Appropriations cap (1977 cap law)
A 1977 state law that limits how much a town can raise its budget spending, called final appropriations, from one year to the next. It is separate from the 2010 property tax levy cap, and towns must follow both.
New Jersey example
For 2026 budgets, the state set the cost-of-living adjustment at 2%. A town can pass an ordinance to allow up to 3.5% and bank unused room for up to two years. Made-up numbers: on $20 million of capped spending, that is $400,000 at 2% or up to $700,000 at 3.5%. Part of health insurance increases falls outside the cap.
Official source
Local Finance Notice 2025-14: Calendar Year 2026 Municipal & County Budget Cap Information
This is a plain-English summary. Rules and dollar amounts change, so check the official source or a professional before you file or sign anything.