SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0123-98T3
CITY OF JERSEY CITY,
Plaintiff-Respondent,
v.
JOHN J. FARMER, JR., ATTORNEY
GENERAL OF THE STATE OF NEW
JERSEY,See footnote 11 and CITY OF NEWARKSee footnote 22,
Defendants-Appellants.
________________________________________________________________
Argued October 14, 1999 - Decided February 29, 2000
Before Judges Baime, Wecker and BilderSee footnote 33.
On appeal from the Superior Court of New
Jersey, Law Division, Hudson County.
Patrick DeAlmeida, Deputy Attorney General,
argued the cause for appellant (John J.
Farmer, Jr., Attorney General of New Jersey,
attorney; Joseph L. Yannotti, Assistant
Attorney General, of counsel and Mr.
DeAlmeida, on the brief).
Michelle Hollar-Gregory, Corporation Counsel
for Department of Law, City of Newark,
attorney for appellant City of Newark,
partially relying on the brief of appellant
(Melvin Simon, Assistant Corporation Counsel
on the reliance letter).
Stephen J. Edelstein, argued the cause for
respondent City of Jersey City (Schwartz,
Simon Edelstein, Celso & Kessler, attorneys;
Mr. Edelstein, of counsel and on the brief and
Stefani C. Schwartz, on the brief).
The opinion of the court was delivered by
WECKER, J.A.D.
This appeal involves an amendment to the Local Tax
Authorization Act, N.J.S.A. 40:48C-1 to -41, specifically to the
provision of the Act that allows a municipality with a population
of 200,000 or more to enact a local payroll tax. N.J.S.A. 40:48C
19, as amended by L. 1996, c. 33, § 2. The amendment, sometimes
referred to as a grandfather clause, retroactively adds a longevity
requirement that prevents any otherwise eligible municipality from
enacting a payroll tax unless it did so within two years before (but
no later than) July 1, 1995.See footnote 44 Whereas prior to the 1996 amendment,
both Newark and Jersey City were empowered to enact and collect a
payroll tax, under the statute as amended Jersey City cannot qualify
and only Newark is so empowered.
On cross-motions for summary judgment, the Law Division Judge
rejected the State's contentions that Jersey City's lawsuit was
barred for lack of standing, as well as by reason of the entire
controversy doctrine. On the merits, the judge held that the
grandfather amendment was unconstitutional special legislation in
violation of N.J. Const. art. IV, § 7, ¶9(6)See footnote 55 and severed the
provision. However, the judge stayed his judgment pending
disposition of this appeal.
On the constitutional issue the judge applied the test of
special legislation set forth in Vreeland v. Byrne,
72 N.J. 292
(1977), and held that (1) the underlying purpose of the Act was to
enable large cities to meet a fiscal crisis (or hardship) brought
on by local conditions, and (2) the so-called "grandfather"
provision of the amended statute, which excludes otherwise
qualifying cities that did not collect or enact a payroll tax before
July 1, 1995, had no "rational or reasonable basis relevant to the
purpose and object of the act." Id. at 301. Because we disagree
with the Law Division Judge's application of the law to the facts
before the court, we reverse.
A brief history of the challenged legislation will set the
stage for our analysis. The Local Tax Authorization Act, N.J.S.A.
40:48C-1 to -41, first enacted in 1970, allows cities of a certain
size to enact certain local taxes, including a payroll tax. The
original Act applied to cities having a population greater than
350,000. At the time, Newark's population was 382,417 and Jersey
City's population was 260,545.See footnote 66 No other New Jersey city had a
population greater than 350,000. With a brief exception in 1975See footnote 77,
until the qualifying population size was reduced to 200,000 in 1990,
only Newark qualified by population to enact a payroll tax under the
Act. In 1981, the Act was amended to authorize cites of 300,000 to
enact the local tax. L. 1981, c. 462, § 38 ("An Act Concerning the
Effects of the Census of 1980"). The 1980 Census shows Newark with
a population of 223,532. After the 1990 census, which revealed that
Newark's population had decreased to 275,221 and Jersey City's had
increased slightly to 228,537, the population requirement of the
Local Tax Authorization Act was amended to apply for the first time
to cities of 200,000 or more. L. 1990, c. 9.
