, and date of hire.
The budget documentation provided to the governing body in support of budget line items.
Current organizational charts showing budgeted positions and titles.
If the municipality does not participate in the SHBP, a written explanation as to why not and how much, if any, the municipality saves by not using SHBP. In addition, support documentation regarding employee health benefit contributions must be provided pursuant to Chapter 78.
Debt service schedules for all municipal obligations, including municipally operated utilities, listed by payment date.
A list of all motor vehicles owned or leased by the municipality (excluding construction equipment and fire apparatus); the department assigned its use; if the vehicle is assigned to an individual, the name of the individual; and if the vehicle is used by the individual outside of the regular workday or taken home by the individual.
For Civil Service municipalities, a certified statement from the head of personnel stating that the municipality has placed the names of all current civil service employees in the County and Municipal Personnel System (CAMPS).
For applicants not currently receiving Transitional Aid, the municipality must submit a resolution agreeing to State supervision upon application.
The municipality’s Chief Administrative Officer must provide a certification that copies of all active collective negotiations agreements and the cost-out of each has been delivered to PERC. Support documentation regarding the method of cost out must also be provided.
After the application is submitted, the Mayor, Chief Administrative Officer and Chief Financial Officer shall participate in a remote meeting or in-person meeting, as scheduled by the DLGS staff, to discuss the application.
No applicant should assume the receipt of any aid. Municipal governing bodies applying for aid should act and plan accordingly, including advancing a levy referendum, if appropriate, to prepare for the possibility of not receiving aid.
Award decisions are expected to be made as soon as possible thereafter so that municipalities can plan for a levy cap referendum if necessary. The application can be downloaded from the DLGS website.