5. a. (1) The commission shall study and report on the structure and functions of county and municipal government, including local taxing districts, their statutory bases, including the fiscal relationship between local governments, and the appropriate allocation of service delivery responsibilities from the standpoint of efficiency. The study of the transfer of the municipal tax assessment function to the county through the appointment of a county assessor and deputy county assessors in a pilot county pursuant to the “Property Assessment Reform Act,” sections 1 through 15 of P.L.2009, c.118 (C. 54:1-86 et seq.), shall be conducted in consultation with the Director of the Division of Taxation in the Department of the Treasury.

(2) The commission shall recommend legislative changes which would encourage the more efficient operation of local government. These changes may include the structural and administrative streamlining of county and municipal government functions, including but not limited to, the transfer of functions from one level of government to another, and the use or establishment of regional service delivery entities.

(3) The commission shall also consider optimal service levels, ratios of employees to population served, cost structures for service delivery, and other best practices.

Within two years following the effective date of P.L.2007, c.54 (C. 52:27D-501 et al.), the commission shall report its findings to the Governor, the President of the Senate, and the Speaker of the General Assembly; provided, however, that findings concerning the transfer of the municipal tax assessment function to the county through the appointment of a county assessor and deputy county assessors shall be reported on or before February 1 of the sixth year next following the effective date of P.L.2009, c.118 (C. 54:1-86 et al.).

b. Based on its findings pursuant to paragraph (3) of subsection a. of this section, the commission shall develop criteria to serve as the basis for recommending the consolidation of specific municipalities, the merger of specific existing autonomous agencies into the parent municipal or county government, or the sharing of services between municipalities or between municipalities and other public entities. Recommendations for sharing services may result from a study focusing exclusively on the sharing of services or may result from a study examining potential consolidation. Municipalities to be considered for consolidation shall be within the same county and shall also be situated within the same legislative district.

The criteria to govern a study to examine consolidation or the sharing of services shall include, but need not be limited to:

(1) a consideration of geographic factors, such as a shared boundary, or in the case of the recommended consolidation of more than two local units, that the consolidated local unit will have a contiguous boundary;

(2) an analysis of the economic costs and benefits of consolidation or the sharing of services, as the case may be, including potential tax savings and reductions in government costs through economies of scale;

(3) measures to ensure that costs and benefits of consolidation or service sharing are distributed equitably across the entire community; and

(4) measures to safeguard the interests of communities in the municipalities for which consolidation is recommended.

The commission shall give priority to local units that volunteer to be studied.

c. When a municipal consolidation is recommended by the commission, the commission shall substitute for a joint municipal consolidation study commission that would be formed pursuant to section 7 of the “Municipal Consolidation Act,” P.L.1977, c.435 (C. 40:43-66.41) or any other statute governing municipal consolidation, and no voter approval shall be required to create the study commission.

d. When a consolidation or shared service is recommended by the commission, the commission shall recommend State funding for any extraordinary expenses necessitated by the consolidation plan or shared service agreement. The commission shall recommend that this funding be provided either by funds made available to the commission for that purpose or by the Legislature or State Treasurer as part of the annual State budget process.

L.2007, c.54, s.5; amended 2009, c.118, s.16.