Although Jersey City became eligible as of the 1990 amendment,
it did not enact a payroll tax until December 6, 1995. On December
26, 1995, one day before the local payroll tax would have become
effective in Jersey City, a referendum petition was filed as
permitted by the Faulkner Act, N.J.S.A. 40:69A-1 to -210. Although
that petition was later withdrawn, the Supreme Court held that its
filing delayed the effective date of the Jersey City payroll tax
ordinance from December 27, 1995, until January 27, 1996. Hudson
County Chamber of Commerce v. Jersey City,
310 N.J. Super. 208
(App. Div. 1997), aff'd in part o.b.,
153 N.J. 254 (1998).
Legislation enacted on June 17, 1996, retroactive to January
1, 1996, amended section 19 by extending the sunset provision of
the Act to December 31, 1999; the amendment also added for the
first time a provision that excluded municipalities that had not
collected payroll taxes or enacted a payroll tax ordinance within
two years prior to July 1, 1995. See L. 1996, c. 33, § 1. Thus
Jersey City never could qualify, and Newark remained the only city
permitted to collect a local payroll tax. It is that retroactive
exclusion that Jersey City challenges.
The challenged provision here has been referred to as a
grandfather clause, as described in Paul Kimball Hospital v. Brick
Twp. Hosp.:
Grandfather clauses operate to exempt from the
requirements of legislative enactments certain
defined individuals or entities that, at the
time the requirements become effective, meet
specific defined criteria.
[
86 N.J. 429, 440-41 (1981).]
The provision we consider differs from the typical grandfather
clause in that it creates a prior condition, enactment of a payroll
tax, that no other municipality can meet in the future. Describing
the provision as a longevity requirement would be more accurate.
See, e.g., Secaucus, 133 N.J. at 495.
The State's first argument is that "[Jersey City], lacks standing to raise a claim against the State with respect to the delegation of municipal taxing authority by the Legislature." The issue as we see it is not one of "standing" but rather of justiciability;See footnote 88 that is, can the judiciary hear Jersey City's claim, or does the challenged legislation address a political question on which the court may not intervene? There can be no doubt that the municipality is a creature of the State, and has only such powers as the State may grant. See, e.g., Hunter v. City of Pittsburgh, 207 U.S. 161, 178-79, 28 S. Ct. 40, ___, 52 L. Ed. 151, 159 (1907). Holding that it had no authority to hear the City's federal constitutional challenge to state legislation, the United States Supreme Court said:
In all these respects the state is supreme, and its legislative body, conforming its action to the state Constitution, may do as it will, unrestrained by any provision of the Constitution of the United States. (Emphasis added.)
[Id., 207 U.S. at 179, 28 S. Ct. at ____, 52 L. Ed. at 159 (emphasis added).]
That proposition, however, does not restrict a municipality's right to challenge state legislation, in state court, under the state's own constitution. Indeed, by assuming that the state legislature would have "conform[ed] its action to the state Constitution," the Court suggests just the opposite.
In Alfred Vail Mutual Ass'n v. Halpin, 107 N.J. Super. 517 (App. Div. 1969) aff'd sub. nom. Alfred Vail Mutual Ass'n v. Borough of New Shrewsbury, 58 N.J. 40 (1971), Judge Conford rejected the contention of two of the defendants, the Speaker of the Assembly and the President of the Senate, that the plaintiffs, a municipality and a taxpayer, could not proceed on their claims that a statute violated the constitutional prohibition against special legislation.
If the named plaintiff had no status to sue, the constitutional issues would still require determination since plaintiff municipality, Township of Shrewsbury, unquestionably is a proper party plaintiff.
[Id. at 527 (emphasis added.)]
In In re Charter School Application of Englewood, 320 N.J. Super. 174 (App. Div. 1999), certif. granted, ___ N.J. ___ (Oct. 29, 1999), recognizing some authority for the proposition that a municipality may not challenge legislation affecting municipal budgets, Judge King wrote for this court that we would nevertheless follow decisions that had "taken a less formalistic approach, in the interest of reaching the merits of a public-policy controversy." Id. at 234.
In support of its challenge to Jersey City's right to maintain this suit, the State contends that because the legislature "is vested with the sole ability to grant and repeal municipal taxing power ... a municipality [cannot] compel the Legislature through judicial decree to expand a local government's powers." The State misconstrues the issue, and its reliance upon McKenney v. Byrne, 82 N.J. 304 (1980), and Glassboro Borough v. Byrne, 141 N.J. Super. 19 (App. Div.), certif. denied, 71 N.J. 518 (1976), is misplaced.
