The Erie County budget approved December 7th by the county legislature was given the “Green” light by Justice John Lane today by ruling that the vote taken by the legislature was legal.

The following is the complete ruling.

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STATE OF NEW YORK
SUPREME COURT : COUNTY OF ERIE
__________________________________________

In the Matter of the Application of

RALPH H. MOHR and LAURENCE F.
ADAMCZYK, as Commissioners of Election
constituting the Erie County Board of Elections
and, respectively, resident taxpayers of the Town
of Lancaster, Erie County and the City of Buffalo,
Erie County,

DECISION

Index No. 2004/12707

DENISE E. MARSHALL, as Member of the Erie
County Legislature, representing the 5th Legislative
District and a resident Taxpayer of the Town of
Lancaster, Erie County,

NANCY A. NAPLES, as Comptroller of the County
of Erie and a resident taxpayer of the Town of Hamburg,
Erie County,

and

CHESTER C. PAWARSKI, a resident taxpayer of the
Town of Elma, Erie County,

Petitioners/Plaintiffs
-v-

JOEL A. GIAMBRA, County Executive of the
County of Erie, New York,

JOSEPH PASSAFIUME, Director of Budget,
Management and Finance for the County of Erie,
New York,

JOHN W. GREENAN, Commissioner of Personnel
for the County of Erie, New York,

ERIE COUNTY LEGISLATURE
and
COUNTY OF ERIE,
Respondents/Defendants.
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BEFORE: HON. JOHN P. LANE
Justice of Supreme Court

APPEARANCES: RALPH M. MOHR, ESQ.
Attorney for Petitioners Mohr, Adamczyk, Marshall and Naples

RICHARD C. PAWARSKI, ESQ.
Attorney for Petitioner Chester C. Pawarski

HARTER, SECREST & EMERY, LLP- Attorneys for Respondents and Counsel to Frederick A. Wolf,

County Attorney
By Kenneth W. Africano, Esq., and Carol E. Heckman, Esq.

MAGAVERN, MAGAVERN & GRIMM, LLP
Special Counsel to Harter, Secrest & Emery, LLP
By James L. Magavern, Esq., and Aven Rennie, Esq.

FREDERICK A. WOLF, ERIE COUNTY ATTORNEY
and James L.Tuppen, Esq., Assistant County Attorney

__________________________________________

Initially, petitioners Ralph H. Mohr, Laurence F. Adamczyk, Denise E. Marshall and Nancy A. Naples commenced an article 78 proceeding (index no. 2004/12707) as public officers of Erie County as well as taxpayers of the County against respondents Joel A. Giambra, Joseph Passafiume, John W. Greenan, Erie County Legislature and County of Erie seeking relief in the nature of mandamus and prohibition and for various declarations:
1. Restraining and enjoining respondents from levying any charge
for election expenses in 2003 upon municipalities within the county in an amount
in excess of that certified by the Board of Elections;
2. Restraining and enjoining them from imposing various fees
included within amendments to the 2005 county budget which was adopted
without a two-thirds vote of the County Legislature;
3. Declaring the procedure followed by the Legislature on
December 8, 2004 in adopting amendments to the Budget Committee report
to be improper and in violation of the County Charter;
4. Directing the County Legislature to provide an opportunity
to petitioner Marshall and other members of the Legislature voting in the
negative upon the amendments, if they so desire, to cast an affirmative or
negative vote with respect to each line of the package presented as amendments
to the 2005 county budget and to record such votes accordingly;
5. Declaring invalid and null and void the action of respondents in
deleting four Republican employees holding the title of senior election clerk and
ordering their reinstatement;
6. Directing respondents Giambra, Passafiume and Greenan to
recognize the number, titles, rank and salaries of employees certified by the
commissioners as having been established by the Board of Elections within
the amounts appropriated therefor by the legislative body.

