Opinion ID: 2828537
Heading Depth: 3
Heading Rank: 5

Heading: Does the ordinance stand “as an obstacle to

Text: the accomplishment and execution of the full purposes and objectives” of the Legislature? [71 N.J. at 461-62 (citations omitted).] The Overlook factors have served as the governing standard in several settings in which courts determined whether state law preempts a local ordinance. See, e.g., Mack Paramus Co. v. 25 Mayor of Paramus, 103 N.J. 564, 566, 573-74 (1986) (citing Overlook factors to assess whether local Sunday blue law ordinances were preempted by State Sunday blue law); Lake Valley Assocs. v. Twp. of Pemberton, 411 N.J. Super. 501, 505-06 (App. Div.) (noting that, “[o]rdinarily, to determine whether an ordinance or part thereof is preempted by statute, the court should consider the [five] factors set forth in Overlook,” but such inquiry was not needed when statute explicitly provided that it was not intended to preempt local ordinances), certif. denied, 202 N.J. 43 (2010); Crow-N.J. 32 Ltd. v. Twp. of Clinton, 718 F. Supp. 378, 385-86 (D.N.J. 1989) (citing Overlook “guidelines for deciding whether a state statute preempts a local ordinance”). The preemption standard of Overlook is consistent with the principles stated in two recent opinions in which this Court rejected challenges to referendum petitions submitted pursuant to the Faulkner Act, Trenton Ordinance 09-02, supra, 201 N.J. at 359-64, and Ordinance 04-75, supra, 192 N.J. at 464-69. Although it does not appear that the municipality challenging the referendum in either case couched its contention as a preemption argument, the issues raised in both appeals are closely related to the preemption argument asserted by Mayor Redd and Council President Moran in this case, and thus, the Court’s analysis in both instances is instructive. 26 In Ordinance 04-75, supra, the Court rejected the reasoning of a line of cases that exempted “administrative” ordinances from the reach of the Faulkner Act. 192 N.J. at 467-70. The Court cited the expansive language of the Faulkner Act referendum provision, which gives the voters “the power to approve or reject at the polls . . . any ordinance passed by the council” and challenged by referendum. Id. at 460 (quoting N.J.S.A. 40:69A-185). It also identified a panoply of statutes in which the Legislature demonstrated that it “knew precisely how to exclude particular ordinances from the purview of the referendum statute when it wished to do so.” Id. at 466-67. The Court then observed: That sampling clearly establishes that the Legislature has determined, on multiple occasions, those municipal matters that should not be called before the voters in a referendum. Because the Legislature has made exceptions to N.J.S.A. 40:69A-185 with such precision in a multitude of statutes, we cannot find that it intended an amorphous legislative/administrative distinction that cannot be gleaned from the statute’s text, legislative history, or place in the larger statutory scheme. [Id. at 467.] Following the analysis of Ordinance 04-75, the Court held in Trenton Ordinance 09-02, supra, that the Municipal Utilities Law, N.J.S.A. 40:62-1 to -151, which provided for Board of Public Utilities review of the sale of Trenton’s water works 27 system, was not intended to deprive the public of its referendum power under the Faulkner Act. 201 N.J. at 353, 359-68. The Court reiterated the holding of Ordinance 04-75 that where the legislative intent is not clear “from the statute’s text, legislative history, or place in the larger statutory scheme[,]” an intention to immunize an ordinance from a Faulkner Act challenge will not be found. Put another way, in the absence of an unequivocal legislative expression to the contrary, citizens in a Faulkner Act municipality are empowered to protest any ordinance under the Act. The burden is on the party seeking to defeat the Faulkner Act to clearly establish the existence of a contrary legislative intent. [Id. at 362 (quoting Ordinance 04-75, supra, 192 N.J. at 467).] Thus, the Overlook standard that generally governs questions of state preemption of municipal ordinances, and the Court’s two recent decisions applying the referendum provision of the Faulkner Act, direct that we discern whether the Legislature intended to deny voters the power of initiative in the setting of this case. The broad statutory language, on which the Court’s holdings in Ordinance 04-75 and Trenton Ordinance 09-02 rest, finds an exact counterpart in the initiative provision of the Faulkner Act. The Act permits the voters of any municipality to “propose any ordinance and . . . adopt or reject the same at the polls.” N.J.S.A. 40:69A-184; see Ocean City, supra, 403 N.J. Super at 357 (noting that 28 Faulkner Act’s initiative provision “by its very terms admits of no qualification”). Accordingly, we review MRERA and the fiscal statutes on which Mayor Redd and Council President Moran rely, as well as the Police Force