In McKenney v. Byrne, the Court addressed a municipal challenge to a statute apportioning certain tax receipts. The Court rejected plaintiff's equal protection argument on the merits, because "the apportionment ratio is predicated on the same standards for all municipalities." Id. at 317. Also finding no violation of the prohibition on special legislation, Justice Schreiber nevertheless wrote for the Court:
The burden of mounting a successful challenge on equal protection grounds under the state Constitution in view of the circumstances here is no different from that which prevails under the federal Constitution. Although the sovereign power reposing in the people is exercisable by the Legislature, the exercise of that power must not violate the right to equal protection which the people have included in the Constitution. See State v. Saunders, 75 N.J. 200, 225-226, 381 A.2d 333 (1977) (Schreiber, J., concurring). We must consider the "apparent public justification" of the statute to "decide whether the State action is arbitrary." Robinson v. Cahill, 62 N.J. 473, 492, 303 A.2d 273, 282 (1973).
[Id. at 317.]
Defendant relies on these comments in the McKenney opinion:
Recognizing the need to find a constitutional
provision, plaintiffs have relied upon the
federal and state equal protection clauses, and
upon two provisions of the New Jersey
Constitution (1947), Art. IV, § VII, par. 9(6)
and 9(13), relating to special legislation. We
find none of these provisions applicable. It is
doubtful whether any of the municipalities may
attack the legislation on these grounds. [FN4]
FN4. Whether a municipality has
standing to raise these issues is
questionable. It has been held it is
not a "person" entitled to the
benefit of the Equal Protection
Clause of the Fourteenth Amendment.
[citations omitted.] Furthermore,
being a political subdivision and
creature of the state, a
municipality might not fall within
the protective mantel of the cited
state constitutional provisions. See
Glassboro Borough v. Byrne,
141 N.J.
Super. 19,
357 A.2d 65 (App.
Div.1976), certif. den.
71 N.J. 518,
366 A.2d 674 (1976). . . .
[Id. at 315 (emphasis added).]
McKenney describes as "questionable" a municipality's standing
to challenge the formula for apportioning proceeds from a tax on
public utilities' gross receipts as special legislation, citing
Glassboro Borough v. Byrne. However, Glassboro involved a challenge
to certain line items in an appropriations act, which we held to
"represent an exercise of legislative judgment" that did not raise
"any justiciable issue ...." 141 N.J. Super. at 24. See also City
of Camden v. Byrne,
82 N.J. 133, 149 (1980) ("There can be no
redress in the courts to overcome either the Legislature's action
or refusal to take action pursuant to its constitutional power over
state appropriations.") Each of these cases involved legislative
appropriations, classically the exclusive domain of that branch of
government. Jersey City's challenge is distinguishable from
McKenney, Glassboro and Camden in that Jersey City is not
challenging an allocation or appropriation of tax monies collected
by the State. In fact, Jersey City does not challenge the
Legislature's power to enact rational classifications that would to
grant Newark alone the right to enact a payroll tax.See footnote 99 Plaintiff
challenges only the after-the-fact aspect of the 1996 amendment to
section 19, which effectively grandfathered Newark but not Jersey
City.
We agree with the motion judge's ruling that the plaintiff had
the right to bring this action to the courts:
The challenge is not aimed at the
discretionary authority of the legislature to
repeal municipal taxing privileges. The issue
is whether the legislature acted in conformity
with the requirements of the New Jersey
constitution. That is an important public
question appropriately raised by an affected
municipality. Indeed if Jersey City, by its
duly elected officials, lacked standing to
challenge the recent amendment to N.J.S.A.
40:48C-19 as special legislation, it is
unlikely that the question could be raised at
all.
We also agree with Judge King that we should "reach[] the merits of
a public policy controversy." We therefore reject the State's
contention that the Law Division "lacked jurisdiction to entertain
[Jersey City's] claims ...."
