§ 52:27-23 — Limitation on school budget when municipality in default

Whenever a municipality in which the commission is functioning has been or shall be in default for twelve months in the payment of interest on any of its bonds or notes or other written evidence of indebtedness (except where the same is under litigation as to its validity, or where the validity thereof has been denied by formal notice given by the municipality, and no suit, action or proceeding to enforce the same has been commenced by the holder); or whenever any such municipality has been or shall be in default for six months in the payment of any part of its regular pay roll, or in the payment of any sums due from the annual tax levy to the state, county or school district, no subsequent budget or tax ordinance or appropriation for local school purposes shall include any amounts in excess of such limits as may be fixed by the commission, exclusive of appropriations for the purpose of raising the principal and interest on the public debt, and exclusive of appropriations to create a reserve fund under the provisions of section 52:27-25 of this title.