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City of Ocean City v. Somerville

September 13, 2007

THE CITY OF OCEAN CITY, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT,
v.
JOSEPH SOMERVILLE, PETER GUINOSSO, DENNIS MYERS, JOHN BRYSON, FREDERICK HOFFMAN, INDIVIDUALLY AND COLLECTIVELY AS THE COMMITTEE OF THE PETITIONERS, DEFENDANTS-APPELLANTS.



On appeal from the Superior Court of New Jersey, Law Division, Cape May County, Docket No. L-107-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted August 29, 2007

Before Judges A.A. Rodríguez and Parrillo.

Appellants are five residents of plaintiff City of Ocean City, collectively comprising the "Committee of Petitioners" (Committee), who appeal from the November 30, 2006 judgment of the Law Division declaring invalid a so-called taxpayer protection ordinance (TPO) that they seek to have adopted by the initiative process. We affirm.

By way of background, Ocean City is organized under the Faulkner Act, N.J.S.A. 40:69A-1 to -17, in a "mayor-council" form of government. As such, its citizens have the right to propose and vote on municipal ordinances through the initiative process, N.J.S.A. 40:69A-184, and also have the power to approve or reject municipal ordinances passed by the council, against which a referendum petition has been filed. N.J.S.A. 40:69A- 185.

On February 3, 2006, the Committee presented to the Ocean City clerk an initiative petition requesting adoption of a TPO that essentially would limit increases in municipal expenditures (budget, debt and salaries) to increases in the cost of living. Specifically, the initiative stated:

We, the undersigned registered voters of the City of Ocean City, pursuant to N.J.S.A. 40:69A-184 to 40:69A-196 want to adopt the TAXPAYER PROTECTION ORDINANCE. Municipal budgets, salary ordinances, and contracts would be restricted to the Social Security Cost of Living Adjustment (COLA) increases of the prior calendar year. It also limits the creation of new debt not to exceed total debt as of December 31, 2005, nor shall the benefits of employment be augmented. Any increase above the Social Security COLA or debt limit must be placed on a ballot and approved at the poles by a majority of the voters.

The TPO, attached to the initiative, sets 2005 as its "base year", and correlates budget and salary increases to increases in the "index", defined as "increases in the annual Social Security Cost of Living Adjustment."

With respect to the municipal budget, the TPO provides:

No municipal budget shall result in a percentage increase in appropriations in excess of the prior year's budget appropriations that exceeds the rate of inflation, as measured by the index for the prior calendar year, unless a majority of the voters in the city has approved a public question authorizing the increase.

As concerns municipal debt, the TPO states:

The mayor and council shall not, in any manner, create in any fiscal year a debt or debts, liability or liabilities of Ocean City, which together with any previous debts or liabilities, shall exceed at any time the city's total outstanding debt as of December 31st of the base year, unless a public question ...


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