There is insufficient merit to the entire controversy issue to warrant extended discussion in a written opinion. See R. 2:11 3(e)(1)(E). Suffice it to say that it was not an abuse of discretion to conclude that plaintiff had no obligation to bring this challenge to amending legislation that was enacted after the prior suit, Hudson County Chamber of Commerce, had been decided at the trial level and while it was on appeal. We add only brief explanation.
Defendant invokes the entire controversy doctrine based on the Hudson County Chamber of Commerce lawsuit. That case was decided in the Law Division on May 17, 1996, before the legislation extending the sunset provision of N.J.S.A. 40:48C-19 to December 31, 1999 was approved on June 17, 1966. L. 1996, c. 33, § 2. Because the Jersey City ordinance on its face imposed a tax on services performed in "the calendar quarter in which this ordinance takes effect," and because of the sunset date of the Act, the ordinance potentially applied only to the fourth quarter of 1995, and then only if the ordinance was deemed to have taken "effect" in December, before the sunset of the enabling statute. The Law Division Judge concluded in that lawsuit that Jersey City's payroll tax ordinance, which was adopted by the counsel on December 6, 1995, and by the mayor on December 7, 1995, and which would ordinarily have become effective twenty days later on December 27, 1995, did not take effect because the referendum petition was filed on December 26. That petition was withdrawn in January 1996, and the ordinance did not take effect until after the withdrawal, on January 26, 1996.
The Law Division decision was filed on May 17, 1996, before the June 1996 amendment to N.J.S.A. 40:48C-19. That decision was affirmed on appeal. Hudson County Chamber of Commerce, 310 N.J. Super. 208, 215 (App. Div. 1997), aff'd in part o.b., 153 N.J. 254 (1998). The June 1996 legislation at issue here obviously was not the subject of the Chamber of Commerce suit, nor was Jersey City obligated to raise it on appeal, and the entire controversy doctrine is inapplicable.
The motion judge correctly set forth the legal standard applicable to a special legislation challenge, citing Newark Superior Officers' Ass'n v. City of Newark, 98 N.J. 212 (1985) and Vreeland v. Byrne, 72 N.J. 292, (1977). The judge agreed with the State's contention that
the legislature could merely have provided that no municipality which had not adopted a payroll tax by the effective date of the amendment, could impose such a tax in the future. That would have been a prospective declaration of a policy consistent with the discussion of grandfather clauses in the Paul Kimball Hospital [v. Brick Twp. Hosp., 86 N.J. 429 (1981)] case.
However, he found "no rational basis for this exception to the application of the grandfather clause." In other words, the judge based his decision on finding the July 1, 1995 cut-off date irrational. We are constrained to disagree with the judge's application of the Vreeland principles to the "specific terms" of the amendment to section 19 and therefore with his conclusion that the longevity or "grandfather" provision has no rational basis.
Every statute bears a presumption of validity that is not readily overcome. Newark Superior Officers Ass'n v. City of Newark, 98 N.J. 212, 222 (1985); Paul Kimball Hospital, 86 N.J. at 447. "Where alternative interpretations of a statute are equally plausible, the view sustaining the statute's constitutionality is favored." Town of Secaucus v. Hudson County Bd. Of Taxation, 133 N.J. 482, 492 (1993), cert. denied sub nom. City of Bayonne v. Town of Secaucus, 510 U.S. 1110, 114 S. Ct. 1050, 127 L. Ed.2d 372 (1994). A statute must "clearly and irremediably violate[]" the ban on special legislation to be invalidated. Town of Secaucus, 133 N.J. at 493. The "Legislature has wide discretion in determining the perimeters of a classification ... and an adequate factual basis for the legislative judgment is presumed to exist." Paul Kimball Hospital, 86 N.J. at 446-447 (citations omitted). As the Supreme Court said in Paul Kimball Hospital:
The fact that only one entity that meets the specific provisions of the amendment has been identified thus far does not render legislation special. The test is, as we have seen, whether any health care facilities have been excluded that should have been included. Irrespective of whether any other hospital fits into the category, it is settled that a class of one is constitutionally permissible. Bayonne v. Palmer, 90 N.J. Super. 245, 284, 217 A.2d 141 (Ch. Div. 1966), aff'd, 47 N.J. 520, 221 A.2d 741 (1966) ("The mere fact that a class will embrace but one entity which is distinct from all others, does not in itself mean that legislation affecting the one entity must be regarded as a special, private or local law"); Budd v. Hancock, 66 N.J.L. at 136, 48 A. 1023 ("If ... this act is special only in the sense that its object is single, the question of its special character in a legal sense does not arise").