Statute invoked by Council President Moran, to determine whether the Legislature intended to deny a properly framed Faulkner Act ordinance to preclude the police reorganization undertaken by Camden in 2013. The Memorandum of Understanding, which prompted the regionalization of the Camden police force, followed years of State oversight of Camden’s finances, and is rooted in the LBL, SMAA, TAL, and, most directly and specifically, MRERA. The LBL generally charges the Department’s Division of Local Government Services with significant oversight of municipal budgets, which must be certified by the Director of the Division. N.J.S.A. 40A:4-76 to -79.6 The LBL requires local municipalities to enact a balanced budget in every fiscal year. See Ocean City, supra, 403 N.J. Super. at 363-64 (explaining municipal budget process); 6LBL provides that “[t]he governing body of each local unit shall adopt a budget for each fiscal year.” N.J.S.A. 40A:4-3. The Director of the Division of Local Government Services will then “examine the budget for detail and accuracy of itemization and for compliance as to form, arrangement and content with the provisions of [Chapter 4] and the regulations of the local government board.” N.J.S.A. 40A:4-76. “Immediately after the making of his examination of the budget, the director shall certify the results of his determination to the governing body. A governing body shall not finally adopt a budget until a certification of approval by the director has been received.” N.J.S.A. 40A:4-79. 29 accord Cnty. of Morris v. Skokowski, 86 N.J. 419, 422-23 (1981). The statute imposes on Camden and other municipalities detailed requirements with respect to the process of enacting a municipal budget, but contains no evidence that the Legislature intended to preempt the Faulkner Act initiative at issue in this case.7 For municipalities such as Camden that were eligible for municipal aid, SMAA prescribes a procedure by which the Director of the Division of Local Government Services determines that the “municipality is experiencing fiscal distress and may require assistance under [N.J.S.A. 52:27D-118.24 to 118.31],” and reports that finding to the Local Finance Board. N.J.S.A. 52:27D-118.28. After reviewing the municipality’s finances and meeting with the governing body and other “interested parties,” the director is required to “notify the board of the findings of the review and . . . recommend to the board actions necessary to be taken by the municipality, which may include the provision of short-term financial aid.” Ibid. The Legislature clearly stated in SMAA that the implementation of reforms necessary to the 7 As this Court noted in Ordinance 04-75, supra, the Faulkner Act’s referendum provision “contains at least a partial, if not total, exception to the referendum rule for municipal budgets,” because in N.J.S.A. 40:69A-185, the Legislature exempted local budget ordinances from the otherwise applicable twenty-day waiting period before they become effective. 192 N.J. at 46566. The Court read this provision to “signify[] that, unlike other ordinances, a budget ordinance cannot be suspended” under the Faulkner Act. Id. at 465. 30 municipality’s financial recovery was a condition of receiving State aid under N.J.S.A. 52:27D-118.24 to -118.31: As a condition of receiving assistance under the provisions of [N.J.S.A. 52:27D-118.24 to -118.31], an eligible municipality shall implement any government, administrative and operational efficiency, and oversight measures necessary for the fiscal recovery of the municipality as recommended by the director and approved by the board, and be subject to management and fiscal audit by the director. . . . . b. The director may withhold from an eligible municipality any State aid payments that are disbursed by the Division of Local Government Services if the director finds the municipality has failed to implement fiscal recovery measures approved by the board. Upon withholding an aid payment, the director shall report to the board the circumstances surrounding the reasons for withholding aid. The board shall then hold a hearing to give the eligible municipality an opportunity to explain why such aid payments should not continue to be withheld, and what action the eligible municipality plans to take to implement the fiscal recovery measures. Upon completion of the hearing, the board shall determine if State aid payments should continue to be made to the municipality, establish a schedule for such payments when appropriate, and determine what other actions should be taken. [N.J.S.A. 52:27D-118.29.] In 2011, TAL replaced the SMAA scheme and two other existing municipal aid programs. See S. Budget & Appropriations Comm. Statement to S. 3118 (Dec. 8, 2011). The Senate Budget 31 and Appropriations Committee declared that “[a]pplying for aid under this program is a declaration that the municipality is not capable of managing its finances without special State assistance and