Lawsuit Could Test Christie’s Budget Strategy

John Mooney | May 26, 2010
Perth Amboy school district challenges governor's executive order to withhold state education aid

A gritty Middlesex County school district could prove a wild card in the New Jersey’s ongoing state budget saga.

The Perth Amboy school district has filed suit against Gov. Chris Christie over his executive order this spring that withheld $475 million in state aid payments to schools across the state.

The lawsuit, heard last week in state appellate court in Trenton, contends that Christie overstepped his executive powers in withholding the aid, which amounted to about $15 million for Perth Amboy.

The state maintains the order was within the governor’s rights.

Still, the case was worrisome enough that a leading senator asked Christie’s treasurer during a budget hearing yesterday whether the state had a backup plan in case it loses.

It would be a big blow to Christie’s budget proposal and the steps he has already taken to shore up the state’s finances. State officials were already before the Legislature laying out plans to make up hundreds of millions in other lost revenues in this fiscal year.

“Are you concerned if the court rules in favor of Perth Amboy?” said Senator Paul Sarlo (D-Bergen), chairman of the Senate’s budget committee. “It’s a big number, $475 million.”

The case stems from the details in how the state would carry out Executive Order No. 14, signed by Christie in February during his first month in office. Faced with a deepening deficit in the current fiscal year, the new governor ordered aid payments be withheld from schools based on each district’s so-called excess surplus.

The lawsuit argues that the order wrongfully supersedes state statute that requires all surplus in excess of 2 percent of the budget be returned in the next year to taxpayers.

“The Governor has assumed through the issuance of Executive Order No. 14 the power to make law – a power constitutionally lodged in the legislative branch,” reads the Perth Amboy motion.

The state’s response led with the words: “New Jersey is confronting a financial crisis.” It said that in order to meet the emergency, the governor directed his education commissioner only to withheld payments based on the surplus amounts and to approve districts’ transfers from surplus into its operational costs.

“Under these circumstances, the Commissioner not only has the power but the responsibility to act, despite the absence of specific legislative authorization,” read the state’s brief.

Treasurer Andrew Sidamon-Eristoff said in testimony yesterday that we was “very confident” the state would prevail. If it doesn’t, he said he would likely come back to the Legislature with help in the next step.

“I don’t have a specific battle plan in the event that the court rules against us, but I have no doubt working with the Legislature we’ll come up with the solutions that will work for all of us,” he said.