[86 N.J. at 448-49 (footnote omitted).]
See also Mahwah Tp. v. Bergen County Bd. of Taxation, 98 N.J. 268, 285 (1985). The real test is not who the classification includes, but whether it excludes some who should be included. See Mahwah, 98 N.J. at 292-94; Secaucus, 133 N.J. at 231.
Our Supreme Court has likened the special-legislation analysis to an equal protection analysis. See McKenney v. Byrne, 82 N.J. at 317; Paul Kimball Hospital, 86 N.J. at 446. The question boils down to whether the court can perceive any rational basis for the legislative classification whose impact, whether positive or negative, falls on a single person or entity.
Jersey City's constitutional challenge is brought not under Article I, paragraph 1 of the New Jersey Constitution, the equal protection clause, but as special legislation prohibited by Art. IV, § 7, ¶ 9(6). Nevertheless, to the extent that the standard for addressing a challenge as special legislation has been likened to an equal protection analysis, we note the "balancing test" employed by our courts in judging an equal protection challenge: "whether there is an appropriate governmental interest that is suitably furthered by the differential treatment." In re Charter School Application, 320 N.J. Super. at 237 (citing Rutgers Council of AAUP v. Rutgers, 298 N.J. Super. 442, 452, (App. Div. 1997), certif. denied, 153 N.J. 48 (1998)).
In Greenberg v. Kimmelman, 99 N.J. 552 (1985), Justice Pollock explained the New Jersey Supreme Court's "independent analysis" of equal protection claims by "employ[ing] a balancing test."
In striking the balance, we have considered the nature of the affected right, the extent to which the governmental restriction intrudes upon it, and the public need for the restriction.
[Id. at 567 (citations omitted).]
Viewed under this test we note first the nature of the affected
right. Jersey City has no right to enact a payroll tax unless the
State grants it that power. The right Jersey City maintains before
us is to be free of irrational exclusion from the empowering act by
retroactive revocation of its power to enact a payroll tax. Second,
the extent of the intrusion is total. The restriction in the
amending statute totally eliminates Jersey City's power to tax.
Third, "the public need for the restriction" essentially
incorporates a rational basis test, and points us to the legislative
history of the Act as a whole.
The power to enact a municipal payroll tax was first granted
to Newark in 1970, in the aftermath of the 1967 riots in that city.
The widespread devastation and resulting fiscal crises existing at
that time are well-documented. Newark enacted the payroll tax when
it was permitted to do so, and has continued to collect the
payroll tax ever since. Newark's continuing fiscal problems,
notwithstanding the current, well-publicized downtown rejuvenation,
are well-known.
We agree with the Attorney General that the 1996 longevity
amendment to section 19 permissibly limited the power to enact a
local payroll tax to Newark, as the only municipality that had
actually enacted and relied upon such a tax before the expiration
of the then-existing empowering statute. Newark relied on monies
collected through the payroll tax for almost thirty years. Jersey
City, which is excluded under amended section 19, did not enact the
tax between 1990 and 1995, when it was eligible to do so, and has
never relied on collecting that tax. We note that Newark's ability
to continue to collect a payroll tax has no effect upon Jersey City.
This is not a case where Newark's benefit inures to Jersey City's
detriment. Compare Mahwah and Secaucus, where the result of
allowing a tax benefit to one municipality was to increase the tax
burden on others.
Moreover, unlike the grandfather cases cited by plaintiff, the
underlying statute includes a sunset provision that guarantees that
the Legislature will reexamine the longevity provision before
enacting a further extension. While the sunset provision has been
repeatedly extended, its inclusion in section 19 is some evidence
of the Legislature's reluctance to permit municipalities to enact
and collect a local payroll tax except in extraordinary
circumstances.See footnote 1010
The burden is on the party challenging the statute "to
demonstrate clearly that it violates a constitutional provision."
Mahwah, 98 N.J. at 283. In Mahwah and Newark Superior Officers
Ass'n,
98 N.J. 212 (1985), the Supreme Court found
grandfather/longevity provisions to be unconstitutional special
legislation because there was no discernible rationale for
engrafting a longevity requirement upon an otherwise rational
categorization. Here we find it reasonable for the Legislature, in
the context of empowering a municipal payroll tax for a term of
years, to extend that term only for a municipality that has
previously enacted and relied on the tax.
