Spadoro v. Whitman

In Spadoro v. Whitman, 150 N.J. 2, 695 A.2d 654 (1997), the issue of the constitutionality of the Pension Bond Financing Act of 1997, N.J.S.A. 34:1B-7.45 et seq. (PBFA), and contract bond financing was raised. However, the matter was dismissed as moot when the bonds were sold before the Court decided whether to hear the case on the merits. Spadoro v. Whitman, supra (150 N.J. at 13-14, 695 A.2d 654). The PBFA utilized contract bond financing in authorizing the issuance of bonds by the EDA to pay the State's unfunded accrued liability on various pension funds. It provided for the repayment of the bonds by a contract between the EDA and the State Treasurer. Id. at 5-7, 695 A.2d 654. In his dissenting opinion, joined by Justice Stein, Justice Handler concurred in the finding of mootness, but opined that the PBFA violated the Debt Limitation Clause. Id. at 2-14, 695 A.2d 654. Justice Handler distinguished Spadoro from prior decisions because: (1) the EDA had no governmental function requiring funding and acted as a mere conduit to enable the State to issue bonds; (2) there was no separate source of income for the EDA to repay the bonds; (3) the PBFA provided for the issuance of bonds merely to defray the ordinary operating expenses of government rather than for capital improvement, capital construction or the provision of special services. Id. at 9-11, 695 A.2d 654.