Chester C. Pawarski, a resident taxpayer of the Town of Elma, Erie County, commenced a separate article 78 proceeding (index no. 2004/13013) against respondents Giambra, Erie County Legislature and County of Erie seeking mandamus and prohibition pursuant to article 78 of the CPLR:

1. Declaring the 2005 Erie County budget passed and adopted by
respondents in violation of state law and the Erie County Charter;
2. Nullifying the actions taken by the County Legislature on
December 8th relative to adoption of the 2005 Erie County budget on the
same grounds;
3. Declaring the tentative 2005 budget submitted by the County
Executive as the official budget for 2005;
4. Declaring that if the tentative budget is deemed adopted there is no
necessity for an increase in the sales and use tax as the budget adopted is balanced;
5. Enjoining respondents from presenting to the Governor and
Legislature the resolution of necessity for an increase in the County’s sales
and use tax adopted by the County Legislature;
6. Declaring invalid and null and void the sharing formula of
the additional one percent of sales tax.

Petitioner Pawarski has withdrawn his challenge to the proposed formula for sharing part of the revenue expected to result from an increase in the County’s share of the sales and use tax by an additional one percent for which approval by the State Legislature has been sought. However, he maintains that as the State Legislature has not acted, no revenue from the increase in the County’s share of the sales and use tax can be anticipated as revenue and, therefore, the budget adopted by the County Legislature is not balanced.

The court has consolidated these proceedings under the above title and has converted the consolidated proceeding into a combined action and proceeding for declaratory judgment and article 78 relief (see Matter of Graziano v County of Albany, ___ NY3d ___, 2004 NY Slip Op 08782 [2004]; Matter of Swanick v Erie County Legislature, 103 AD2d 1036, [1984], appeal dismissed 64 NY2d 1039 [1985]). The petitioners’ and respondents’ objections in point of law and motions to dismiss the petitions have been considered as motions and cross motions for summary judgment and the parties have responded accordingly.

Standing

Petitioners Mohr, Adamczyk, Marshall and Naples contend that the public offices they hold
provide them standing to bring this proceeding, and their status as taxpayers of the county subject to the various fees and charges imposed in the amended budget they challenge further supports this claim. They also point out that they are within the zone of interest to be protected by various statutory provisions that apply to the budget process followed by the government of Erie County this year. The Court agrees (see generally Graziano; Silver v Pataki, 96 NY2d 532, 542 [2001]; Matter of Gallagher v Regan, 42 NY2d 230 [1977]; Matter of Board of Elections of County of Westchester v O’Rourke, 210 AD2d 402 [1994], lv dismissed 85 NY2d 967 [1995]; Swanick). The standing of petitioner Pawarski has not been challenged.

The Budget Process

“A budget is a statement of the financial position of the government, for a definite period of time, based upon an estimate of proposed expenditures and anticipated revenues” (Matter of Korn v Gulotta, 72 NY2d 363, 372 [1988] [citation omitted]). While the executive must itemize entries in the budget, the degree of itemization is a matter of discretion which the court will not review (id. at 369). “[T]he courts cannot and will not intervene in the budget process if doing so requires them to substitute their judgment on matters of discretion” (id.). In considering the budget provisions of the Erie County Charter, the Appellate Division, Fourth Department has stated “[t]he charter imposes guidelines upon the Executive and the Legislature which must be maintained to prevent either branch of government from usurping the powers of the other. The check and balance system incorporated in the charter is basic to our traditional government policy (Swanick at 1037 citing Gallagher, 42 NY2d at 233-234).

Article XVIII of the Erie County Charter contains the provisions for Erie County’s annual budget process. In pertinent part, it provides as follows. The County Executive prepares a tentative budget and capital program and submits it to the County Legislature on or before November 10th of each year (Charter §1802). Except for appropriations required by law or for debt service, the County Legislature, after one or more public hearings, may strike or reduce appropriations from the tentative budget, and may add items to or increase items in the tentative budget. Additions to or increases in the tentative budget must be stated separately and distinctly. Decreases do not require executive approval (Charter §1803[A]). The report of the budget committee to the County Legislature concerning amendments to the tentative budget must be presented to the Legislature and laid on the table at least 48 hours prior to the annual meeting for adoption of the budget (id.). Budget amendments proposed subsequent to the tabling of the budget committee report, and less than 48 hours prior to the annual meeting, “shall be considered separately and voted on individually on the floor of the legislature” (id.). If the budget as passed by the County Legislature contains additions or increases, it shall be presented by the Clerk of the Legislature to the County Executive not later than the Wednesday following the first Tuesday in December (or December 8th) for his consideration. The County Executive is authorized to object to any one or more added or increased items provided he does so in writing, stating the reasons for his objections (Charter §1803[C]). If the County Executive approves all additions and increases, he signs the budget accordingly and returns it to the Clerk of the Legislature, and the budget, including the additions and increases, is then deemed adopted (Charter §1803[B]). If a budget has not been adopted in accordance with section 1803 on or before the second Tuesday of December (or December 14th), the tentative budget as submitted by the County Executive, plus all additions and increases to which he has failed to object, shall be the budget for the ensuing fiscal year

