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In Re: Petition For Initiative To

April 12, 2011

IN RE: PETITION FOR INITIATIVE TO PREVENT THE SALE AND/OR LEASE OF GRACEDALE FILED WITH THE NORTHAMPTON COUNTY ELECTION COMMISSION ON JANUARY 18, 2011 APPEAL OF: COUNTY OF NORTHAMPTON AND JOHN STOFFA


The opinion of the court was delivered by: Dan Pellegrini, Judge

Submitted: April 6, 2011

BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, President Judge HONORABLE DAN PELLEGRINI, Judge HONORABLE MARY HANNAH LEAVITT, Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge

OPINION BY JUDGE PELLEGRINI

John Stoffa (Mr. Stoffa), the County Executive of Northampton County, and the County of Northampton (together, Objectors) appeal from the order of the Court of Common Pleas of Northampton County (trial court) denying their objection to the Gracedale Ballot Initiative Petition (Initiative) alleging that the Initiative violated Article XI, Section 1101(b) of the Northampton County Home Rule Charter. Because the initiative does not extend to the County's budget or capital program, we affirm.

This case involves a dispute over the potential sale of the Gracedale Nursing Home (Gracedale), currently owned and operated by Northampton County (County). Gracedale is the County's single largest budgetary unit, comprising over 20% of the County budget and employing approximately 700 people. The approved 2010 County budget reflects an appropriation for Gracedale of $65,640,100. Over the past several years, Gracedale has operated at a loss - specifically incurring losses of $4,743,799 in 2009 and $2,875,297 in 2010 - with the County making operating transfers to Gracedale each year in order to make up the difference.

In order to help address the County's budgetary shortfalls, the Northampton County Council (Council) passed Resolution 71-2010 (Resolution) on August 19, 2010, directing Mr. Stoffa to pursue a sale of Gracedale to private entities. A number of County residents and employees of Gracedale opposed the Resolution and potential sale of the facility. The County's Home Rule Charter allows for direct citizen participation by giving registered voters the power by initiative to enact and repeal ordinances and by referendum to suspend and repeal ordinances. Article XI, Section 1101(a). However, the Home Rule Charter also places a limitation on this power as Section 1101(b) states, "[t]he power of initiative and referendum shall not extend to the budget or capital program." (Emphasis added).

In response to the Resolution, a group of 12 registered voters within the County created the Gracedale Initiative Petition Committee (Committee) and commenced a petition drive to place the following proposed ordinance on the May 17, 2011 primary ballot: "The county nursing home, known as Gracedale, shall not be sold and/or leased by the County of Northampton for a period of five years from the date of the approval of this ordinance." On January 18, 2011, the Committee submitted 507 signature petitions to the Northampton County Election Commission (Commission) purportedly containing the signatures of 23,391 registered voters. The Commission initially rejected the Committee's petition on January 25, 2011.

Nevertheless, the Commission instructed the Northampton County Registrar (Registrar) to conduct a thorough examination of each of the Committee's 507 petitions. After the Registrar completed her review and submitted a determination to the Commission that the Committee's submission met the 10% threshold, the Commission again reviewed the petitions. On January 31, 2011, the Committee reversed its prior declaration, held that the Initiative conformed to the provisions of the Home Rule Charter, and certified the Petition for submission to Council for further action.

On February 3, 2011, Mr. Stoffa filed a complaint in the trial court, both individually and on behalf of the County in his official capacity, challenging the Commission's revised decision. This action sought a determination pursuant to the Declaratory Judgment Act, 42 Pa. C.S. §§7531-7541, that the proposed ordinance could not be enacted under the Home Rule Charter because it extended to the County's budget and capital program in violation of Article XI, Section 1101(b) of the Home Rule Charter. Section §1.11-1101 provides:

(a) Reservation of Power. In accordance with the provisions of this article, the registered voters of the County shall have the power by initiative to enact and repeal ordinances, by referendum to suspend and repeal ordinances, and by recall to remove officials from office.

(b) Limitation of Power. The power of initiative and referendum shall not extend to the budget or capital program, to the appropriation of money, to the levy of taxes, or to the salaries of elected officials, officers, or employes of the County. The power of referendum shall not extend to any emergency ordinance or to any ordinance proposed by initiative. The power of recall shall extend only to the offices of County Executive, member of County Council, Controller, and District Attorney. The power of recall shall not extend to any official during the first year or during the last year of his term of office or within one (1) year after a recall election won by the official for the same office. (Emphasis added).

348 Pa. Code §1.11-1101.

The trial court scheduled hearings and argument on the objections for February 11, 2011, solely on the legal issue of "whether the language of the Ballot Initiative violates the restrictions set forth in Article XI, Section 1101(b) of the Home Rule Charter because the question extends to the County budget or capital program." (Trial Court Opinion at 13).

