LEGISLATIVE FISCAL ESTIMATE

[First Reprint]

ASSEMBLY, No. 5538

STATE OF NEW JERSEY

221st LEGISLATURE

DATED: JUNE 27, 2025

SUMMARY

Synopsis:	Prohibits municipal utilities authority from charging fire district and fire department water service charges for fire protection systems in certain circumstances.
Type of Impact:	Annual local government revenue loss.
Agencies Affected:	Municipal utility authorities; fire districts, fire departments.

Office of Legislative Services Estimate
Fiscal Impact
Local Government Revenue Loss	Indeterminate

· The Office of Legislative Services (OLS) concludes that this bill would result in an annual local government revenue loss because municipal utility authorities would no longer be permitted to charge a fire district or fire department for a fire protection system’s water supply when water customers of the authority are also taxpayers of the fire district or, for a fire department, of a local government unit that finances the operations of the fire department.  This would result in an indeterminate revenue loss to the affected municipal utility authority while the affected fire district or fire department would have a concomitant reduction in its expenditures.

BILL DESCRIPTION

      The bill would prohibit a municipal utilities authority from imposing water service charges for fire protection systems upon a fire district or fire department if the authority also imposes water service charges upon customers of the authority who are taxpayers of the fire district or of a local government unit that finances the operations of the fire department.

FISCAL ANALYSIS

EXECUTIVE BRANCH

      None received.

OFFICE OF LEGISLATIVE SERVICES

      The OLS concludes that this bill would result in an annual local government revenue loss because municipal utility authorities would no longer be permitted to charge a fire district or fire department for a fire protection system’s water supply when water customers of the authority are also taxpayers of the fire district or, for a fire department, of a local government unit that finances the operations of the fire department..  This would result in an indeterminate revenue loss to the affected municipal utility authority while the affected fire district or fire department would have a concomitant decrease in its expenditures.  The OLS is unable to estimate the number of municipal utility authorities that currently engage in this practice and the exact water service charges that are being duplicated and is, therefore, unable to estimate the extent of these fiscal impacts.

      The OLS notes, however, that municipal utility authorities are created to perform specific functions within a municipality and are required to be self-financing, and if one is not self-financing, the deficit must be appropriated for in the general municipal budget of the subsequent year.  Municipal utility authorities are also broadly authorized to charge and collect rents, rates, fees, and other charges for the provision of water service, and since the bill prohibits these authorities from charging fire districts and fire departments for fire a fire protection system’s water supply, a municipal utility authority could potentially shift revenue losses onto other ratepayers.

Section:	Local Government
Analyst:	Abigail Stoyer Senior Fiscal Analyst
Approved:	Thomas Koenig Legislative Budget and Finance Officer

This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.

This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).