Lance v. McGreevey

*600Justice LaVECCHIA,

concurring in part and dissenting in part.

I concur in the majority’s determination that the State be allowed to proceed with the bond sales authorized by the Cigarette Tax Securitization Act of 2004, L. 2004, c. 68, and the Motor Vehicle Surcharges Securitization Act of 2004, L. 2004, c. 70, and to use the proceeds of those sales to support expenditures authorized by the Appropriation Act for Fiscal Year 2005. Because I agree that any decision adverse to the State should be prospective only due to the disruption that otherwise would ensue, I join in the disposition of the Court. However, I disagree with the majority’s determination that certain contract bond proceeds (see generally, Lonegan v. State, 174 N.J. 435, 809 A.2d 91 (2002) (Lonegan I), and Lonegan v. State, 176 N.J. 2, 819 A2d 395 (2003) (Lonegan II)), do not constitute “revenue” under the Appropriations Clause, N.J. Const, art. VIII, § 2, ¶ 2, and, as to that, I respectfully dissent. At this point, I am not prepared to say whether the type of borrowing proposed here should be allowed in the future. There are a number of questions that have not been addressed fully and that, I believe, must be considered before a final decision is rendered as to that question. Therefore, I would not issue a decision on the merits now, and instead would require additional briefing and argument.

The majority’s opinion recognizes the term “revenue” is shrouded in ambiguity. There are competing dictionary definitions of “revenue.” Black’s Law Dictionary 1319 (6th ed.1990) defines revenue narrowly, as the “yield from taxes, excise, custom, dues, [and] rents,” which the majority suggests excludes borrowed funds; but, other editions of Black’s define revenue as “a broad and general term, including all public monies which the state collects and receives, from what ever source and in whatever manner,” see, e.g., Black’s Law Dictionary 1185 (5th ed.1979), which the State defendants note could encompass borrowed funds. Other dictionary definitions similarly are vague, including those relied upon by the majority, because the “defining” term, “income,” is itself ambiguous. See, e.g., Webster’s New International *601Dictionary 2132 (2d ed.1934, updated 1945) (defining revenue as “public income of whatever kind”).

There are competing definitions to be found in case law as well. The majority points to Public Market Co. of Portland v. City of Portland, 171 Or. 522, 130 P.2d 624, 644 (1942), supplemented on reh’g by, 171 Or. 522,138 P.2d 916 (1943), for a seemingly narrow definition, but broad definitions are found in other cases, such as State v. Kemp, 365 Mo. 368, 283 S.W.2d 502, 513 (1955) (en banc). In Kemp, the Supreme Court of Missouri gave expansive reading to the term “general revenue,” stating “[b]y revenue, whether its meaning be measured by the general or the legal lexicographer, is meant the current income of the state from whatsoever source derived which is subject to appropriation for public uses. This current income may be derived from various sources ... but, no matter from what source derived, if required to be paid into the treasury, it becomes revenue or state money.” Ibid, (internal quotation marks and citation omitted).

Our own case law has determined the word revenue to be ambiguous. In State v. Trump Hotels & Casino Resorts, Inc., we wrestled with the question whether proceeds received by the Casino Reinvestment Development Authority (CRDA) from the sales of its bonds to casino operators constituted “revenues derived” from casino operations under the 1976 casino gambling constitutional amendment, N.J. Const, art. IV, § 7, ¶ 2(D). 160 N.J. 505, 512, 734 A.2d 1160 (1999). If the bond proceeds were so characterized, they would be part of a pool of constitutionally dedicated funds and would not be available to fund the CRDA’s redevelopment projects. The majority here correctly notes that in Trump, we concluded the proceeds received by the CRDA from borrowings were not revenues derived from gaming, as the term was used in the casino amendment, but interestingly we also concluded that the term included only the proceeds of some, but not all, taxes. Id. at 529, 734 A.2d 1160. Thus, “revenues derived from” casino operations was determined to refer only to the proceeds of the eight percent gross tax imposed on gaming *602operators; it did not include the proceeds of corporate, sales, or other state and local taxes. Ibid.

The majority’s own construct of its forward-looking rule is a testament to the elusiveness of the term “revenue.” In purporting to define the term as it probably was understood by the voters, the majority settles on a definition that excludes borrowed funds from being counted as revenue when the monies are the proceeds of borrowings for general expenses of government. Under the majority’s formulation of the rule then, borrowed funds are sometimes revenue for purposes of the Appropriations Clause, sometimes not. Therefore, some borrowed funds may be used to balance a budget, and some may not. It is not clear from the majority’s opinion whether voter-approved debt (General Obligation or GO) is on the same footing as contract debt, that is, must voter-approved debt also be subject to the new restrictive definition of revenue? If the two types of obligation are to be treated differently, then one is left to puzzle why the proceeds of one type of lawful obligation constitute revenue but the proceeds of another do not.

