June 2008

Attempt to tie city spending to cost of living remains alive

By Michael Miller, The Press of Atlantic City

(Published: Wednesday, May 28, 2008)

OCEAN CITY - Taxpayers who want to tie city spending to the federal cost of living have new hope.

The state Supreme Court this month remanded the proposal to the Appellate Court for further review.

The proposal called the Taxpayer Protection Initiative would tie city spending to the annual cost of living. If the city wanted more money in a given year, it would have to ask voters first. The same system would apply to union contracts and city debt.

A state Appellate Court last year rejected the proposal, saying the state Legislature never intended for municipal budgets to be subject to public referendums.

The court agreed with case law that determined that "such a scheme threatens to place municipal governments in a straitjacket and make it impossible for the city's officers to carry out the public's business."

Superior Court Judge Joseph C. Visalli last October ruled in the city's favor, saying the proposed measure would lead to financial chaos.

But the state Supreme Court sent the proposal back to the lower court after overturning another New Jersey budget case.

The federal cost of living adjustment for 2008 was 2.3 percent. By contrast, City Council approved a 10 percent tax hike this year.

"I don't know that financial chaos is how I would describe it," said Mayor Sal Perillo, who opposed the group's plan.

"We have the state caps, which have turned out to be pretty effective restraints on municipal spending," he said.

Perillo noted that the city has trimmed staff by 10 percent from 291 in 2004 to 263 full-time employees this year.

The city initiated the lawsuit by asking the court to rule on the legality of the issue.

Among the taxpayers pushing the initiative are James Tweed, Joseph Somerville, Dennis Myers, Fred Hoffman and Pete Guinosso. Their lawyer, Frank L. Corrado, said the Appellate Court still might rule against them.

"The real issue in the case is whether there are other statutes in New Jersey that pre-empt a municipality from enacting a budget-cap ordinance," he said.

Taxpayer Protection Ordinance Update

The Supreme Court of New Jersey has summarily remanded the Taxpayer Protection Ordinance case to the Appellate Division. This means the Appellate Court must reconsider the case in light of a recent the Supreme Court decision that overturns a 40-year-old lower court case upon which both the Appellate Court and the Superior Court relied.

The Superior Court held, and the Appellate Division affirmed, that the Taxpayer Protection Ordinance was invalid and could not be adopted by initiative. That decision was based partly on the rationale of Cuprowski v. Jersey City, which held municipal budgets were “administrative” rather than “legislative” acts, whose adoption or nullification by popular vote would result in “chaos.” The lower courts were not persuaded by our argument that an ordinance adopting a prospective budget cap by initiative differs significantly from a retroactive attack, by referendum, on an already-adopted budget.

By summarily remanding the case, the state Supreme Court has merely said the Appellate Court must rethink the case in light of its inability to rely on the Cuprowski rationale. The Appellate Court could again rule against us. But if it does, it must come up with a better reason.

We hope the Appellate Court will now apply the same “plain language” rule that the state Supreme Court applied to the Faulkner Act when it overturned Cuprowski. That Act, under which Ocean City is governed, grants citizens the unequivocal right to propose and vote on “any ordinance” through the initiative process. The issue on remand will likely be whether other state laws except the Taxpayer Protection Ordinance from this plain and unequivocal language.

What’s next? The Appellate Court may, or may not request additional briefs and/or oral argument on the case.