(Charter §1803[E]). The net county tax requirement, determined by subtracting the total estimated revenues from the total proposed expenditures set forth in the adopted budget, shall be levied in advance by the County Legislature on the taxable real property of the several tax districts of the county (Charter §1804). No new form of county tax may be imposed, and the county’s three percent sales and use tax and fees or charges established by the County Legislature shall not be increased except by a resolution approved by an affirmative vote of two-thirds of the membership of the County Legislature (Charter §1812).
Following a series of budget hearings that took place in the latter half of November 2004, the Budget Committee’s report proposing amendments to the tentative budget was presented to the Legislature and laid on the table on December 3rd, more than 48 hours prior to the Legislature’s meeting scheduled for Tuesday, December 7th. The County Legislature started its meeting for the adoption of the budget on Tuesday, December 7th and concluded it late in the evening of December 8, 2004. At that time, the Legislature by separate and independent motions and votes did the following:
A. Accepted a resolution memorializing the State Legislature
requesting authority to impose an additional one percent Erie County sales
and use tax subject to an incorporated $12.5 million revenue sharing formula,
which was approved as amended by a vote of 10 to 5.
B. Moved the tentative budget and the report of the Budget
Committee off the table. It then deleted amendment packages A, B, C and D
from the committee’s report.
C. Amended the report of the Budget Committee by considering
and voting separately on two amendments offered by Legislator Charles
Swanick. The first amendment consisted of 341 pages containing numerous
appropriation adjustments and the second, authorized the Executive to enter
into a contract with Community Based Connections LLC.
D. Approved the 2005 budget, as amended.
E. Approved a resolution levying the amounts required to be raised by
taxes for the 2005 budget.

Immediately following the adjournment of the meeting and prior to midnight on December 8, 2004, the Clerk of the Legislature presented the adopted budget to the County Attorney who received it on behalf of the County Executive. Thus, the County Legislature satisfied County Charter §1803, subdivision B (see Swanick).

The challenge by petitioners focuses on the correct reading of Section 1803 of the County Charter entitled “Adoption of Budget” as amended by Local Law No. 1-1978. They claim that the third paragraph of subdivision A of section 1803, referred to as the “Separate Consideration Clause” by respondents, required the County Legislature to separately consider and vote on each and every individual item of the amended budget. That clause provides:

Budget amendments proposed subsequent to the tabling of the
budget committee report, and less than forty-eight hours prior to the annual meeting, shall be considered separately and voted on individually on the floor of the legislature.

(Charter §1803[A]). Respondents argue that, according to the clause, budget amendments are to be considered and voted on separately and independently as a whole rather than taking up each and every line item within an amendment individually. Section 1803 contains specific references to “items of appropriation” and “items” in the paragraphs preceding and following the challenged text.
Preceding the challenged clause, the first paragraph of subdivision A allows the County Legislature to… “strike items of appropriation from the tentative budget or reduce items therein”… and “add items to or increase items in such budget….” (Charter §1803 [emphasis added]). Subdivision C of §1803 specifies that the County Executive…can object to “added or increased items” and shall attach a statement of the “added or increased items” to which he objects (Charter §1803[C] [emphasis added]). Had the Legislature elected to specify distinct “items” when referring to the budget amendments, it certainly could have done so. Instead, it chose to refer to additions and increases as part of a whole, macrocosmic entity, the budget “amendments.” The only reasonable interpretation that can be drawn from the omission of references to “items” in the “Separate Consideration Clause” is that their absence was intentional.

