On appeal from the Superior Court of New Jersey, Law Division, Mercer County, L-3799-02.
Before Judges Cuff, Axelrad and Lario.
The opinion of the court was delivered by: Cuff, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted: March 17, 2004
This appeal concerns the Municipal Rehabilitation and Economic Recovery Act (MRERA), N.J.S.A. 52:27BBB-1 to -65, as amended, which provides for significant State involvement in the municipal affairs of a qualifying municipality, and in the affairs of the municipality's school district if the school district is already subject to certain other State monitoring programs. Plaintiffs contend that MRERA violates the State constitution because it is special legislation and that any gubernatorial veto of school board action violates the Open Public Meetings Act. We disagree and affirm.
In order to place our discussion of MRERA, as amended, in context, we need to discuss the statute as originally enacted and prior litigation regarding the statute.
On July 22, 2002, the Legislature enacted the"Municipal Rehabilitation and Economic Recovery Act." N.J.S.A. 52:27BBB-1 to -65, L. 2002, c. 43. It found that"certain municipalities" suffered from"a continuing state of fiscal distress which endures despite... a series of measures" by the State. N.J.S.A. 52:27BBB-2(a). The distress was characterized by poverty, inadequate housing, high unemployment, high crime, the need for large police and fire departments, municipal hospitals that must provide disproportionate amounts of charity care, declining bases of taxable property to pay for such services, and the resulting depopulation and inability to attract business that would serve and employ city residents, all"without any obvious signs of improvement." N.J.S.A. 52:27BBB-2(b) through (f),(h),(k), and (m).
The Legislature observed that the substantial and recurring budget deficits of those municipalities, coupled with"a lack of [the] internal audit controls, accountability and oversight" required for efficient collection of property taxes, required continuing"extraordinary payments of State aid" as well as continuing assistance to maintain police-force staffing levels. N.J.S.A. 52:27BBB-2(g),(i),(l). Because neither government nor the private sector was making any progress in addressing all those needs, it was imperative for the State to"take exceptional measures, on an interim basis, to rectify certain governance issues" and"to strategically invest those sums of money necessary in order to assure the long-term financial viability of these municipalities." N.J.S.A. 52:27BBB-2(j),(o).
For the governance of a qualifying municipality, most of the enactment's provisions addressed the needs that would follow from the two hallmarks of MRERA's application. The first hallmark was the gubernatorial appointment,"in consultation with the mayor and the governing body," of a"chief operating officer" for the municipality for a five-year term to reorganize municipal governance and finances in conjunction with the mayor and the municipality's governing body. N.J.S.A. 52:27BBB-7 to -30. The second hallmark was the creation of a subsidiary of the New Jersey Economic Development Authority for that municipality alone, which would facilitate its"rehabilitation and economic recovery" and operate several specified programs toward that end during the municipality's rehabilitation period. N.J.S.A. 52:27BBB-36 to -55.
Those aspects of the enactment were not implicated in the prior litigation and are not at issue in this appeal. Rather, the focus of the constitutional challenge to MRERA has been and remains limited to the qualification of a municipality and whether the legislative purposes justify the decision to include provisions that extend to the school board instead of just the municipal executive agencies.
In its original version, the definition of a"qualified municipality" had two elements. The first was that the municipality already be subject to the supervision of a financial review board and the State Local Finance Board pursuant to other statutory schemes. N.J.S.A. 52:27BBB-3. The second was that, as of the effective date of the enactment, the municipality must be relying on state funding for at least fifty-five percent of its"total budget." N.J.S.A. 52:27BBB-3.
Turning to school districts, MRERA applied as long as the district was located entirely within the municipality, had a nine-member board of education, and was already a"Type II" district, which meant that it was subject to"level II" monitoring pursuant to N.J.S.A. 18A:7A-14.*fn1 L. 2002, c. 43, § 67(a)*fn2; N.J.S.A. 52:27BBB-63. For such a district, the Governor would expand the school board by appointing three additional members for a limited number of years. L. 2002, c. 43, § 67(a). For the next ten years, the specified procedures for such appointment of some board members and the public election of others would ensure that the gubernatorial appointees always constituted a minority of the board. L. 2002, c. 43, § 67(a)-(e). Meetings of the school board would be subject to the Open Public Meetings Act (OPMA).*fn3 L. 2002, c. 43, § 67(f). Copies of the minutes of each board meeting would be sent to the Governor, who would have fifteen days to review them and to veto"any action taken" at the meeting. L. 2002, c. 43, § 68(b); N.J.S.A. 52:27BBB-64(b).
Plaintiffs Camden City Board of Education and Sara Davis commenced an action to enjoin sections 67 and 68 of MRERA as special legislation. These sections authorized the Governor to veto the minutes of the board of education and establish the composition of the board. In an August 5, 2002 opinion, Judge Smithson found that MRERA applied only to the City of Camden and only the City of Camden met the definition of a qualified municipality. Furthermore, the statute applied only to municipalities with a mayoral form of government. Finding that there was no rational basis for the ...