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:

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.1

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, 74 Pa.Cmwlth. 522, 460 A.2d 880 (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.2

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 882. 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 the water supply system facilities when they required extensive improvements or replacement, which, according to city council, they did. Id. Because it was intertwined with the transfer agreements, we held that the matter pertained to the capital budget and struck consideration from the budget.3

There are substantial factual differences between this case and Cottone: as found by the trial court, there are no transfer or lease agreements that would be affected; the sale of Gracedale was not contemplated or referenced in either the 2011 proposed budget or the 2011 capital improvements plan; and the approved budget for 2011 did not contain any capital expenditures for Gracedale due to its potential sale. While the County has apparently put out requests for proposals and has identified a potential buyer for Gracedale with the possibility of a sale occurring in May or June, 2011, it has not yet entered into a contract for the sale. In addition, Gracedale is not presently in need of extensive improvements or repairs as was the water system in Cottone. In this case, unlike Cottone, there is no direct impact on the budget or the capital budget making it inapposite.

Objectors are seeking to extend Cottone to limit the power of citizens to enact or repeal any ordinance, even if it is not a budget ordinance, if it has an indirect impact on the budget or capital budget ordinance as falling within the ambit of "extend[ing] to the budget or capital program." In deciding whether the Initiative that would prohibit the conveyance of Gracedale for five years "extend[s] to the budget or capital program," we have to look at the context of how those terms are used in the Home Rule Charter.

The County Home Rule Charter treats ordinances, such as the one here, and budgets as two different things. Section § 1.6-601(a) provides:

348 Pa.Code § 1.6-601.

Article VI of the Home Rule Charter provides the requirements of an ordinance and how ordinances are to be enacted. Section § 1.6-602 9(a) lists the matters that have to be enacted by ordinance. Pertinent to this case is subsection (6) which requires that an ordinance be enacted if it "conveys or leases or authorizes the conveyance or lease of any real property of the County."

In this case, Resolution 71-20104 directed Mr. Stoffa to pursue a sale of Gracedale to private entities. Under the Home Rule Charter, if Mr. Stoffa receives an offer for Gracedale, then the matter will have to come back to Council to authorize the conveyance by ordinance. Section § 1.11-1101 provides "the registered voters of the County shall have the power by initiative to enact and repeal ordinances." The Initiative's purpose is to block the conveyance of Gracedale for a period of five years from the date of the approval of this Ordinance, which is the proper subject of an ordinance.5 While it may or may not have a budgetary impact, all the Initiative is doing is attempting to enact an ordinance prohibiting the conveyance of Gracedale for five years and does not extend to the budget or capital program.6

Moreover, budgets are not even considered ordinances under the Home Rule Charter. The capital and operating budgets of Northampton County are covered by Article VII of the Home Rule Charter which provides a different procedure for the enactment of budgets as opposed to the enactment of ordinances. Section § 1.7-702 entitled "Projected Financial Plan" deals with the capital budget. It provides:

348 Pa.Code § 1.7-702.

The County operating budget is enacted pursuant to Section 1.7-703, which provides:

348 Pa.Code § 1.7-703.

As can be seen, budgets and ordinances are two different things. A prohibited initiative that "extend[s] to the budget or capital program" would involve the budgeting process set forth in Title VII of the Home Rule Charter dealing with the capital or operating budget. Because the Home Rule Charter gives the citizens the "power by initiative to enact and repeal ordinances" and the Initiative here deals with a conveyance of land that is required to be enacted by ordinance, this Initiative does not "extend to the budget or capital program."

Because the Initiative involving the sale of Gracedale does not extend to the County's budget or capital program, the Initiative does not violate the County's Home Rule Charter. Accordingly, the order of the trial court is affirmed.

Judges McGINLEY, COHN JUBELIRER and SIMPSON did not participate in the decision in this case.

ORDER

AND NOW, this 12th day of April, 2011, the order of the Court of Common Pleas of Northampton County, dated February 15, 2011, and docketed at No. C-48-CV-2011-1095, is hereby affirmed.

CONCURRING OPINION BY Judge BROBSON.

I agree with the majority that we should affirm the trial court in this case. I write separately, however, because I cannot embrace the entirety of the majority's reasoning.

Specifically, I am wary of the portion of the majority's analysis that relies so heavily on Section 1.6-601(a) of the Northampton County Charter (Charter), which provides that "[t]he County Council shall act only by the adoption of an ordinance, resolution, budget, or motion." (Emphasis added.) Based on this language, the majority concludes that Northampton County (County) regards a "budget" as separate and distinct from an "ordinance." The majority then reasons that because the initiative power in Section 1.11-1101 of the Charter extends only to the enactment of "ordinances" and not a "budget," an initiative can never "extend to the budget" and thus can never exceed the limitation on the initiative power contained in Section 1101(b) of the Charter. If the majority's reasoning is correct, however, then the express language of Section 1101(b), limiting the power of referendum where it would "extend to the budget," is unnecessary and becomes mere surplusage. Because such a construction violates a well-settled principle of statutory construction, I cannot agree with it. 1 Pa.C.S. § 1921(a); Commonwealth v. Ostrosky, 589 Pa. 437, 450, 909 A.2d 1224, 1232 (2006) ("The legislature . . . is presumed not to intend any statutory language to exist as mere surplusage and, accordingly, courts must construe a statute so as to give effect to every word."); see Patricca v. Zoning Bd. of Adjustment of the City of Pittsburgh, 527 Pa. 267, 590 A.2d 744 (1991) (holding that principles of Statutory Construction Act of 19721 are to be followed when construing local ordinance.)

Nonetheless, I agree with the majority that the "extends to the budget" limitation to the initiative power in the Charter cannot reasonably be read as extending to ordinances that merely have an indirect impact on a County's budget. While there is no precedent from this Court or the Pennsylvania Supreme Court directly on point, the interpretation by the Court of Appeals of Michigan of identical language in the City of Detroit Charter is persuasive:

Settles v. Detroit City Clerk, 169 Mich.App. 797, 808, 427 N.W.2d 188, 193 (1988) (citations omitted).

Here, the trial court made findings to the effect that the initiative at issue, if passed, would at most have an indirect impact on the County's budget. The trial court also made findings to the effect that the County's efforts to sell or lease Gracedale Nursing Home had not progressed to such a point that a transaction was a certainty or that the initiative, if passed, would impact any existing contract rights. Although the objectors dispute these findings by the trial court, and while there is arguably record evidence to support the objectors' contrary view of the facts, there is also substantial evidence in the record to support the trial court's findings. Based on the trial court's findings that the proposed initiative will not have a direct and substantial impact on the County's budget, the proposed initiative does not extend to the budget. I would therefore affirm the trial court on this basis.

Judges McGINLEY, COHN JUBELIRER and SIMPSON did not participate in the decision in this case.

Judge LEAVITT joins in this Concurring Opinion.