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Township of Hopewell v. State

Decided: January 25, 1978.


Morton I. Greenberg, J.s.c.


Plaintiff Township of Hopewell seeks a declaration that an expenditure proposed for its 1978 budget be excluded from application of the so-called "cap law," N.J.S.A. 40A:4-45.1 et seq. The problem confronting Hopewell derives from an affirmative vote in a referendum held November 8, 1977 authorizing Hopewell to unite with the Borough of Pennington for the operation of a public library and thereby withdraw from the Mercer County library system. See N.J.S.A. 40:54-29.3. Hopewell noted that, pursuant to N.J.S.A. 40:33-9, it had previously, upon certification of the county, made a contribution to the county library system which was included as a portion of the tax bill within the municipality. It is not disputed that the amount so certified for 1977 to be raised by taxes was $111,258.39. Hopewell also noted that the said sum had been essentially a county tax in 1977 and therefore was not included as a portion of its municipal budget in 1977 for cap purposes. It thus feared that inclusion of its share in the 1978 municipal budget of the joint municipal expenditure would be subject to the 5% limitation of N.J.S.A. 40A:4-45.3 even though it replaced an expenditure not so included. Consequently it sought an opinion from the Department of Community Affairs that the taxes raised as a portion of the municipal budget to support the new joint library system be excluded from the cap law.

The Department, by letter dated December 20, 1977, advised Hopewell that the appropriation for the joint library system would be within N.J.S.A. 40A:4-45.3 and that consequently that amount, together with other additional appropriations, could not exceed the 5% statutory limitation unless one of the exceptions to the statute be otherwise met. There was no suggestion that any exception applied.

On January 6, 1978 Hopewell instituted this action against the State. Because of the urgency of the matter the court, without objection, accelerated the matter for hearing.

In this action Hopewell has expanded on the arguments presented to the Department. It contends that appropriations for the joint library system, the establishment of which was approved by referendum, fall within an exception in the cap law permitting expenditures in excess of the 5% limitation upon referendum approval. But this position cannot be accepted. The referendum approved the following question:

Shall the Township of Hopewell unite with the Borough of Pennington in the support, maintenance and control of a joint free public library pursuant to Chapter 155 of the Laws of New Jersey, 1959?

While substantial financial information was released to the public concerning the effect of approval, surely the question itself made no reference to any expenditures. Further, since Pennington itself was previously not a part of the county system, but rather had its own library, there is no suggestion that it would be exempt from the limitation unless the exception in N.J.S.A. 40A:4-45.3(j) discussed below applies. It would be anomalous if the same character of expenditures were exempt from N.J.S.A. 40A:4-45.3 in Hopewell but not in Pennington.

The municipality further argues that expenditures for the joint library system should not be considered municipal appropriations within the cap law, as they replace expenditures for a like purpose through the county system which were excluded. But adoption of this position would frustrate the intention of the Legislature to limit increases in municipal expenditures. See N.J.S.A. 40A:4-45.1; Clifton v. Laezza , 149 N.J. Super. 97 (App. Div. 1977). Further, the argument would also place Hopewell on a different basis than Pennington.

Hopewell also contends that since the joint library is being established by agreement, N.J.S.A. 40:54-29.3, expenditures

for it are exempted from the cap law by L. 1977, c. 10. This act amended N.J.S.A. 40A:4-45.3 by expanding the exceptions to the cap limitations to include a subsection reading as follows:

j. Amounts required to be paid pursuant to any contract with respect to use, services or provision of any project, facility or public improvement for water, sewer, solid waste, parking, senior citizen housing or any similar purpose, or payments on account of debt service therefor, between a municipality and any other municipality, county, school or other district, agency, authority, commission, instrumentality, public corporation, body corporate and politic or political subdivision of this State. With respect to the amounts required to be paid for senior citizen ...

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