Local Budget Law Review and Practice Questions

Question 1

The Local Budget Law, N.J.S.A. 40A:4-3.1(b) requires any municipality deciding to convert to a State Fiscal Year from a Calendar Fiscal Year perform the following:

a. Apply to the Division of Local Government Services
b. Apply to the Local Finance Board
c. Apply to the Commissioner of the Department of Community Affairs
d. All of the above
e. None of the above

Answer 1

b. Apply to the Local Finance Board

Transition year budget for 1/1 - 6/30

Question 2

When converting to a State Fiscal Year calendar from a Calendar Year a municipality may do so by which of the following:

a. Ordinance
b. Resolution

Answer 2

a. Ordinance

Question 3

All budgets shall be introduced, approved, amended and adopted by what vote and by which action of the governing body?

a. By resolution passed by not less than a 2/3rds vote of present governing body members
b. By resolution passed by not less than a 2/3rds vote of the full membership of the governing body members
c. By resolution passed by not less than a majority vote of the present governing body members
d. By resolution passed by not less than a majority vote of the full membership of the governing body

Answer 3

d. By resolution passed by not less than a majority vote of the full membership of the governing body

Question 4

N.J.S.A. 40A:4-5 sets the introduction dates for the municipal budget for both a Calendar Year and State Fiscal Year community. The statutory introduction dates are as follows:

a. Calendar Year - February 10 State Fiscal Year - August 10
b. Calendar year - February 20 State Fiscal Year - August 20
c. Calendar Year - February 10 State Fiscal Year - August 10
d. Calendar Year - February 10 State Fiscal Year - September 10

Answer 4

a. Calendar Year - February 10 State Fiscal Year - August 10

Question 5

A municipal governing body has introduced their town budget on Thursday, February 6 and will hold a public hearing on said budget on Thursday, March 6 (a non-leap year). The advertisement giving notice of the public hearing shall not be published later than which date?

a. February 20
b. February 27
c. February 24
d. March 1

Answer 5

c. February 24

Question 6

Using the identical dates as presented in question number five above. Would the minimum number of days required between approval and adoption been satisfied as stipulated in the Local Budget Law, 40A:4-7?

a. Requirement satisfied
b. Requirement not satisfied

Answer 6

a. Requirement satisfied

Question 7

According to N.J.S.A. 40A:4-9, concerning amendments to an introduced budget. An increase or decrease to any item of appropriation by more than five percent (5%) would require a public hearing on a said amendment.

a. True
b. False

Answer 7

b. False

10%

Question 8

The amount to be raised by taxes for school purposes, required to be certified to the governing body of a municipality for inclusion in its budget, shall set forth in a separate section of the budget upon adoption and shall be added to the amount to be raised by taxes by which of the following:

a. Special District tax rate
b. School tax rate
c. Municipal tax rate
d. None of the above

Answer 8

b. School tax rate

Question 9

The governing body may by resolution authorize temporary budget appropriations to provide for the period between the beginning of the fiscal year and the adoption of the budget. The resolution shall be adopted within how many days of the beginning of the fiscal year?

a. Thirty-days
b. Forty-days
c. Forty-five days
d. Sixty-days
e. None of the above

Answer 9

a. Thirty-days

Question 10

Nothing in the Local Budget Law, specifically as stated in N.J.S.A. 40A:4-19, shall prevent or relieve the governing body from making appropriations during the last 10 days of the year preceding the beginning of the fiscal year for all capital improvement fund purposes.

a. True
b. False

Answer 10

b. False

Debt service

Question 11

When emergency temporary appropriations are adopted after the introduction and approval of the budget and were not included in the budget as approved, the temporary emergency appropriation shall be included by amendment.

a. True
b. False

Answer 11

a. True

Question 12

Which of the following is known as, in the current section of accounts shall consist of the excess of quick assets such as cash, investments, State or other public aid receivable, and deferred charges over legal and demand liabilities.

a. Statutory Charges
b. Operations Account
c. Surplus
d. Reserve for Receivables
e. None of the above

Answer 12

c. Surplus

Question 13

Which of the following is known as; revenue amounts that may reasonably be expected to be realized in cash during the fiscal year from know and regular sources, or from sources reasonably capable of anticipation.