The authority for the preparation and adoption of the annual budget for Erie County is the County Charter, a source that must be strictly followed. In reviewing its provisions, the Court is subject to the rules of statutory construction (McKinney’s Cons Laws of NY, Book 1, Statutes, §71 et seq.; see, e.g., Matter of Slominski v Rutkowski, 91 AD2d 202, 206 [1983], mod and affd 62 NY2d 781 [1984] for reasons stated below). The failure to include the terms “items” or “items of appropriation” in the language pertaining to the consideration and voting of amendments, indicates that their omission was intentional (see McKinney’s Cons Laws of NY, Book 1, Statutes, §74; Pajak v Pajak, 56 NY2d 394, 397 [1982]; accord Presbyterian Hosp. v Maryland Casualty Co., 90 NY2d 274, 284-285 [1997]; Matter of KSLM-Columbus Apartments v New York State Div. of Hous. and Community Renewal, 6 AD3d 28, 37, lv granted 3 NY3d 611 [2004]). It is not for this Court to supply a term which would ultimately impose an additional obligation upon the Legislature to approve each and every line item seriatim (see, e.g., St. Joseph’s Hospital Health Care Center v Dept. of Health, 247 AD2d 136, 155 [1998], lv denied 93 NY2d 803 [1999]; see also McKinney’s Cons Laws of NY, Book 1, Statutes §73). As Judge Cardozo recognized over eighty years ago, “[f]reedom to construe is not freedom to amend” (Sexauer & Lemke v Burke & Sons Co., 228 NY 341, 345 [1920]. The omission of the reference to “items” is compelling evidence that its absence was the intended consequence. Accordingly, this Court concludes that petitioners’ argument that the Legislature should have separately considered and voted on each line item included in the proposed budget amendments individually, is mistaken.

The provisions of the Erie County Charter and its administrative code give the power and duty to estimate revenues for the budget process to the County Executive (see Matter of Gallagher v Regan, 55 AD2d 284 [1976], rev’d in part on other grounds 42 NY2d 230 [1977]). Absent a showing that the estimated revenues were arbitrary and capricious, the total estimated revenues included in the budget adopted by the Legislature shall be used in computing the amount to be levied on taxable real property in the County (id; Charter §1804). To the extent petitioners argue that revenues expected to result from an increase in the sales tax, approved by two-thirds vote of the County Legislature, and awaiting action by the State Legislature, is arbitrary and capricious, they are mistaken. Given the history of state legislative approval of increases in the local share of sales tax revenue in response to requests from the various counties of the state, and Erie County in particular, neither the County Executive’s inclusion of such an item in the tentative budget nor the approval of that budget as amended by the County Legislature can be deemed arbitrary and capricious. Of course, increased taxes and fees included in budget revenue estimates cannot be imposed until they are enacted in accordance with law.
Furthermore, in calculating and levying the net county tax requirement, the County Legislature must subtract the total estimated revenues from the total proposed expenditures as set forth in the adopted budget (Charter §1804). The County Charter provides mechanisms to address shortfalls in available revenues within the fiscal year (see Charter §1806). Thus, if at any time during 2005 it appears that the revenues available from taxes, fees or other sources will be insufficient to meet the amounts appropriated, the County Executive shall report to the County Legislature
without further delay the estimated amount of the deficit, remedial action taken by him, and his recommendations as to further action (id.). The County Legislature shall then take such action as it deems necessary to prevent or minimize any deficit and, for that purpose, may by resolution reduce one or more appropriations other than those for debt service (id.). Transfers of part or all of unencumbered appropriation balances may also be allowed in certain instances (id.).

In their supplemental memorandum of law, the Mohr petitioners concede that the Legislature did approve a resolution for the imposition of an additional one percent sales tax in Erie County by an affirmative vote of two-thirds of its members. Further, they state that the revenue expected to result from this increase is properly recognized in the 2005 budget. The Mohr petitioners also concede they are not challenging the validity of the budget amendments as any decision by the court invalidating the amended budget would have no practical effect on the tax levy for the year 2005. However, petitioner Pawarski continues to challenge the validity of the budget amendments, and to insist that the tentative budget be deemed adopted.