The index rate is the federal government calculation
of the relative annual "cost of living" for state and
local governments.
In late 2003, the United States Department of Commerce,
Bureau of Economic Analysis recompiled a number of its indexes and
renamed several of them. The
index that used to be called the "State and Local Implicit
Price Deflator," has been renamed as Table 3.9.4, "Price Indexes
for Government Consumption Expenditures and Gross Investment for
State and Local Government" and is found in the Bureau's quarterly
compilation, "National Income and Product Accounts Table",
specifically, Table 3.9.4, Line 21.http://www.bea.gov/national/nipaweb/SelectTable.asp?Selected=Y
The index rate is based on the most recently completed
quarter calculation and the calculation from the same quarter of
the previous year. The rate
of change between the quarters of the two years is the "rate."
The "index rate" is used by New Jersey
governments to calculate the annual rate of increase for purchases
of goods and services. In
New Jersey, the index rate (COLA) is used for several purposes:
- To calculate the allowable increase in municipal and
county government budgets (budget cap).
- To calculate the increases allowed for contract extensions
under the Local Public Contracts Law and the Public School Contracts
Law.
- As the calculation for increasing the bid threshold
for all New Jersey local units, a calculation made every five
years to the nearest $1,000 dollars.
The next calculation will be made in 2010.
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