Concerns local unit appropriations cap.

This bill modifies New Jersey's municipal budget cap rules, which limit annual budget increases to 2.5% or the cost-of-living adjustment, whichever is lower. It adds pension contribution increases over 3.5% as an exception to the cap, lowers the health insurance cost exemption threshold from 4% to 3.5% above prior year costs, and requires director approval for municipalities to include projected savings from interlocal service agreements in their budget calculations. The bill also expands provisions for municipalities experiencing fiscal distress to potentially permanently add approved surplus to their budget cap base. These changes directly affect New Jersey municipalities by altering their budget flexibility and financial planning processes. The bill takes immediate effect for municipal budget years beginning after enactment.