Can a municipality adopt a COLA ordinance if its budget cap referendum fails?

A municipality cannot adopt a Cost of Living Adjustment (COLA) ordinance if its budget cap referendum fails. When a budget cap referendum does not pass, it indicates that the voters do not approve of exceeding the set budget limitation for that fiscal year. In many cases, a COLA ordinance involves budgetary implications that would require increased expenditures to reflect cost-of-living increases for employees or services. Since the failure of the referendum signifies a rejection of additional financial allowances, the municipality would be bound by the limitations imposed by the budget cap, making the adoption of a COLA ordinance infeasible under those circumstances.

Other options may imply scenarios where a COLA could be adopted, but they do not address the financial constraints indicated by the failure of the referendum.