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Friday, October 24, 2008

Taxpayer Protection Ordinance Update

Upon remand from the New Jersey Supreme Court, the Appellate Division reached the same conclusion on the Taxpayer Protection Ordinance (TPO) as it did the first time it reviewed this case last year. It held that that the “TPO in this case, proposed by initiative petition, and which caps municipal budget, debt, and salary of municipal employees, would be invalid.” This holding is limited to caps created by initiative petition. The opinion does not specifically hold that it is beyond the power of a municipal governing body to enact its own budget caps. Several years ago the governing body of , passed a TPO similar to the one proposed here without the resulting “chaos” opponents of our TPO predicted.

However, several passages in the Court’s opinion seem to go farther. The Court reasoned that the State had “preempted” the field in budgetary matters. Although no state statute expressly prohibits a municipality from enacting its own cap laws, and the Faulkner Act grants municipalities the right to subject “any ordinance” to initiative, the court cited the existence of the state Budget Cap Law, Local Budget Law, Local Bond Law and specific referendum provisions as evidence that the legislature reserved to itself the power to limit municipal spending.

It is fair to ask whether FIT’s three-year fight to limit uncontrolled increases in City spending, borrowing, salaries and benefit increases was worth it. We think sometimes the battles lost are the ones most worth fighting. Indeed, the fact that the state passed a Budget Cap Law for municipalities shows someone in was paying attention to what was happening in . You can’t be on the cutting edge without drawing some blood.