State Supervision in New Jersey over Municipalities in Unsound Financial Condition

Abstract

In 1938, New Jersey established a State Department of Local Government which, although not as far-reaching in the scope of its authority as its name suggests, possesses extensive and, in some respects unusual, powers of control over municipal finance. The powers given to the Department then and subsequently include supervision of municipal accounting, fiscal administration, funding operations, budgeting, and auditing. Particular interest, however, in New Jersey and elsewhere has centered on the authority given the Department over municipalities in or approaching serious financial peril. Such municipalities were made subject to supervision administered with considerable discretion by the Department which, it was hoped, would not only check the course of localities headed for financial wreckage but also salvage and repair areas where the crash had already occurred. The experience of the Department thus far indicates that much has been accomplished on both scores, but also that there are clear limits to the possibility of restoring financial health to all of New Jersey's existing assortment of municipalities by virtue of the present treatments.