SAYREVILLE, N.J. — Councilwoman Mary Novak moved to adopt the $83.4 million budget early in the May 11 meeting. Nobody seconded her. The motion died before it reached a vote. The borough had not adopted a budget for 2026.
Mayor Kennedy O’Brien warned the six council members that the state Department of Community Affairs could impose daily fines for noncompliance. He knew the threat personally. Borough minutes from June 11, 2012 record Chief Financial Officer Wayne Kronowski stating “the budget did not pass” and Councilman Nicholas Perrette confirming the deadlock: “it was 3 to 3.” O’Brien left that 2012 meeting before the impasse resolved. The 2012 budget was introduced March 12 and adopted August 27, a nearly six-month process that included a June deadlock.
The crisis in Sayreville relates to health insurance costs that are straining municipal budgets across New Jersey.
Sayreville anticipates $6 million in surplus within an $83.4 million budget that requires $43.28 million in local property taxes. But the State Health Benefits Program for local governments (SHBP-LG) is consuming a growing share of municipal revenue. A Treasury Department white paper from May 2025 calls the local government plan an "actuarial death spiral": a self-reinforcing loop where premium spikes force employers to exit, which leaves a sicker pool and higher premiums for those who remain.
The white paper reveals the structural trap. Ninety-five percent of SHBP-LG enrollees are in plans with actuarial values above 97 percent. That means near-total coverage by employers, with minimal cost-sharing by employees. When a municipality exits, the remaining employers absorb the full cost of the sickest beneficiaries. The state government has transferred $258 million from the state employee plan to the local government plan since 2020, but this did not fix the underlying problem.
The March 31, 2026 Treasury statement projected the SHBP local government reserve would hit a $209 million negative balance. The state borrowed $200 million under P.L. 2024 c.86 to stabilize the plan. Plan design changes approved in September 2025 would cut premiums 2.2 percent for medical coverage and 4.7 percent for prescriptions, but only for local governments that opt into new plan options through a Special Open Enrollment. The current plans remain unchanged. The Treasury Department projects SHBP local government premiums will spike 40 percent in 2027, 50 percent in 2028 and 60 percent in 2029 if the death spiral continues.
The New Jersey League of Municipalities confirmed the SHBP-LG rate jumped 36.5 percent for 2026. Hudson County absorbed a $22 million increase, from $63 million last year to $85 million this year, according to county finance officials. Jersey City faces a $255 million deficit with $48 million in unbudgeted health insurance costs. Middlesex Borough took a 53 percent increase costing $1.1 million. Princeton confronted a $1.9 million spike. Mercer County pulled its employees out of the state plan entirely and negotiated a 17.5 percent increase through private coverage instead of the 31 percent the state demanded.
More than 70 employers have exited the SHBP plan since 2020. Each exit leaves a smaller, sicker pool for the remaining employers: the self-reinforcing loop the Treasury Department has warned about since 2025.
The same council that deadlocked on the budget voted unanimously to demand state reform. On the same night the budget stalled, the body passed a resolution alongside the Board of Education, demanding the legislature reform the health benefits system. The school district’s 2026-27 budget runs $167 million and includes a $6.89 million health care cost adjustment. That $6.89 million is the school district's own premium spike, running parallel to the one that stalled the municipal budget.
The DCA had already given Sayreville more time. Local Finance Notice 2025-18 extended the 2026 budget deadline to April 30 for municipalities that requested it. Sayreville blew past that extension and currently has no adopted budget.
The council agreed on the need for reform, but diverged on ways to close the gap in the budget. Councilman Herve Blemur moved to ban data centers borough-wide. That vote split 3-3, with the three Republican members opposed and the three Democratic members in favor. Blemur, Novak and Alberto Rios voted yes. Michael Colaci, Stanley Synarski and Council President John Zebrowski voted no. O’Brien declined to break the tie, so the ban failed.
The mayor wants the borough to host data centers to generate tax revenue. Data centers generate Payments In Lieu Of Taxes (PILOT) that could supplement property tax revenue. The borough already carries $6.69 million in long-term PILOT revenue and expects revenue from the Riverton redevelopment, where developers expect a Bass Pro Shops anchor to open in 2026.