Plaintiff contends, as the law division judge found, that the
retroactive July 1, 1995 cut-off date for the municipality to have
enacted the payroll tax in order to retain the right to collect the
tax under section 19 is arbitrary. The focus of the rational
relationship test is properly upon the imposition of any retroactive
longevity requirement, and not on the specific cut-off date, July
1. In any event, whether July 1 was an arbitrary cut-off date is
a moot point in light of Jersey City's failure to enact its tax to
be effective before the then effective sunset date, December 31,
1995. Jersey City cannot claim to have met the December 31
deadline. See Hudson County Chamber of Commerce, supra. Moreover,
we can perceive one rational basis for the earlier July 1 date
already mentioned: only a municipality that had not only enacted but
also collectedSee footnote 1111 and relied on the tax in at least one budget year
should receive the benefit of the extended term.
We see a substantial similarity to Paul Kimball Hospital.
There the Health Care Facilities Planning Act, N.J.S.A. 26:2H-1 to
-26, established a certificate-of-need procedure as a prerequisite
for opening a new hospital. The challenged grandfather provision
exempted a non-profit corporation in a municipality that had
appropriated construction funds before the effective date of that
Act. Like the payroll taxing power before us, the power to build
a hospital was accorded only to one (or possibly two) entities which
were to be located in a municipality that had already taken a
specified, affirmative step to avail itself of the privilege. The
affirmative step in that case was the municipality's appropriation
of funds; here it was enactment of a payroll tax ordinance. It is
not irrational in the constitutional sense to distinguish between
a municipality that took advantage of the granted taxing power it
had and one that did not.
Moreover, in the case of the payroll tax, there is an obvious
State interest in strictly limiting the municipalities that collect
such a tax. The original enactment was expressly intended to assist
the City of Newark in addressing its unique financial problems.
Newark took advantage of the opportunity to enact a payroll tax
early on, and continued to collect the tax thereafter.
The test of special legislation requires us to consider whether
any person or entity excluded by the statutory classification should
have been included because there was no rational explanation for the
exclusionary classification. Jersey City might have challenged the
subsequent amendment with, for example, evidence to compare its
urban problems and financial need with that of Newark, thereby
proving an irrational exclusion that might satisfy the test of
special legislation. No such evidence was offered, and Jersey City
has not attempted to compare its needs with those of Newark.
Jersey City admits that legislation that applies to only one
or very few municipalities is not per se invalid special
legislation. The City correctly argues that a grandfather clause
superimposed on such a statute must itself bear some rational
relationship to the underlying purpose that justifies the
substantive provisions. Plaintiff relies upon Mahwah, Newark, and
Secaucus, for the further contention that the grandfather provision
of the 1996 amendment bears no rational relationship to the
municipal payroll tax statute.
On the face of it, Jersey City's reliance on Newark, Mahwah and
Secaucus, appears to have merit. In each case, the Supreme Court
found a grandfather or longevity provision to be special
legislation. Closer analysis reveals the distinguishing
characteristics of each case.
Newark and Mahwah were decided by the Supreme Court on the same
day; both involved grandfather clauses engrafted onto statutes that
originally benefitted only one or two municipalities, thereby
insuring that no other municipality would qualify in the future.
In each case, the original statute was upheld, but the grandfather
amendment was found to be unconstitutional special legislation.
In the Newark case, an organization of deputy police chiefs
challenged as special legislation the statute allowing mayors of
cities of the first class which had a "Mayor-Council Plan C" form
of government to appointment the municipal police chief, exempting
that position from civil service rules. 98 N.J. at 216. Only
Newark and Jersey City met those conditions. Id. Thereafter, the
statute was amended to provide that it would apply only to cities
that had previously adopted that plan of government, thereby
ensuring that no other city could ever qualify. Id. at 218-19.
