Measure Would Cap Annual Fee Increases For Shared Service Agreements
TRENTON – Legislation sponsored by Senators Shirley K. Turner (D-Mercer) and Bob Gordon (D-Bergen) that would help promote cost-savings between local governments by holding the line on the annual fees charged for shared service agreements was approved today by the full Senate.
“While we want to encourage local governments to share services, we do not want any of them put at a disadvantage by having to pay excessive annual fee increases to a local unit they are now dependent on for a specific service,” said Senator Turner. “That can lead to either an increase in taxes for their residents, or to a termination of the sharing agreement. We do not wish to see either of those happening. Hopefully, this bill will increase the reliability of shared service agreements and provide more incentives for local officials to consider this measure as a way to streamline costs.”
“Everyone agrees that shared services is a way to reduce the tax burden on New Jersey residents, yet often too many obstacles are in place to prevent towns from taking these kinds of measures,” said Senator Gordon. “Placing a cap on annual fee increases is just one measure we can take to get more local governments thinking about merging and consolidating services.”
The bill (S-441) would cap the annual fee increases for a shared service agreement at 2 percent, the same cap that is in place for local property tax levy increases. An increase in a shared services agreement could only exceed the two percent cap if the increase has been approved by the voters of each local unit that is a party to the agreement.
Under current law, local units of government are allowed to enter into a shared service agreement with another local unit(s) in an effort to reduce administrative expenses and save money through efficiencies of scale. For example, two neighboring municipalities that provide trash removal for their respective residents might enter into a shared service agreement that allows one of the municipalities to provide trash removal for the residents of both.
The bill now heads to the Assembly for further consideration.