SENATE COMMUNITY AND URBAN AFFAIRS COMMITTEE

STATEMENT TO

SENATE, No. 2289

STATE OF NEW JERSEY

DATED:  FEBRUARY 5, 2026

      The Senate Community and Urban Affairs Committee reports favorably Senate Bill No. 2289.

      As reported, this bill modifies the "Uniform Shared Services and Consolidation Act," sections 1 through 35 of P.L.2007, c.63 (C.40A:65-1 through C.40A:65-35), and the law governing the Local Unit Alignment, Reorganization, and Consolidation Commission, P.L.2007, c.54 (C.52:27D-501 et seq.) to encourage and facilitate the provision of local and regional services through shared service agreements and joint meeting contracts.

      The bill amends and supplements the "Uniform Shared Services and Consolidation Act" to expedite the resolution of disputes over Civil Service rules and tenure provisions, which are reportedly responsible for delaying the implementation of shared service agreements and joint contracts.  The bill also makes a number of changes that affect employees of local units that enter into either a shared service agreement or a joint meeting. 

      Most notably: (1) local units would no longer be required to provide employees terminated for reasons of economy and efficiency with a terminal leave payment; (2) the Civil Service Commission would no longer be required to review employment reconciliation plans; and (3) certain provisions of Title 11A, Civil Service, of the New Jersey Statutes, could be relaxed by the Civil Service Commission upon request by the parties to the agreement.  The local unit providing the service would have to decide which employees would transfer from a recipient local unit, subject to the provisions of any existing collective bargaining agreements within the affected local units.  To that end, the bill would repeal certain provisions of the "Uniform Shared Services and Consolidation Act" that preserve the tenure rights of police officers.

      Under current law, the Local Unit Alignment, Reorganization, and Consolidation Commission (LUARCC) examines the consolidation of municipalities, the merger of autonomous agencies into their parent municipal or county government, and the sharing of services between municipalities or between municipalities and other public entities.

      This bill clarifies LUARCC’s powers to recommend the consolidation or merger of specific municipalities and autonomous agencies and the sharing of services between municipalities or between municipalities and other public entities.  When considering a possible recommendation for consolidation or the sharing of services, the bill requires LUARCC to conduct at least five on-site consultation sessions in each local unit being studied, with the governing bodies, or their designees, and affected officials and other public entities under consideration for consolidation or the sharing of services.  LUARCC would be required to include in every consolidation and shared services proposal an estimate of the savings that would result from the implementation of its recommendations.  Once LUARCC recommends a sharing of services, it must hold a series of public hearings in each affected municipality.  The State Treasurer would be required to certify LUARCC’s basis for its fiscal analysis before LUARCC could submit a recommendation to a municipality.  The municipality would then have the right to appeal LUARCC’s estimate of savings resulting from a recommendation to the Commissioner of Community Affairs.

      The bill provides that a LUARCC consolidation recommendation would not be binding on a municipality and there would be no penalty for failing to implement the consolidation under certain circumstances.  However, the bill requires a municipality to approve a LUARCC recommendation for the sharing of services within 14 months of the recommendation, subject to an appeal process specified in the bill, and implement the proposal within 28 months.  A municipality could approve the recommendation by adoption of a resolution or ordinance or by adoption by the voters of the local unit.  The bill allows a municipality to adopt a resolution or ordinance approving the recommendation subject to voter approval.

      If a municipality does not approve a LUARCC recommendation for the sharing of services, or does not make a good faith attempt to implement the recommendation within the required timeframes, it would be subject to an annual reduction of Consolidated Municipal Property Tax Relief Aid (CMPTRA) State aid equal to LUARCC’s estimated cost savings for implementing the recommendation.  The bill, however, specifies that no municipality is to be subject to a reduction in its CMPTRA allocation for refusal to comply with a consolidation recommendation or proposal.  Furthermore, a municipality would not be subject to a reduction in CMPTRA State aid if it approved a recommendation for the sharing of services and the failure to implement the recommendation was due to the action or inaction of the governing body or voters of another local unit.  Since fiscal year 2024, allocation through CMPTRA has been functionally $0 after transfer to the Energy Tax Receipts program.

      This bill was prefiled for introduction in the 2026-2027 session pending technical review.  As reported, the bill includes the changes required by technical review, which has been performed.