Half the council and a room full of residents do not want industrial server farms next to neighborhoods. Data centers can generate noise levels up to 96 decibels, according to MyCentralJersey. The borough had already stripped data centers from the Sunshine Biscuits redevelopment plan on April 15, after residents objected to water use and power demand. The national data center market is slowing anyway. Wood Mackenzie reported that development stalled in late 2025 because power grids cannot keep pace with artificial intelligence demand. Morgan Stanley projects a 49-gigawatt shortfall by 2028. Sayreville is not rejecting a booming industry. It is arguing over whether to chase an industry constrained by power grid limits.
The deadlock runs deeper than land use. The council also failed to pass Ordinance 09-26, a retroactive correction to add a Management Specialist position created in 2022 to the salary schedule. The salary ordinance never included the position. The ordinance described the omission as a “ministerial error”; borough officials told the Sayreville Insider they considered it a “technical correction.” The correction would have authorized pay ranging from $66,885 to $102,824 across five years. Novak objected that the ordinance lacked salary steps and would allow employees to start at maximum pay. O’Brien called the opposition political. The ordinance died.
This agenda also introduced Ordinance 12-26 to establish a cap bank, a statutory tool available to municipalities under N.J.S.A. 40A:4-45.14. The bank allows municipalities to budget below the tax raise cap and save the unused portion. Future budgets may then use those portions to exceed the tax cap without voter approval or an emergency declaration. Sayreville’s User Friendly Budget explicitly flags a structural imbalance and warns that non-recurring revenue items fill the gap.
The governing body has operated on a 3-3 partisan split since January 1. Zebrowski won the council presidency only because O'Brien broke a 3-3 tie on reorganization day. Since then the mayor has broken multiple deadlocks according to borough minutes and MyCentralJersey, appointing Council of Affordable Housing professional counsel and blocking virtual public participation. He declined to break a tie on April 27 over Port Authority firing range access, according to CitizenPortal. On May 11 he declined again.
The municipal purpose tax levy has climbed 70 percent since the 2012 budget deadlock, from $25.45 million in 2012 to $43.28 million today. The average Sayreville homeowner paid $9,082 in property taxes in 2025. The borough’s 2026 budget document estimates the total at $9,730, which includes a projected school tax levy of $85.3 million. The school district’s April budget includes an 11 percent general fund levy increase.
The district's $6.89 million health care adjustment is where the premium spike shows up on the tax bill. It is not abstract accounting — it is part of the levy increase hitting homeowners alongside the municipal tax hike. A Sayreville resident paying $9,082 in 2025 faces $9,730 in 2026 before the school increase takes full effect. Middlesex County held the line on county taxes for 2026, but the municipal and school increases still land on the same homeowner.
Sayreville is not an outlier. Municipalities across New Jersey are facing the same arithmetic. What led to the Sayreville deadlock ultimately relates back to the same 36.5 percent premium spike that hit Hudson County, the same unbudgeted health costs that opened Jersey City's $255 million hole and the same pressure that drove Mercer County out of the state plan entirely.
The state can compel the borough to adopt a budget through several enforcement mechanisms. The DCA can fine the borough $25 per day under N.J.S.A. 40A:4-84 for willful failure to comply, and it holds emergency appropriation authority under Local Finance Notice 2026-04. But fines will not lower health insurance premiums. Emergency appropriations will not break the council's deadlock on data centers.
The council’s resolution demands state reform. The SHBP Plan Design Committee approved changes effective July 1 that would reduce premiums for local governments that opt into new plan options. But the PDC has traditionally deadlocked 6-6, making further plan design changes difficult without consensus.
Assemblyman Anthony Verrelli (D, 15th) introduced A5903 in the 2024-2025 session and A1831 in the current session. The legislation would abolish the PDC and transfer plan design authority to an expanded State Health Benefits Commission. The first bill passed the Assembly State and Local Government Committee unanimously in July 2025 before dying in the Appropriations Committee. Verrelli reintroduced the legislation as A1831 in January 2026, where it again sits in the State and Local Government Committee.
But Sayreville needs a budget now. The tax bills are waiting. And the health insurance bills keep coming.
Related Articles
• Hudson County Proposes Tax Levy Hike as Jersey City Faces Four Budget Pressures
• New Jersey’s Fiscal Fault Lines: Six Cities, Six Models of Distress, and the State’s Uneven Hand
• Jersey City Requests $150 Million in Transitional Aid, Largest Municipal Bailout in State History
Sources
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• Daniel Munoz, MyCentralJersey, "Sayreville data center ban fails, leaving growth vs. tax debate" (May 13, 2026)
• Daniel Munoz, MyCentralJersey, "Sayreville drops data centers from Sunshine Biscuits redevelopment" (April 15, 2026)
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