The term “revenue” is susceptible to many different meanings. The Legislature and the Governor have determined the term “revenue” should include borrowed funds. It is a reasonable construct. If the term “revenue” as used in the Appropriations Clause does not include the proceeds of borrowings, the money, as the- majority seemingly concedes, cannot be spent. That is so because the State can only spend money if it is appropriated by line item or language appropriation, in either a single appropriation act or a series of acts. City of Camden v. Byrne, 82 N.J. 133, 151, 411 A.2d 462(1980).

In other contexts, when we have addressed ambiguities in constitutional text, we have deferred to the legislature’s conclusion where it is reasonable. See Trump, supra, 160 N.J. at 534, 734 A.2d 1160 (stating that, where reasonable, legislative choice in implementing constitutional goal obligates courts “to view tolerantly and with restraint the presumed validity” of legislative *603action); N.J. Ass’n of Correction v. Lan, 80 N.J. 199, 218, 220, 403 A.2d 437 (1979) (acknowledging “broad tolerance” that attaches to legislative action challenged as “constitutional evasion or excess” and observing that when “reasonable men might differ” on issues, including interpretation of constitutional terms, judiciary should defer to “the will of the lawmakers”).

In full recognition of the fact that the Court is the ultimate authority on constitutional questions, I would defer nonetheless to the reasonable judgment of the Legislature and Governor here, and include borrowed proceeds as revenue. It is not irrelevant that the term “revenue” has been construed broadly in practice. See id. at 213, 403 A.2d 437. I do not join in the Court’s determination to alter that fiscal practice by now defining revenue restrictively. Indeed, plaintiffs here conceded that the proceeds of GO borrowings constituted revenue. I see no principled reason to treat the proceeds of contract debt differently than GO debt. Both are lawful means of raising monies to be appropriated for government purposes.

I, therefore, disagree with the majority that the proceeds of the borrowings proposed here would not constitute “revenue.” That, however, does not end the inquiry. I too believe that the type of borrowing proposed here, if allowed to be repeated, has the potential to harm the public fisc. That said, I would not be comfortable ruling on its constitutionality before several questions could be explored fully. The ultimate question, of course, is whether the State lawfully may borrow to fund day-to-day operating expenses of government. Nothing in the text of the Constitution speaks directly to that point. The Debt Limitation Clause, N.J. Const art. VIII, § 2, ¶ 3, suggests that borrowings will be for only what is traditionally thought of as capital-type expenditures: the State may borrow money only “for some single object or work distinctly specified.” That language seems to bespeak the types of investments that are non-recurring and not of an operational character. Yet, if the voter should approve of borrowing for operational type expenditures — and the State correctly informs us *604that GO bonds have been authorized for distinctly non-capital projects — why does not that voter approval satisfy any constitutional requirement?

The Debt Limitation Clause, by its terms, does not apply to contract debt because by definition the latter is not a legal obligation of the State. Lonegan II, supra, 176 N.J. at 13-14, 819 A2d 395. Nonetheless, even if the Court should conclude that GO debt can issue to cover operating expenses, does that mean we also must allow the proceeds of contract debt to be so used? There is a ready argument for treating contract debt differently: its merits are not subject to scrutiny by the general electorate. Neither Lonegan I or Lonegan II specifically addressed the question.

There are related questions as well, such as whether the other restrictions of the Debt Limitation Clause, such as the “single object or work” requirement, should apply to contract bonds. The proposed borrowings before us would seem to have difficulty satisfying the “single object or work” standard.

However, I am not prepared to decide those questions now. In fairness to the parties, the questions have not been fully briefed. Some were first raised by the Court at oral argument. Because I am in agreement with the majority that the two bond acts at issue should be allowed to go forward even if they are constitutionally defective, I would not finally decide this case now. I would require further briefing and argument in respect of whether any debt proceeds — GO or contract debt — should be allowed to be used for operational expenses other than those incidental to a project, whether contract debt should be treated differently than GO debt, and whether the “single object or work” standard should be applied to contract debt. The issues are of great import and deserve our and the parties’ full attention before they are decided.

Because I cannot ascribe to the majority’s internally inconsistent definition of revenue, I respectfully dissent from that portion of the majority’s opinion. I would require further briefing and argument in this ease.

*605For reversal in part/affirmance in part — Chief Justice PORITZ and Justices VERNIERO, ZAZZALI and WALLACE — 4.

For concurrence in part/dissent in part — Justice LaVECCHIA— 1.