Ordinances Increasing Municipal Appropriations by Not More Than 3.5% Cannot be the Subject of a Faulkner Act Referendum

Roseff v. Byram Tp., 432 N.J. Super. 8 (App. Div. 2013).  The referendum provision of the Faulkner Act, N.J.S.A. 40:69A-185, which permits citizens to petition for a referendum to seek to overturn a municipal ordinance, is not often invoked.  It is even less frequently the subject of appellate decisions.  This case, however, is the second published Appellate Division decision in the last sixty days to address Faulkner Act referenda.   

N.J.S.A. 40:69A-185 gives voters “the power of referendum which is the power to approve or reject at the polls any ordinance submitted by the council to the voters or any ordinance passed by the council, against which a referendum petition has been filed as herein provided.”  As Judge Grall noted in her opinion for the panel in this case, the Supreme Court has made clear that “any ordinance” means all ordinances “except where the Legislature has made clear its intention to carve out of the democratic processes provided in the Faulkner Act a particular type of ordinance.” 

In this case, the defendant Township adopted an ordinance that increased the municipal budget by up to 3.5% over the previous year’s final appropriations, pursuant to N.J.S.A. 40:4-45.14.  That statute allows a municipality to increase its final appropriations for a fiscal year by a percentage higher than the cost-of-living adjustment, but not more than 3.5%.  Citizens petitioned for a referendum to attempt to override that ordinance.  Relying on an opinion of the Township Attorney that this ordinance was not subject to referendum, the Mayor and Council rejected the petition.  Plaintiffs sued, and the Law Division agreed with the Township.  The Appellate Division affirmed, holding that although the Township had the burden of showing that the Legislature intended to exempt this type of ordinance from a referendum, the Township had carried that burden.

The key to Judge Grall’s ruling was the differing provisions of N.J.S.A. 40:4-45.14 and the Faulkner Act as to when ordinances take effect.  N.J.S.A. 40:69A-181 expressly states that “[n]o ordinance other than the local budget ordinance shall take effect less than twenty days after its final passage,” a twenty-day period that is also incorporated into the referendum provision, N.J.S.A. 40:69A-185.  Citing prior appellate authorities, particularly Cuprowski v. Jersey City, 101 N.J. Super. 15 (Law Div.), aff’d o.b., 103 N.J. Super. 217 (App. Div. 1968), Judge Grall concluded that “by providing for budget ordinances to take immediate effect, the Legislature expressed its intent to insulate those ordinances from a protest referendum.”  Since N.J.S.A. 40:4-45.14 likewise states that ordinances adopted pursuant to its authority “shall, notwithstanding any other provision of law, take effect immediately upon adoption,” this ordinance could not be the subject of a referendum.    

Though that reasoning sufficed to affirm the decision of the Law Division, Judge Grall also noted that nothing in the legislative history undercut the panel’s conclusion based on the language of the statutes.  The Legislature amended N.J.S.A. 40:4-45.14 several times in the period after Cuprowski.  The Legislature is deemed to have been aware of that ruling, but it did not alter the provision that ordinances adopted pursuant to N.J.S.A. 40:4-45.14 take effect immediately.  That reinforced the panel’s ruling that such ordinances cannot be the subject of a referendum.