Applying the principles set forth in Paul Kimball Hospital, and
Vreeland, the Supreme Court found the original act constitutional:
"Although the act is applicable only to Newark and Jersey City, no
other similarly-situated municipality is excluded. There is no
other city in this state that meets the population requirement of
the act," Newark, 98 N.J. at 224, and "population can form a valid
basis for legislative classification." Id. at 225. The Court stated
the basic rule for addressing an allegation of special legislation:
Ultimately, the generality or speciality
of a statute becomes a question of
reasonableness. There is no general rule to
distinguish a reasonable from an unreasonable
classification, the question being a practical
one varying with the facts in each case. As
stated previously, where the question of
reasonableness is fairly debatable, courts will
uphold the classification. The burden of
showing that the classification is not
reasonable is upon the party attacking the
statute. If we can conceive of any reason to
justify the classification, the statute will be
upheld.
[Id. at 227.]
Applying that rule, the court found "a reasonable relation" between
the population of the two cities and the law removing the police
chief position from the civil service process, and the
classification therefore was not arbitrary. Id. at 228-30. On the
other hand, the Court found no reasonable basis for the grandfather
provision:
Applying this standard, we find it difficult
to conceive a rational basis for excluding
other municipalities that may in the future
become first class cities operating under the
"Mayor-Council Plan C" form of government. The
reasoning that supports the constitutionality
of the statute prior to this amendment, ...
would apply as well to municipalities that in
the future become first class cities operating
under the "Mayor-Council Plan C" form of
government. Accordingly, we find the amendment
to the statute to constitute special
legislation in violation of the New Jersey
Constitution.
[Id. at 231 (citations omitted).]
In Mahwah, a Bergen County municipality challenged as special
legislation a statute allowing a county tax rebate to municipalities
in first class counties with population over 800,000 if it had
within its borders 200 acres or more of land used and occupied by
state or county institutions. 98 N.J. at 271. The original statute
was supplemented by a statute barring the rebate to any municipality
which had not received the rebate for any prior year, thereby
leaving only one municipality that could ever qualify. Id. at 277.
Reiterating the approach set forth in Newark, the Court rejected the
challenge to the underlying legislation, despite its initial purpose
to relieve an inequity only to Cedar Grove, because (1) the purpose
of the act was to relieve the burden on host communities which had
to provide additional services on account of the tax exempt
properties, and (2) the resulting burden created by the rebate, that
is the additional tax to be shared among the county's other
municipalities, would be minimized in larger counties. Id. at 290
92. However, the Court again could find no "rational basis for
excluding other municipalities that may satisfy the requirements of
[the rebate statute in the future]," and therefore found the
grandfather clause to be unconstitutional special legislation. Id.
at 293-94.
In Secaucus, that city challenged a statue that originally
exempted any municipality that maintained its own vocational
education system from contributing to that portion of the county tax
used to maintain the county's vocational school. 133 N.J. at 487
89. However, by amendment, the benefit was limited to
municipalities in a first class county with a population of no more
than 700,000, making Hudson County municipalities alone eligible,
and further limited the benefit to municipalities whose vocational
program had been in existence for at least twenty years--a longevity
requirement. As a result, only Bayonne could qualify. Id.
The Court found "two possible interpretations of [the statute
that] on their face reveal a legitimate legislative purpose." Id.
at 495. One was "to address the problem of double contributions by
municipalities that have their own vocational programs ...." The
other "may be to promote the development of local, high quality
vocational educational programs within densely--populated
communities." Id. The Court found it "difficult to see" how the
population-density and longevity requirements rationally served
either purpose because the prospect of double contributions was
faced by "[a]t least twenty municipalities within the state, and at
least one other municipality within Hudson County ..." and because
"if the goal [of the statute] is to encourage the development of
high-quality vocational educational programs within densely
populated municipalities, ... to exclude municipalities either in
the most-populous counties, i.e., Essex and Bergen, or in less but
densely-populated counties like Union and Middlesex, does not seem
reasonable." Id. at 495-96.
To accept the classifications contained in [the
statute] as having a rational basis, one must
imagine that the Legislature had some
reasonable ground for encouraging the
development of local vocational programs only
in the most-densely-populated county in the
state with a total population below 700,000,
and that the Legislature had reasonable grounds
for concluding that only those programs in
existence for at least twenty years were of
sufficient quality to be worthy of financial
encouragement through tax relief. Those
conclusions seem to us to stretch credulity
beyond reasonable limits.
[Id. at 498.]
The statute therefore was declared unconstitutional special
legislation.