Before the trial court, Objectors presented the testimony of Victor Mazziotti (Mr. Mazziotti), the Chief Financial Officer and Director of Fiscal Affairs for the County. Mr. Mazziotti testified that he was responsible for the budget and accounting functions of the County Executive's office and that he, in fact, prepared the proposed budget and capital improvements plans each year for submission to the Council as required under the Home Rule Charter. He also testified that neither the 2011 proposed budget nor the 2011 capital improvements plan contemplated or referenced the sale of Gracedale, and the final budget for 2011 did not contain any capital expenditures for Gracedale due to its potential sale. While the sale of Gracedale would be a capital event, Mr. Mazziotti insisted that it would not be included in the County's capital or budgetary plan. According to Mr. Mazziotti, the 2011 budget as proposed by County Executive Stoffa included funding Gracedale for the entire calendar year. However, Council decided only to fund Gracedale through June 2011, reducing Gracedale's budget from $66 million to $33 million because the option of selling Gracedale was under consideration.

Mr. Stoffa also testified that the sale of Gracedale was not contemplated or referenced in his 2011 proposed budget or his 2011 capital improvements plan. His 2011 budget message, which accompanied the proposed budget, merely stated that Council may wish to consider the possibility of leasing or selling Gracedale in order to cut expenditures. Mr. Stoffa testified that if Gracedale was not sold before June 30, 2011, the County budget would have to be amended as it only provided for funding for Gracedale for approximately six months. According to Mr. Stoffa, the sale of Gracedale would have a direct impact on the County budget as there would be fewer County employees, less need for appropriations, less expenditures, and it would eliminate the need for future capital improvements at the facility.

The trial court denied the objection, finding that the Initiative was proper under the Home Rule Charter. The trial court noted that the mere fact that Gracedale has an impact on the yearly County budget did not preclude the Initiative as almost any subject of importance had an impact on the budget. Section 1101(b) of the Home Rule Charter only precluded ballot initiatives that "extend to the budget or capital program." Both Mr. Mazziotti and Mr. Stoffa testified that the sale of Gracedale was not referenced or contained within either the 2011 budget or capital improvements plan, and Mr. Mazziotti testified that the sale was not even a proper event for a capital plan. The trial court found that: "(1) The Ballot Initiative, if passed by the voters, would not interfere with the proposed 2011 Budget or the 2011 Budget adopted by Council; (2) The Ballot Initiative, if passed by the voters, would not interfere with the proposed 2011 Capital Improvements Plan; (3) County Council did not modify or adopt a Capital Improvements Plan or a Capital Program; (4) There is no other defined Capital Program in Northampton County; (5) The record made by the Objector established, without any contradiction, that the sale of Gracedale would not be included or part of a Capital Plan; and (6) The Ballot Initiative, if passed by the voters will not interfere with or abrogate any existing contractual obligations of Northampton County related to the Budget or a Capital Program." (Trial Court Opinion at 19). While the Initiative would prevent the sale of Gracedale and, thus, would continue to impact the budget in the immediate future, the trial court found that the Initiative did not extend to the budget or capital program, did not violate the Home Rule Charter, and the determination of the Commission to certify the Initiative for submission to Council was proper. This appeal followed.*fn1

On appeal, Objectors argue that the trial court erred in holding that the Initiative was proper under the County Home Rule Charter because it "extend[s] to the budget or capital program." According to Objectors, this Court's decision in Cottone v. Kulis, 460 A.2d 880 (Pa. Cmwlth. 1983), holds that initiatives that prohibit legislative actions seeking to avoid or minimize capital expenditures are within the scope of the Charter's prohibition that "initiative and referendum shall not extend to the budget or capital program." It argues that if the Initiative passes, that provision would be violated because the 2011 budget would require a major revision and capital improvements would be required as well.*fn2

In Cottone, city council for the City of McKeesport enacted an ordinance authorizing the sale of the City's water system to the Water Authority of the City of McKeesport. Id. at 881. The City's Home Rule Charter, like that in the present case, allowed citizens to challenge ordinances through referendum, "provided that such power shall not extend to the budget or capital program." Id. A group of citizens submitted an affidavit to the city clerk in order to commence referendum proceedings. Id. However, after reviewing the ordinance, the city clerk refused to release the petition blanks for the citizens to circulate because she believed the ordinance pertained to a capital program. Id. The petitioners filed an action in mandamus and a petition requesting peremptory judgment. Id. at 82. The trial court found that the ordinance was exempted from the Home Rule Charter's referendum procedures because it pertained to a capital plan. Id. at 883. The reason that it pertained to a capital plan was that four years prior to the enactment of the ordinance, the City and the Authority entered into a transfer agreement and a lease agreement which specified that the City could offer to sell ...


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