N.J. Stat. § 27:7-19.3
When any municipality of this State shall be indebted to the State, on contract, for highway or road work or improvement, including the cost of right-of-way and including cost of land acquired pursuant to chapter one hundred ninety-one of the laws of one thousand nine hundred and thirty, such indebtedness shall be treated as a temporary offset against any claim that the said municipality may have against the State arising out of emergency relief expenditures and the said municipality shall only be paid that sum which the said emergency relief expenditures exceeds the said indebtedness, pending liquidation, adjustment or settlement of the claim. In the event that in the future any adjustment shall be made by the State, or any of its departments, of the amount chargeable against any such municipality, the difference between the amount now alleged to be due and, as adjusted, shall be credited to the municipality. In order that the treasurer of this State may be apprised of the amount due from the municipalities of this State on account of road work or improvement, the State Highway Commissioner shall forthwith certify to the State Treasurer the amount due the State from each municipality for any such work or improvement.
N.J.S. § 27:7-19.3