intervention.” Ibid. Under TAL, the Director of the Division of Local Government Services exercises broad oversight of the municipality’s operations, focusing on, but not limited to, its fiscal management. See N.J.S.A. 52:27D118.42a(a). The Director of the Division of Local Government Services in the Department of Community Affairs shall determine conditions, requirements, orders, and oversight for the receipt of any amount of grants, loans, or any combination thereof, provided to any municipality through the [TAL] program or any successor discretionary aid programs for municipalities in fiscal distress. Conditions, requirements, or orders deemed necessary by the director may include, but not be limited to, the implementation of government, administrative, and operational efficiency and oversight measures necessary for the fiscal recovery of the municipality, including but not limited to requiring approval by the director of personnel actions, professional services and related contracts, payment in lieu of tax agreements, acceptance of grants from State, federal or other organizations, and the creation of new or expanded public services. [Ibid.] SMAA and TAL plainly reveal the Legislature’s determination that municipal aid for Camden and other qualified municipalities is premised on the municipalities’ compliance with a broad 32 spectrum of conditions and requirements imposed by the State. See N.J.S.A. 52:27D-118.24 to 118.31; N.J.S.A. 52:27D-118.42a. Under SMAA and TAL, a municipality’s failure to comply with the State directives authorized by the Legislature may have dire fiscal consequences. See N.J.S.A. 52:27D-118.29(b). Nonetheless, neither statute bars a municipality from enacting ordinances by initiative or referendum under the Faulkner Act that contravene a condition imposed by the State. Although such an ordinance might imperil state funding under SMAA or TAL, it is not preempted by either statute. In enacting MRERA in 2002, the Legislature clearly viewed the statute as an extraordinary response to a crisis of both fiscal management and public safety.8 Citing “a continuing state 8 Camden meets the definition of a “qualifying municipality” under MRERA. Camden City Bd. of Educ. v. McGreevey, 369 N.J. Super. 592, 607 (App. Div. 2004). MRERA defines a qualified municipality as one
of a financial review board pursuant to the “Special Municipal Aid Act,” L. 1987, c. 75 [N.J.S.A. 52:27D-118.24 to -118.31] for at least one year; (2) that has been subject to the supervision of the Local Finance Board pursuant to the “Local Government Supervision Act (1947),” L. 1947, c. 151 [N.J.S.A. 52:27BB-1 to -23] for at least one year; and (3) which, according to its most recently adopted municipal budget, is dependent upon State aid and other State revenues for not less than 55 percent of its total budget. [N.J.S.A. 52:27BBB-3.] 33 of fiscal distress which endures despite the imposition of a series of measures authorized pursuant to law,” and “a lack of internal audit controls, accountability and oversight,” the Legislature acknowledged the failure of prior efforts to encourage economic growth. N.J.S.A. 52:27BBB-2 (a), (g). In addition to several provisions regarding the fiscal management of a qualified municipality, the Legislature specifically addressed the need for a police force sufficient to protect public safety: Given the high crime rates in these municipalities, if economic recovery is to be successful, it is vital that municipal residents feel that their basic safety is assured; accordingly, the State will continue to commit to assist such municipalities in maintaining not less than that number of police officers employed by the municipality at the time of the determination by the commissioner that the municipality fulfills the definition of a qualified municipality and in creating working relationships between State agencies, local law enforcement and the community to identify and develop strategies to improve the quality of life and the security of residents in qualified municipalities. [N.J.S.A. 52:27BBB-2(l).] In MRERA, the Legislature mandated that State and municipal officials focus on the efficacy and cost of police services. See, e.g., N.J.S.A. 52:27BBB-2(b) (providing that municipalities qualified under MRERA “have a history of high crime rates . . . that has necessitated the maintenance of large police and fire 34 departments, at enormous taxpayer cost in municipalities without a sound tax base”); N.J.S.A. 52:27BBB-12(d) (mandating study to “analyze the current state of [public safety] services . . . and make recommendations for current and future staffing levels in order to realize appropriate levels of service”). Thus, the Legislature disclosed a clear intent that the State and the local governing body, such as Camden, would scrutinize, and, as necessary, reform the delivery of police services to its residents. In MRERA, however, the Legislature reaffirmed that a municipality’s status as a