What is the maximum percentage increase allowed under the Municipal Cap Law?

The maximum percentage increase allowed under the Municipal Cap Law is 2%. This law is designed to limit the amount by which municipal budgets can increase from one year to the next, in order to control property tax growth and provide predictability for residents.

The 2% cap applies to the general appropriations of a municipality and is calculated based on the prior year’s budget, making it essential for municipalities to manage finances carefully within this limit. There are certain exceptions and allowances within the law that can lead to increases above this cap, such as extraordinary expenses or specific health benefits increases, but the baseline for typical budget increases is firmly set at 2%. Understanding this aspect of local government finance is crucial for managing a municipality's budget effectively while ensuring compliance with state regulations.