New Jersey Assembly Bill A4789

New Jersey 2022-2023 Regular Session

• Introduced: 10/17/22
• Refer: 10/17/22

Caption

Requires any increase in local government costs for employee health care and prescription benefits coverage be offset by equivalent increase in municipal energy tax receipts property tax relief aid.

Impact

The legislation, once enacted, would amend existing statutes related to municipal finance and health care benefits. It will essentially guarantee that municipalities are compensated for their increased spending on health care benefits, thereby allowing them to maintain their financial health and prevent budget shortfalls arising from these mandatory expenses. The provisions apply regardless of how municipalities choose to provide health care, whether through self-insurance or commercial insurance options.

Summary

Bill A4789, introduced in the New Jersey Legislature, is aimed at addressing the increasing costs of employee health care and prescription benefits coverage for municipalities. Specifically, the bill stipulates that if a local government faces an annual rate increase that necessitates an increase in their expenditure for employee health care and prescription benefits, the State must offset this increase with a corresponding boost in the municipal energy tax receipts property tax relief aid. This is designed to ensure that municipalities do not face a financial strain due to rising health care costs.

Contention

A point of contention surrounding Bill A4789 is its potential impact on local budgets and tax policies. Supporters argue that the bill is a necessary safeguard for municipal governments, helping them manage health care costs without resorting to increases in local property taxes. Critics, however, warn that increasing dependency on state aid for health care costs could lead to long-term fiscal mismanagement. There may also be concerns about whether adequate state funding will be available to meet these obligations, especially in times of economic downturn.

Implementation

The execution of the bill's provisions will require municipalities to report their increased expenditures to the State's Division of Local Government Services, ensuring accountability and transparency. The bill is set to take effect immediately upon passage, signaling the urgency to address rising health care costs for municipal employees. This prompt implementation reflects the growing recognition of the fiscal realities facing local governments in New Jersey.