b. Miscellaneous Revenues Not Anticipated
b. Miscellaneous Revenues Anticipated
c. Grant Revenues
d. Trust Account Revenues
e. None of the above

Answer 13

b. Miscellaneous Revenues Anticipated

Question 14

Miscellaneous revenues when being anticipated in the municipal budget are regulated by N.J.S.A. 40A:4-26. This section of the statue limits anticipated revenues to the amount:

a. Held in cash reserve
b. Governing body estimates
c. Certified by the Division of Local Government
d. Actually realized in cash from the same source in the next preceding fiscal year

Answer 14

d. Actually realized in cash from the same source in the next preceding fiscal year

Question 15

A municipal governing body has determined that a parcel of land is no longer required for public use and so concluded that said parcel be sold at auction. The parcel of land will generate sale proceeds that would benefit town property owners if anticipated in the municipal budget as a revenue. In order for the proceeds to be an anticipated revenue in the budget the obligation to make payment to the municipality must be entered into;

a. At any time
b. Prior to the filing of the Annual Financial Statements
c. Prior to introduction of the budget
d. Prior to adoption of the budget
e. None of the above

Answer 15

d. Prior to adoption of the budget

Question 16

When a municipality has a sinking fund cash surplus, such surplus may, upon written application by the sinking fund commission and the approval of the director, be used, in whole or in part, as which of the following according to N.J.S.A. 40A:4-28.

a. Reserve for future debt service
b. General Capital Fund surplus
c. An anticipated miscellaneous revenue in current fund budget
d. None of the above

Answer 16

c. An anticipated miscellaneous revenue in current fund budget

Question 17

N.J.S.A. 40A:4-30 describes the amount to be raised by taxes as be the amount required to be levied by taxation for support of the municipal budget. It is the difference between the total of all general municipal budget appropriations, including chapter 6 school debt service, and such deferred charges and statutory expenditures for chapter 6 schools as are required to be raised in the municipal budget, less the total of anticipated revenues.

a. True
b. False

Answer 17

a. True

Question 18

To the extent there is available surplus revenue collected by a municipality for supplying a utility service which is regulated by the Board of Public Utilities an amount of this utility surplus may be transferred annually and included in the local municipal budget. This amount of surplus to be utilized may not exceed what percentage of the annual costs of operation of the utility?

a. Two percent
b. Three percent
c. Five percent
d. Limited to amount held in cash

Answer 18

c. Five percent

Question 19

Dedicated revenues stated in the budget shall be classified according to their respective sources and shall be state in a separate section of the budget, together with the appropriations to the purposes to which such dedicated revenues are applicable. The total of anticipated revenues must equal the total of appropriations. This definition would describe which of the following:

a. Trust Fund accounts
b. Escrow accounts
c. “Chapter 159” Resolutions
d. None of the above

Answer 19

a. Trust Fund accounts

Question 20

Which of the following would meet the standard to qualify as a dedicated revenue as described in the previous question?

a. Animal Control Fund
b. Sinking fund for term bonds
c. A bequest
d. Motor vehicle fines dedicated to road repairs
e. All of the above

Answer 20

e. All of the above

Question 21

An appropriation for “cash deficit of preceding year” shall be raised how?

a. One-fifth per year for five years
b. In full the immediate successive year of the deficit
c. Does not need to appear in the budget as an appropriation
d. None of the above

Answer 21

b. In full the immediate successive year of the deficit

Question 22

N.J.S.A. 40A:4-45.2a authorizes that amounts of revenue generated by an increase in its valuations based solely on applying the preceding year’s local purposes tax rate of the municipality to the assessed value of new construction or improvements will result in which of the following.

a. Increase the “CAP” base
b. Decrease in the amount to be raised by taxation
c. Increase the reserve for uncollected taxes
d. None of the above

Answer 22

a. Increase the “CAP” base

Question 23

Which of the following groups of appropriations are exceptions to the budget “CAP”, or also known as outside “CAP” appropriations.

a. Debt service, capital expenditures, amounts expended to fund a free public library
b. Reserve for uncollected taxes, social security, federal grants, amounts to meet New Jersey Public Employees’ Occupational Safety and Health Act
c. Public Employees Retirement System, expenditures resulting from the impact of a hazardous waste facility, municipal court operations
d. All of the above

Answer 23

a. Debt service, capital expenditures, amounts expended to fund a free public library