Citizens of Walsh Act Municipalities Have the Same Right to a Referendum on Authorizing Indebtedness as Citizens of Other Types of Municipalities Do

In re Petition for Referendum to Repeal Ordinance 2010-27 of Margate City, 424 N.J. Super. 242 (App. Div. 2012).  The Home Rule Act, N.J.S.A. 40:49-27, establishes the right to a public referendum regarding any ordinance that authorizes the incurring of an indebtedness.  The question in this case, in which Judge Skillman wrote the opinion, was whether that right applies to a municipality organized under the Walsh Act, N.J.S.A. 40:70-1 et seq., since there is differing or potentially even contradictory language in the two statutes.  Judge Skilman concluded that the referendum right afforded by the Home Rule Act does apply in Walsh Act municipalities, reversing a Law Division decision that was reached on cross-motions for summary judgment on this pure issue of law.

Judge Skillman traced, in exacting detail, the history and changing language of the Home Rule Act and the Walsh Act.  He noted that a prior case that involved a similar issue– “whether a petition for a public referendum regarding an ordinance authorizing the incurrence of an indebtedness was governed by the Walsh Act or the Home Rule Act”– was decided in Wethling v. Board of Commissioners of the City of Orange, 94 N.J.L. 36 (Sup. 1920).  That case held that “residents of a Walsh Act municipality could petition for a referendum regarding an ordinance authorizing the issuance of bonds, but only if they obtained the number of signatures on the petition [then] specified in the Home Rule Act.”  Wethling seemed to settle the issue.

Seventeen years after Wethling, however, as part of a general statutory revision, the Walsh Act was amended to permit referenda, except for “ordinances authorizing an improvement or the incurring of an indebtedness, other than for current expenses, where other requirements are made by law.”  Judge Skillman observed that if the new language had been limited to “ordinances … an indebtedness,” it could reasonably be construed as exempting such ordinances from the referendum provisions of both the Walsh Act and the Home Rule Act.  But the Legislature went on to include “where other requirements are made by law.”  Under standard principles of statutory interpretation, that language could not be ignored but had to be given content.

Judge Skillman held that, in 1937, when the statutory revision occurred, the “law” was the holding of Wethling.  Thus, “the only reasonable intent that can be ascribed to the Legislature in describing ‘ordinances authorizing an improvement or the incurrence of indebtedness’ as ordinances ‘where other requirements are made by law’ was to adopt the court’s holding in Wethling.”

Two other principles also supported this result.  First, the 1937 revision was a general one, not a specific one applicable only to the statutes involved here.  “[T]here is a presumption against a legislative intent to effect a change in substance by a revision of the general laws.”  Second, referendum provisions are to be “liberally construed” in favor of citizen involvement.  That is especially so, Judge Skillman stated, in the context of a referendum on an ordinance that authorizes the incurrence of an indebtedness.  He found an (admittedly imperfect) analogy in Article VIII, section 2, paragraph 3 of the New Jersey Constitution, which provides that a statute authorizing state indebtedness cannot take effect until it is submitted to a vote of the people and approved by a majority of those voting.

This is a somewhat difficult case to follow.  The result certainly might not be seen as intuitively clear.  But the law is often that way.  Especially since Wethling itself was not the decision of an appellate court, it will be interesting to see whether a petition for certification to the Supreme Court will be filed.