MUNICIPAL FINANCE;

You asked if a municipality could split its budget into two budgets, one covering the town and the other for the board of education.

The Office of Legislative Research is not authorized to issue legal opinions and the following should not be considered one.

SUMMARY

A town cannot split its budget into two, because the budgets would have to be separately approved. The state Appellate Court ruled invalid an amendment to the town of Naugatuck’s charter that would have allowed a separate referendum on the town operating budget and the board of education budget. The court held that the provision conflicted with the statutorily defined budget approval process and upset the balance of power between the boards of education and finance. It also found that the amendment allowed Naugatuck’s voters do what its board of finance could not, namely reject the board of education’s budget estimate without regard to statutes prescribing certain board of education activities and requirements.

BOARD OF EDUCATION V. NAUGATUCK

Background and Procedural History

The Connecticut Appellate Court ruled in June 2002 that Naugatuck’s charter amendment providing for separate referenda on the town operating budget and the board of education budget was invalid. In Board of Education v. Naugatuck, the court held that the amendment (1) is precluded by a state statute governing the budget appeal process; (2) intrudes into public education, which is an area of statewide concern; and (3) upsets the statutory balance of power between the local board of education and the local budgeting authority (70 Conn. App. 358 (2002)).

In November 1996, the town of Naugatuck submitted to its voters two proposed amendments to the town’s charter. The first proposal would have allowed the mayor to serve on the board of education; the second allowed up to three separate budget referenda for both the town’s operating budget and the board of education’s budget. Both provisions passed, and the plaintiffs brought suit, seeking to have the measures declared void and invalid. After several procedural turns the Appellate Court found for the plaintiffs in June 2002. The Connecticut Supreme Court granted the defendant’s certification for appeal on the issue of the bifurcated budget referendum on September 5, 2002. The court is expected to hear the case in the spring of 2003.

Defendants’ Argument

The defendants, the town of Naugatuck, argued that the Home Rule Act gave broad powers to the municipalities and allowed them to amend their charters in various ways. The defendants claim authority for their split referendum from statutes allowing them to “manage, regulate, and control the finances . . . of the town,” “[e]stablish and maintain a budget system,” and “[a]ssess, levy, and collect taxes for general or special purposes on all property, subjects, or objects which may be lawfully taxed, and regulate the mode of assessment and collection of taxes and assessments not otherwise provided for” (CGS §§ 7-194 and 7-148(c)(2)(A) and (B)). They also rely on case law that gives towns broad authority in areas of “purely local concern, such as . . . local budgetary policy” (Naugatuck at 365, quoting Shelton v. Commissioner, 193 Conn. 506, 521 (1984)(citing Caulfield v. Noble, 178 Conn. 81, 90-91 (1979))).

Plaintiff’s Argument

The plaintiffs argued that Connecticut statutes precluded the bifurcated referendum because they identify a specific budgetary approval process that does not contemplate split referenda (CGS § 7-344). They also cited the state’s interest in public education as identified in both the state constitution and the statutes as evidence that the state intended to limit the municipalities’ power to control board of education budgets (Conn. Const. art. I, § 8; CGS §§ 10-220 and 10-222).

Appellate Court’s Decision

The Appellate Court found the budget provisions cited by the defendants to be broad, while those that the plaintiff relied upon specifically address the budget formulation and approval process. Citing precedent, the court followed the plaintiff’s reasoning and found the more specific provisions to be controlling.

It outlined the budget process contained in § 7-344, noting that the legislature chose to refer to plural estimates throughout a municipality’s preliminary budget process, but to a single estimate which would be submitted to the town for its vote. The court found the legislative intent to indicate that a proposed budget would be voted on “as a whole, not through piecemeal approval of its component parts” (Naugatuck, 70 Conn. App. at 368).

In reaching this conclusion, the court relied on a canon of statutory construction that holds that a “statute which provides a thing shall be done in a certain way carries with it an implied prohibition against doing that thing in any other way” (Id. at 369 (citing Chairman v. Freedom of Information Commission, 217 Conn. 193, 200 (1991))). The court held that the statutes set forth a specific, comprehensive method for budget votes, and municipalities could not deviate from it.

The court also found that allowing separate votes would upset the balance of power between boards of education and local budgeting authorities. It cited the state Supreme Court’s decision in Board of Education of Stamford v. Board of Finance, which noted that “[a] town board of education is an agency of the state in charge of education in the town; to that end it is granted broad powers by the legislature; and it is beyond control by the town or any of its officers in the exercise of those powers or in the incurring of expense, to be paid by the town, necessitated thereby, except as limitations are found in statutory provisions” (127 Conn. 345, 349 (1940)). The court in Stamford further held that a board of finance could not refuse to include in its budget estimate an expenditure by the board of education that the statutes require or authorize. The board of finance can reduce the board of education’s estimate, but only if the estimate exceeds the amount “reasonably necessary” to carry out the school board’s purpose.

The Appellate Court in Naugatuck found that Naugatuck’s town charter amendment upset the balance of power between the boards of education and finance by allowing the voters to veto the education portion of the budget. These voters, the court feared, might not be aware of the statutory requirements imposed on the board of education or understand the town’s budget priorities as well as would the board of finance. The budget amendment “permits the voters to do what the board of finance cannot, that is, simply to reject the board of education’s budget, ‘[w]ithout regard for whether the expenditures included in the board’s budget are for purposes which the state statutes make it the duty of the board to effectuate, e. g. , providing pupil transportation [in] § 10-220(a); and special education [in] § 10-76d; meeting the minimum expenditure requirement of § 10-262, or whether they are for purposes within the board’s discretion under state statutes. . . ’” (Naugatuck at 373 (quoting the trial court’s opinion)).

If a town charter provision conflicts with state law in an area of statewide concern, such as education, the statutes prevail (Wallingford v. Board of Education, 152 Conn. 568 (1965)). The Naugatuck court found the budget amendment conflicted “with the statutory scheme governing the process whereby boards of education receive the appropriations necessary to fulfill their duties to the state,” and was therefore invalid (Naugatuck at 373). It said that Naugatuck could not hold separate referenda on the town’s operating budget and the board of education budget.

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