On appeal from Final Action of the Department of the Treasury.
Matthews, Crane and Antell. The opinion of the court was delivered by Crane, J.A.D.
This is an appeal from the denial of claims for payment from the State Treasury of a portion of the transfer inheritance taxes collected for the fiscal years ending June 30, 1976 and June 30, 1977 claimed to be due to the Treasurer of Monmouth County. Appellant Surrogate of Monmouth County bases his claim upon N.J.S.A. 54:33-10 which states:
After the close of each fiscal year the state comptroller shall draw his warrant on the state treasurer in favor of the county treasurer of each county for five per cent of the amount of tax collected under chapters 33 to 36 of this title (§ 54:33-1 et seq.), from property of resident decedents in the county during the fiscal year, as certified to the comptroller by the state tax commissioner, whereupon the same shall be paid out of the state treasury.
The claims for payment for both years were denied by officials of the State Treasury Department. The stated reason for the denial was that, under applicable principles of state constitutional law, N.J.S.A. 54:33-10 is not self-effectuating and that the payments it describes may not be made
without specific appropriation therefor having been made by the Legislature for each of the years in question.
Appellant's principal argument is that the statute provides a clear noncontingent self-executing process for recurrent disbursements which does not require an annual appropriation or any further legislative action. Appellant seeks an order of this court requiring the State Treasurer, the State Comptroller and the Director of the Division of Taxation to comply with the terms of N.J.S.A. 54:33-10. No relief is sought against the remaining respondents who are described as "nominal parties."
The parties are in agreement as to the underlying facts. Since 1909, when the predecessor of N.J.S.A. 54:33-10 was enacted, until 1975, the State has paid to Monmouth County 5% of the transfer inheritance taxes collected from property of decedents residing in the county. Since at least 1916, an annual appropriation has been provided for in the General Appropriations Act for each fiscal year up to and including 1974-1975. The Budget Message for the fiscal year 1975-1976 submitted by the Governor to the Legislature included a request that $3,500,000 be appropriated for apportionment among the counties of 5% of the transfer inheritance tax collected. However, the item in the appropriation act was disapproved by the Governor in a "line item veto" and was not reinstated by the Legislature. The 1976-1977 General Appropriations Act, L. 1976, c. 42, did not contain any appropriation to provide funds for distribution pursuant to N.J.S.A. 54:33-10.
Initially, in evaluating the propriety of the actions of the state officials it is appropriate to consider the fundamental relationship of municipalities and other subdivisions to the State. Municipalities are creatures of the State. Moyant v. Paramus , 30 N.J. 528, 535 (1959). As political subdivisions of the State they owe their very existence and the extent of their powers and privileges to the ultimate authority of the legislative process. Finn v. Wayne Tp. , 45 N.J. Super. 375, 379 (App. Div. 1957).
* * * the state may withhold, grant or withdraw powers and privileges, as it sees fit. However great or small its sphere of action, it remains the creature of the state, exercising and holding powers and privileges subject to the sovereign will. [ Trenton v. ...