Reduces allowed diversion of funds from stormwater, water, and sewer purposes to municipal and county budgets; requires municipalities and counties to notify Division of Local Government Services of diversions.

S 3500 reduces how much money municipalities and counties can transfer from stormwater, water, and sewer utility funds to their general budgets, lowering the limit from 5% to 3% of the utility's annual operating costs. It directly affects local governments that operate these utilities or authorities, requiring them to notify the Division of Local Government Services in the Department of Community Affairs whenever they make such transfers. The bill modifies existing laws (P.L.1983, c.111 and P.L.2004, c.87) to implement this change and add the notification requirement. This is a concrete policy change focused on restricting fund diversions and increasing transparency.