qualified municipality would leave in place the form of government chosen prior to its entry into the rehabilitation and economic recovery phases prescribed by the statute. The statute provides that “[n]otwithstanding that a municipality has been placed under rehabilitation and economic recovery under [N.J.S.A. 52:27BBB-1 to -79], the municipality shall remain a body corporate and politic in the same manner as existed prior to rehabilitation and economic recovery.” N.J.S.A. 52:27BBB-34(a). Moreover, MRERA directs that a qualified municipality retain its chosen form of government: Unless otherwise provided pursuant to [N.J.S.A. 52:27BBB-1 to -79], the governing body shall retain all functions, powers and duties prescribed to it pursuant to the charter and administrative code of the municipality, . . . [including] any specific form of government law according to which the 35 municipality is governed, and such other sections or other laws which govern municipal operation or administration. [N.J.S.A. 52:27BBB-25.] As those provisions reflect, the Legislature intended that ordinances be enacted in a qualified municipality in accordance with the procedures mandated for the form of government chosen by the municipality. In the case of Camden, a Faulkner Act municipality, three processes are prescribed by the Faulkner Act for the enactment of an ordinance: council vote, N.J.S.A. 40:69A-180 to -181; initiative, N.J.S.A. 40:69A-184; and referendum, N.J.S.A. 40:69A-185. An ordinance, however enacted, that undermines an agreement reached by Camden pursuant to MRERA may prompt the State to withhold municipal aid under the statute, but there is nothing in MRERA that expresses a legislative intent to preempt the Faulkner Act process. Instead, MRERA reaffirms Camden’s status as a Faulkner Act municipality, and by inference, the initiative and referendum procedure at the Faulkner Act’s core. The Legislature has extensively addressed the field of municipal finance in Camden, particularly in SMAA, TAL and MRERA, but it has not done so to the exclusion of a municipal role, as the actions taken by Camden illustrate. See generally N.J.S.A. 52:27D-118.24 to -118.31, 52:27D-118.42a, 52:27BBB-1 to -79. Although the Legislature clearly intended that a decision 36 by Camden not to reform its police services would have serious ramifications for the City, it left open the possibility that Camden would reject the State-imposed conditions, and with that, its State aid. See N.J.S.A. 52:27D-118.29(b), 52:27D-118.42a. It did not purport to bar Camden from enacting ordinances -- including ordinances with negative fiscal consequences to the municipality -- by initiative or referendum. Thus, in accordance with the standard set forth in Overlook, and in accord with this Court’s decisions in Ordinance 04-75 and Trenton Ordinance 09-02, the Legislature’s intent is clear -- to preserve the Faulkner Act procedures notwithstanding Camden’s status as a qualified municipality under N.J.S.A. 52:27BBB-3. MRERA does not preempt the power of initiative conferred by the Legislature in the Faulkner Act. Similarly, we discern no legislative intent in the Police Force Statute to preempt the police regionalization ordinance. That statute authorizes “[t]he governing body of any municipality [to] create and establish, as an executive and enforcement function of municipal government, a police force.” N.J.S.A. 40A:14-118. Nothing in the Police Force Statute precludes the voter initiative and referendum procedures set forth in the Faulkner Act. See Ordinance 04-75, supra, 192 N.J. at 451-55, 470 (affirming validity of Faulkner Act referendum challenging 37 ordinance regarding composition of police force created pursuant to N.J.S.A. 40A:14-118). Indeed, like MRERA, the Police Force Statute reaffirms the form of government adopted by the municipality: Any such ordinance shall, in a manner consistent with the form of government adopted by the municipality and with general law, provide for a line of authority relating to the police function and for the adoption and promulgation by the appropriate authority of rules and regulations for the government of the force and for the discipline of its members. [N.J.S.A. 40A:14-118.] The Legislature thus expressly acknowledged in the Police Force Statute that a police ordinance would be enacted consistent with the form of government chosen by the municipality -- in Camden’s case, the Faulkner Act Mayor-Council form of government prescribed by N.J.S.A. 40:69A-32. The Police Force Statute does not preempt the Faulkner Act’s mechanisms and invalidate the Committee’s proposed ordinance. Accordingly, we hold that the Faulkner Act initiated, proposed ordinance at issue here is not invalid by virtue of preemption by either MRERA, SMAA, TAL, LBL, or the Police Force Statute. We reverse that portion of the Appellate Division’s judgment that remanded the matter to the trial court for the development of a record on the issue of preemption.