Even with a new two-percent cap in place, New Jersey towns are getting creative and planning ahead to balance their municipal budgets.

Bill Dressel, Executive Director of the NJ League of Municipalities, says towns are still cutting costs through attrition, working with unions on concessions and sharing services.

In these tough economic times, Dressel says everything is on the table.

"Some towns like West Cape May are exploring the sale of liquor licenses to generate money, and others are looking at selling off surplus property and public works equipment."

Even older computers could be out the door.

"Towns could be upgrading their computer systems and are looking to get rid of the older models," said Dressel.

But, the challenge remains for local officials to find ways to generate funds other than the tax base.

"Local officials have to reduce the bottom line and save taxpayer dollars while at the same time maintain adequate service levels to an ever-demanding public."

Dressel says the bottom line is the problem is not going away anytime soon.

"Of the 566 municipalities, this is a process that has been going on and will continue to go on."