In United States Trust Co. v. New Jersey (1977) 431 U.S. 1, the court invalidated the repeal of a bistate statutory covenant that limited the ability of the Port Authority of New York and New Jersey to subsidize rail passenger transportation from revenues and reserves pledged as security for consolidated bonds issued by the port authority, holding this retroactive alteration of the contract rights of state bondholders to be an impermissible impairment of contract. "The Contract Clause limits otherwise legitimate exercises of state legislative authority, and the existence of an important public interest is not always sufficient to overcome that limitation. . .. . . Legislation adjusting the rights and responsibilities of contracting parties must be upon reasonable conditions and of a character appropriate to the public purpose justifying it adoption." (United States Trust, supra, 431 U.S. at pp. 21-22.) In revitalizing the contract clause as a limitation on state legislative authority, the Supreme Court drew two crucial distinctions that bear heavily on the proper analysis of the constitutionality of a state or local law. First, the court differentiated between the object of the legislation: Laws affecting existing contractual relationships between private parties, as opposed to laws affecting obligations of the state itself, are to be reviewed with great deference to the legislature's judgment as to the necessity and reasonableness of a particular measure. (United States Trust, supra, 431 U.S. at pp. 22-23.) Second, and of paramount significance for the case at bar, the Supreme Court confirmed the continued viability of the "reserved-powers doctrine" and sharply distinguished between impairment of a state's own financial obligation through exercise of the taxing and spending powers, on the one hand, and abridgment of rights in a contract to which the state may be a party as a result of the state's exercise of its police powers (for example, for health or safety reasons), on the other hand. ( Id. at pp. 23-25.) "It is often stated that 'the legislature cannot bargain away the police power of a State.' This doctrine requires a determination of the State's power to create irrevocable contract rights in the first place, rather than an inquiry into the purpose or reasonableness of the subsequent impairment. In short, the Contract Clause does not require a State to adhere to a contract that surrenders an essential attribute of its sovereignty. In deciding whether a State's contract was invalid ab initio under the reserved-powers doctrine, earlier decisions relied on distinctions among the various powers of the State. Thus, the police power and the power of eminent domain were among those that could not be 'contracted away,' but the State could bind itself in the future exercise of the taxing and spending powers. Such formalistic distinctions perhaps cannot be dispositive, but they contain an important element of truth." (United States Trust, supra, 431 U.S. at pp. 23-24.) After observing that the bonds at issue were plainly state financial obligations and that repeal of the security provisions protecting the bondholders was an exercise of the state's financial powers, rather than its reserved police powers, the court illustrated the difference between the two situations: "The instant case involves a financial obligation and thus as a threshold matter may not be said automatically to fall within the reserved powers that cannot be contracted away. Not every security provision, however, is necessarily financial. For example, a revenue bond might be secured by the State's promise to continue operating the facility in question; yet such a promise surely could not validly be construed to bind the State never to close the facility for health or safety reasons." (United States Trust, supra, 431 U.S. at pp. 24-25.) Only after it concluded that the impairment of the bondholder's financial rights did not involve an exercise of the state's core governmental power to protect the health or safety of its citizens did the Supreme Court articulate the oft-quoted standard for evaluating the constitutionality of a measure impacting a public contract: " The Contract Clause is not an absolute bar to subsequent modification of a State's own financial obligations. As with laws impairing the obligations of private contracts, an impairment may be constitutional if it is reasonable and necessary to serve an important public purpose. In applying this standard, however, complete deference to a legislative assessment of reasonableness and necessity is not appropriate because the State's self-interest is at stake. A governmental entity can always find a use for extra money, especially when taxes do not have to be raised. If a State could reduce its financial obligations whenever it wanted to spend the money for what it regarded as an important public purpose, the Contract Clause would provide no protection at all." (United States Trust, supra, 431 U.S. at pp. 25-26.)