On certification to the Superior Court, Law Division, whose opinion is reported at 163 N.J. Super. 344 (1978).
For modification and affirmance -- Chief Justice Wilentz and Justices Sullivan, Pashman, Clifford, Schreiber and Pollock. For reversal -- None. The opinion of the Court was delivered by Schreiber, J.
The question raised in this action is whether state-mandated expenditures by the County of Hudson for public welfare assistance, maintenance of county patients in state institutions, and operation of the court system cannot either individually or in total exceed the prior year's payments by more than the 5% limit of the county "Cap" statute ("Cap Law"), N.J.S.A. 40A:4-45.2 and -45.4. That law generally prohibits a county from increasing its county tax levy or final appropriations in excess of 5% of the previous year's figures. Put another way, are the state agencies and the judiciary prohibited from increasing expenditures by more than 5% over that of the prior year's because of the Cap Law?
Fifteen other counties were permitted to intervene and joined the action on behalf of the plaintiffs, Board of Chosen Freeholders, County Executive and County Comptroller of Hudson County. The named defendants are the Attorney General, the Director of the Division of Local Government, the Commissioner of the Department of Human Services, the State Administrative Director of the Courts and the Trial Court Administrator of Hudson County. After hearing cross-motions for summary judgment, the trial court dismissed the action and set forth its reasons in a written opinion. 163 N.J. Super. 344 (Law Div. 1978). Plaintiffs appealed and defendants cross-appealed. We granted plaintiffs' motion for direct certification. R. 2:12-2(a). 83 N.J. 389 (1980).
A preliminary matter is whether the action is moot. The verified complaint sought a declaratory judgment that increases in state-mandated expenditures (1) for maintenance of county patients in state institutions, (2) for administration of and provision for public welfare assistance programs and (3) for operation of the court system may not exceed 5% of the prior year's expenditures. However, Hudson County increased its allowable expenditures for 1978, including those in issue, in an amount within the allowable 5% limit. This budget was approved by the Director of the Division of Local Government Services and Hudson County operated under that budget.
Any ruling in this case would not affect expenditures for the year 1978. We agree with the trial court, however, that, though moot, we should nevertheless consider and decide the merits of the controversy. A bona fide dispute exists and the question is of sufficient public importance, its impact on future budgets being real. (The Cap Law is to remain in effect to December 31, 1982. L. 1978, c. 155, § 1.) Accordingly, the cause will not be dismissed for mootness. In re Court Budget and Court Personnel of Essex County, 81 N.J. 494, 496 (1980); Doe v. Bridgeton Hospital Ass'n, Inc., 71 N.J. 478, 482 n.1 (1976), cert. den. 433 U.S. 914, 97 S. Ct. 2987, 53 L. Ed. 2d 1100 (1977); Busik v. Levine, 63 N.J. 351, 364 (1973), appeal dismissed for want of substantial federal question, 414 U.S. 1106, 94 S. Ct. 831, 38 L. Ed. 2d 733 (1973).
The trial court found and the plaintiffs concede that the following state-mandated expenditures imposed upon the counties must be included in determining whether the county has exceeded the 5% allowable increase: maintenance of mentally ill and mentally retarded patients cared for in state institutions (N.J.S.A. 30:4-78 provides a formula for dividing this cost between the State and counties), Aid to Families with Dependent Children (N.J.S.A. 44:10-5 contains a formula for apportioning this expense among the federal government, the state
government and the county government), financial assistance to disabled, blind and aged individuals (N.J.S.A. 44:7-40, -46 and -82, respectively, set out the formulas for dividing up these costs among the federal, state and county governments), administrative costs of various welfare programs, and judicial services. The amount which a county must contribute for these purposes (other than the judicial services) is a function of the sums appropriated by the Legislature and the number of participants from that county. Therefore, when the Legislature increases its appropriations even though the number of county eligibles remains constant, the county's cost increases.
N.J.S.A. 40A:4-45.4 states:
In the preparation of its budget, a county may not increase the county tax levy to be apportioned among its constituent municipalities in excess of 5% of the previous year's county tax levy, subject to the following exceptions:
a. The amount of revenue generated by the increase in valuations within the county based solely on applying the preceding year's county tax rate to the apportionment valuation of new construction or improvements within the county and such ...