In each of the three aforementioned cases, the court found no
rational relationship between the challenged grandfather or
longevity provisions and the underlying purpose of the Act. Because
we are mindful of the duty to "seek any conceivable rational basis"
for the challenged longevity requirement, see Mahwah, 98 N.J. at
286, and because we have found a rational basis for the longevity
requirement in Newark's years of reliance on the tax to solve its
unique financial problems, we conclude that Jersey City has not met
its "burden of demonstrating clearly the constitutional violation."
Secaucus, 133 N.J. at 509-10. Although we recognize that reasonable
persons might differ on the constitutionality of the grandfather
provision that effectively excludes Jersey City and includes only
Newark, our Supreme Court has emphasized "the long established
principle of deference to the will of the lawmakers whenever
reasonable men might differ as to whether the means devised to meet
the public need conform to the Constitution .... [and] the equally
settled doctrine that the means are presumptively valid, and that
reasonably conflicting doubts should be resolved in favor of
validity." Roe v. Kervick,
42 N.J. 191, 229 (1964).
We reverse.
Footnote: 1 1 See R. 4:34-4.
Footnote: 2 2 The City filed no separate brief.
Footnote: 3 3 Judge Bilder did not participate in the argument of this
case. He has been added with consent of all counsel.
Footnote: 4 4 As amended by L. 1996, c. 33, N.J.S.A. 40:48C-19 (hereinafter
"section 19") provides:
No tax shall be imposed under any ordinance
adopted pursuant to this article with respect
to services performed prior to January 1, 1971,
or in a calendar quarter prior to that in which
the ordinance is adopted, or in a municipality
that has not within two years prior to July 1,
1995 collected taxes or enacted an ordinance
imposing a tax, or on or after December 31,
1999; but any such ordinance shall remain in
effect with respect to the right of the
municipality to receive reports and enforce and
collect taxes due thereunder for any period
prior to December 31, 1999.
Section 19, including the challenged grandfather provision, has
recently been extended through December 31, 2004. S. 1241, 208th
Leg., Third Reprint (N.J. 2000).
Footnote: 5 5 N.J. Const. art. IV, § 7, ¶9(6) provides in pertinent part:
The Legislature shall not pass any private, special or local laws ... (6) relating to taxation or exemption therefrom. Footnote: 6 6 These figures reflect the 1970 census. Footnote: 7 7 L. 1975, c. 20 authorized cities with a population greater than 250,000 but less than 350,000 to enact an employee payroll tax. N.J.S.A. 40:48D-1 to -10, repealed by L. 1981, c. 462, § 57 (eff. January 1, 1982). The original authorization was for one year only, to expire on December 31, 1975, but was apparently extended several times, finally expiring on December 31, 1981. Jersey City's population did not meet the minimum after 1975. Jersey City's population had decreased from approximately 260,000 in 1970 to just over 250,000 estimated in July 1973, to 243,756 according to the July 1, 1975 Census Bureau estimate. Footnote: 8 8 See generally, Harold A. Olsen, Note, Procedural Barriers to Suits Against the State by Local Government, 62 Brook. L. Rev. 431 n.169 and accompanying text (1996). Footnote: 9 9 Plaintiff conceded this legislative power at oral argument, as well as in its brief. Footnote: 10 10 The State has called our attention to the Revaluation Relief Act of 1999, N.J.S.A. 54:1-35.51 et seq., implying that Jersey City could be empowered to enact a payroll tax thereunder. That Act provides that "notwithstanding any provisions of ... [N.J.S.A. 40:48C-19] to the contrary, a municipality as defined in [N.J.S.A. 40:48C-1] that undertakes a revaluation by entering into a contract approved by the director [of the Division of Taxation] for the completion of a revaluation, and enters into that contract within 360 days of [September 21, 1999] is authorized to impose the [payroll and parking] taxes authorized by the Local Tax Authorization Act until January 1 of the fourth year next following the revaluation year or until the date on which the tax expires, whichever is later." The Act mandates that "all monies received by the City of Newark pursuant to [such] a tax ... shall be used for the sole purpose of funding revaluation relief abatements." N.J.S.A. 54:1-35.54. This Act does not affect Jersey City's claims with respect to section 19. Footnote: 11 11 Section 19 prohibits collection for any quarter prior to the quarter in which the payroll tax is enacted.