40A:4-78. a. If the director finds that all requirements of law and of the regulations of the local government board have been met, the director shall approve the budget, otherwise the director shall refuse to approve it.

The director, in refusing to approve a budget, shall not substitute the director’s discretion with respect to the amount of an appropriation when such amount is not made mandatory because of the requirements of law. If a budget fails to incorporate infrastructure improvements identified in an asset management plan required pursuant to section 7 of P.L.2017, c.133 (C. 58:31-7) or any rule or regulation pertaining to asset management adopted by the Commissioner of Environmental Protection pursuant to P.L.1977, c.74 (C. 58:10A-1 et seq.), as applicable, the director may order the inclusion of the improvements, along with any revenues or appropriations necessary to fund and effectuate the improvements. The director may order such other measures as the director deems necessary to ensure the integrity of the local unit‘s water infrastructure; however, the director may take into account the local unit’s fiscal circumstances in determining appropriate measures.

b. Notwithstanding the provisions of N.J.S. 40A:4-10 and N.J.S. 40A:4-76 through 40A:4-79, the Local Finance Board is authorized to adopt rules, pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C. 52:14B-1 et seq.), to exempt certain municipalities from the requirement that the director approve their annual budgets and to provide instead for a system of local examination and approval of such budgets by municipal officials, provided that:

(1) the director finds that such municipalities are fiscally sound and that their fiscal practices are conducted in accordance with law and sound administrative practice;

(2) the director shall examine the budgets of such municipalities in accordance with the provisions of N.J.S. 40A:4-10 and N.J.S. 40A:4-76 through 40A:4-79, at least every third year;

(3) the governing body and chief financial officer of each such municipality shall each file a certification with the director stating that, with reference to the adopted budget of the municipality, they have:

(a) examined the budget in the manner prescribed under N.J.S.40A:4-76;

(b) determined that the budget complies with the requirements set forth in N.J.S.40A:4-77; and

(c) determined that the budget complies with all other provisions of law, including, but not limited to, the “Local Budget Law,” N.J.S. 40A:4-1 et seq., P.L.1976, c.68 (C. 40A:4-45.1 et seq.), and the regulations of the Local Finance Board;

(4) all budget documents required by law or the regulations adopted by the Local Finance Board shall be filed with the director on a timely basis;

(5) other criteria and responsibilities as established by the regulations adopted by the Local Finance Board are met.

c. The director shall act to require immediate compliance with the “Local Budget Law,” N.J.S. 40A:4-1 et seq., if the director finds that any such exemption impairs the fiscal integrity or solvency of any such municipality. Any appeal of a governing body’s action in adopting an annual budget shall be made to the director.

d. If a municipality has received approval for a special emergency appropriation pursuant to subsection m. of N.J.S.40A:4-53, that municipality shall not be eligible for local examination and approval pursuant to subsection b. of this section until the fiscal year after the final appropriation is made.

amended 1996, c.113, s.13; 2020, c.74, s.4; 2021, c.184, s.9.