Injunction is denied in Loch Arbour school budget suit
BY DANIEL HOWLEY Staff Writer
Village of Loch Arbour officials are pushing forward with a legal challenge to the Ocean Township Board of Education's 2009-10 budget, despite a setback in state Superior Court.

On June 30, Superior Court Judge Thomas W. Cavanagh Jr. in Freehold denied the village's request for a preliminary injunction that sought to block Ocean Township from implementing its new school budget, which would drastically increase school taxes for Loch Arbour taxpayers.

"Everyone regrets the interim decision of Judge Cavanagh," Village Clerk Lorraine Carafa, one of the plaintiffs in the suit, said last week.

"We do remain committed to continuing the litigation in an attempt to overturn the tax," Carafa added.

According to Peter Koenig, the attorney representing the village in its lawsuit, Cavanagh scheduled the first hearing in the matter for Oct. 1. A case management conference will be held prior to that on Sept. 14.

While Cavanagh's decision may be a setback, Koenig said it would not deter the village from pursuing relief.

"The most I can say at this time is the village is exploring a number of other avenues. Certainly this case is just beginning," Koenig said. "It's definitely not over."

The Village of Loch Arbour filed suit against Ocean Township, the Ocean Township Board of Education (BOE) and the Monmouth County Board of Taxation last month in an attempt to avoid having its residents saddled with a nearly 450 percent school tax increase.

In the suit, the village is challenging the constitutionality of the state's 2008 School Funding Reform Act and its repeal of the Kiely bill.

Named for former Loch Arbour Mayor James Kiely, the Kiely bill was a specialized piece of legislation that established a unique tax formula for Loch Arbour residents to pay to the Ocean Township School District in exchange for the district's educating the village's children.

With the repeal of the Kiely bill and its tax funding formula, the village has seen its tax levy contribution for the Ocean Township BOE's $65 million spending plan rise to roughly $1.6 million, a $1.3 million increase from last year's approximately $300,000 contribution

With such an increase, the average village homeowner could see their school taxes rise as much as $7,000.

In an effort to prevent the tax hike, the village sought a preliminary injunction in Superior Court asking for the Ocean Township School District's 2009 budget not to be implemented until a decision has been reached in the suit.

If Cavanagh had approved the request for a preliminary injunction, the formula by which the township and village divide the 2009-10 budget's $50 million tax levy would have reverted back to the method used under the Kiely bill.

If the injunction had been granted, the $1.3 million tax increase that village residents are expected to shoulder would have been carried by Ocean Township residents.

With its request for an injunction denied, the village is now focusing its attention on the suit and the reinstatement of the Kiely bill.A

ccording to Loch Arbour's attorney Steven Foley, the village believes the repeal of the Kiely bill, a type of special legislation, by the 2008 School Funding Reform Act, a piece of general legislation, was unconstitutional and therefore invalid.

In the state constitution, Foley explained, there are two types of legislation, special legislation and general legislation.

Special legislation is legislation that is passed and deals specifically with a particular town or area and must pass by a twothirds majority of both the Senate and the Assembly in order to be adopted into law.

The 2008 School Funding Reform Act, the village argues, was an act of general legislation, which deals with the state as a whole.

Under the state constitution, general legislation cannot affect special legislation, Foley said, adding that because of this, Loch Arbour believes that the Kiely bill is still valid.

With Loch Arbour taking the position that the Kiely bill is still in place, Foley said the village has taken steps to refuse the certification of the school budget's tax levy, effectively refusing to pay the amount the Ocean Township BOE believes the village should pay as a result of the passage of the 2008 School Funding Reform Act.

Tensions over the BOE's 2009-10 budget have been simmering since the board first introduced the $65 million spending plan in March.

With taxpayers in Loch Arbour dissatisfied with the proposed exponential tax hike the board was calling for, the budget was defeated by a vote of 1,144 to 1,116.

The dissenting votes included 69 Loch Arbour residents. That number, Ocean Township Mayor William Larkin said during an April meeting, was the reason the budget failed.

Following the budget's defeat, both the Ocean Township Council and the Village of Loch Arbour Board of Trustees agreed to a $306,000 spending decrease in order to lower the school budget's overall tax impact.

Once such an agreement is reached, the clerk must certify the budget for submission to the Monmouth County Board of Taxation. In the case of Ocean Township and Loch Arbour, both the township administrator and village clerk were required to submit certifications explaining how the budget's tax levy would be divided between the two towns.

Loch Arbour did not submit its certification, Foley explained, because the village believes that the Kiely bill is still in place and therefore still valid.

As a result of the role the Monmouth County Tax Board plays in the certification of budgets, Foley said, the village has also named the board as well as Monmouth County Tax Administrator Matthew Clark as defendants in the lawsuit.

According to Loch Arbour Mayor Betty McBain, those who have been named as defendants in the suit were named only so the village could eventually name higher-ranking state officials and entities.

"We realize that Ocean Township did not cause this to happen to us … that they are not to blame for our problems," McBain has said. "They [the school board] and [the town council] have been nothing but supportive and sympathetic in our endeavors to seek resolution.

"The lawsuit is a means by which we hope to get all parties at the same table to learn the facts as they are," McBain added.

Contact Daniel Howley at

dhowley@gmnews.com.