58:11B-12. Unpaid obligations of local government units
a. To assure the continued operation and solvency of the trust, the trust may require that if a local government unit fails or is unable to pay to the trust in full when due any obligations of the local government unit to the trust, an amount sufficient to satisfy the deficiency shall be paid by the State Treasurer to the trust from State aid payable to the local government unit. As used in this section, obligations of the local government unit include the principal of or interest on bonds, notes or other obligations of a local government unit issued to or guaranteed by the trust, including the subrogation of the trust to the right of the holders of those obligations, any fees or charges payable to the trust, and any amounts payable by a local government unit under any service contract or other contractual arrangement the payments under which are pledged to secure any bonds or notes issued to the trust by another local government unit. State aid includes business personal property tax replacement revenues, State urban aid and State revenue sharing, as these terms are defined in section 2 of P.L. 1976, c. 38 (C. 40A:3-3), or other similar forms of State aid payable to the local government unit and to the extent permitted by federal law, federal moneys appropriated or apportioned to the local government unit by the State.
(1) If the trust requires, and there has been a failure or inability by a local government unit to pay its obligations to the trust remaining uncured for a period of 30 days, the chairman of the trust shall certify to the State Treasurer, with written notice to the fiscal officer of the local government unit and to the Legislature, the amount remaining unpaid, and the State Treasurer shall pay that amount to the trust, or if the right to receive those payments has been pledged or assigned to a trustee for benefit of the holders of bonds, notes or other obligations of the trust, to that trustee, out of the State aid payable to the local government unit, until the amount so certified is paid.
(2) The amount paid over to the trust shall be deducted from the corresponding appropriation or apportionment of State aid payable to the local government unit and shall not obligate the State to make, nor entitle the local government unit to receive, any additional appropriation or apportionment. The obligation of the State Treasurer to make payments to the trust or trustee and the right of the trust or trustee to receive those payments shall be subject and subordinate to the rights of holders of qualified bonds issued or to be issued pursuant to P.L. 1976, c. 38 (C. 40A:3-1 et seq.).
(3) In those instances where the local government units are municipal or county sewerage, utility or improvement authorities created pursuant to P.L. 1946, c. 138 (C. 40:14A-1 et seq.) or P.L. 1957, c. 183 (C. 40:14B-1 et seq.), the trust may require the municipalities or counties which receive service or other benefits from the districts or authorities to enter into service contracts or other contractual arrangements under which they would be required to make payments which would satisfy any deficiencies in the revenues of the districts or authorities to repay the loans made by the trust, which contracts would be pledged to secure the payment of the loans of the trust. b. Whenever a local government unit covenants or pledges to or secures the payment of its obligations to the trust by, in whole or in part, certain revenues of the local government unit derived by the local government unit from the imposition of rates, fees and charges, and the local government unit, and if payments by another local government unit under a service contract or other contractual arrangement are pledged to the payment of the obligations, the other local government unit, fails or is unable to pay in full when due any of the obligations and the State aid revenues for any reason have not been made available for the payment of the obligations or have not been made available in sufficient amounts to pay the obligations in full, the trust is authorized during the period of such failure to cause the local government unit, in accordance with the covenants or pledges established in any loan or other agreement relating thereto, to establish and collect rates, fees and charges in the amounts required to pay the obligations in accordance with the covenants or pledges established in the loan or other agreement relating thereto.
L. 1985, c. 334, s. 12, eff. Nov. 5, 1985.
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Last modified: October 11, 2016