THE GOVERNOR HAS NO POWER TO IMPOSE A CONTINUATION BUDGET SINCE THE LEGISLATURE REPEALED KRS 41.110 IN A FRENZY TO GAIN LEGISLATIVE INDEPENDENCE

By Judge Stan Billingsley (Ret.) – LawReader Senior Editor

THE CHICKENS HAVE COME HOME TO ROOST – The 1983 repeal of KRS 41.110 by  the Legislature’s movement to enhance Legislative independence has come home to roost, and the smell is awful.

KRS 41.110  permitted the Governor to apply an interim continuation budget when the legislature failed to enact a budget. This statute was said to give the Governor to much power and those who sought legislative independence garnered enough votes to repeal this law. The statue was repealed and the result has substantially weakened the Governor’s power to run the state.

The legislature has left Frankfort without a budget three times since 1994. In 2004, the last time the legislature could not come to an agreement on a budget, a lawsuit was filed. The state Supreme Court ruled in 2005 that a governor can spend money without a budget, but only on items directly mentioned in the Constitution and state statutes.  The Legislature is currently deadlocked on a budget bill, and gridlock for Kentucky is only days away.

Several court decisions since l983 have weakened the ability of the Governor to remedy a budget crisis.  The Legislature is failing to act, and having assumed the budgetary power have not responsible exercised that power.  Nevertheless, the law is clear…the Governor cannot spend money that is not appropriated except in a few situations.  The Governor no longer has the power to impose a continuation budget in the absence of legislative authority.

Unless this problem is resolved, state government will soon grind to a halt, and the finger will be correctly pointed back to the legislature.  They can argue to the voting public that “legislative independence” is more important than keeping state parks open, funding education, maintaining road’s etc., etc. to the tune of $20 billion dollars.   

One would hope that the legislature would fix our budgetary problem by some other method than shutting down state government.

Authorities:

Baker v. Fletcher, 204 S.W.3d 589 (Ky., 2006)

“The origin of the Plaintiffs’ complaint emerges from the Kentucky General Assembly’s failure to fulfill its constitutional and statutory duty to enact a comprehensive balanced budget appropriating revenues to fund the Executive Branch. As a result of the General Assembly’s neglect and in the absence of a budget appropriation, then Governor Paul E. Patton declared a state of emergency and issued an Executive Order (2002-727) for the fiscal year beginning July 1, 2002. Pertinent to the case at hand, Governor Patton’s Executive Spending Plan contained language seeking to suspend operation of KRS 18A.355(1) and alternatively provide for a two and seven-tenths (2.7%) annual salary increment for state employees.”

“The Governor possesses no “emergency” or “inherent” powers to appropriate money from the state treasury that the General Assembly, for whatever reason, has not appropriated. . . . Nor does the Court of Justice have the power to confer such authority.”

“…it is confirmed by the actual amount of money appropriated. The General Assembly appropriated just enough to pay a two and seven-tenths percent raise for all employees. There was no money for a five percent increment, including employees who had an annual-increment anniversary date prior to the budget enactment. When a sum certain is appropriated there can be no legitimate contention that more spending was intended. In Hager v. Shuck34 this Court stated that salaries of the auditor’s clerks must not exceed the amount legislatively appropriated

Fletcher v. Commonwealth, No. 2005-SC-0046-TG (KY 5/19/2005) (KY, 2005)

The issue presented by this appeal is whether the Governor of the Commonwealth of Kentucky may order money drawn from the state treasury to fund the operations of the executive department of government if the General Assembly fails to appropriate funds for that purpose. The issue arose when the General Assembly adjourned sine die on April 14, 2004, without adopting an executive department budget bill for the 2004-06 biennium.

“… At the 2002 regular session, the Republican-controlled Senate and the Democratic-controlled House of Representatives deadlocked on whether to appropriate funds for the election campaign fund created by the Public Financing Campaign Act, KRS 121A.020, and adjourned sine die on April 15, 2002, without enacting a budget bill for either the executive or judicial departments for the 2002-04 biennium. On April 17, Governor Patton reconvened the General Assembly into an extraordinary session for the sole purpose of negotiating a budget bill. Recalcitrance prevailed, however, and the General Assembly adjourned the special session on May 1, 2002, without enacting a budget bill for either of the other two departments of government.

        On June 26, Governor Patton promulgated an “Executive Spending Plan” and authorized the Secretary of the Finance and Administration Cabinet to issue warrants against the treasury to implement that plan “and to assist the Court of Justice as may be necessary to implement lawful expenditures for its operation.” Exec. Order No. 2002-727, para. 6, at 4.1 In essence, the Governor adopted his own executive department budget and ordered appropriations from the state treasury to fund it. The Treasurer filed a petition in the Franklin Circuit Court for a declaration of rights, KRS 418.040, to determine the constitutionality of the Executive Spending Plan. Ky. Dept. of the Treasury ex rel. Miller v. Ky. Fin. and Admin. Cabinet, No. 02-CI-00855 (Franklin Circuit Court, filed June 26, 2002). However, the legislative deadlock dissolved when all potential gubernatorial candidates announced their intentions to reject public financing of the 2003 election. During its 2003 regular thirty-day session, the General Assembly enacted a budget bill for the 2002-04 biennium that did not fund the election campaign fund and ratified the Governor’s expenditures under the Executive Spending Plan, nunc pro tunc. The Franklin Circuit Court dismissed the declaration of rights action as moot. See generally Paul E. Salamanca, The Constitutionality of an Executive Spending Plan, 92 Ky. L.J. 149, 152-58 (2003-04).

Unlike Governors Jones and Patton before him, Governor Fletcher did not reconvene the General Assembly into extraordinary session for the purpose of further budget negotiations. When asked during oral argument whether the Governor should have called an extraordinary session so that the General Assembly could attempt to resolve its differences, the attorney for the President of the Senate responded that an extraordinary session would have been “futile.” Instead, the Governor announced that he, like Governor Patton before him, would formulate his own executive department spending plan, i.e., his own budget.

        On May 27, 2004, the Attorney General filed this action in the Franklin Circuit Court against the Governor, the Treasurer, and the Secretary of the Finance and Administration Cabinet seeking to preclude the anticipated suspension of 153 existing statutes in the Governor’s executive spending plan. Other parties, including the President of the Senate, the Speaker of the House of Representatives, individual legislators, representatives of state employees, and the Board of Trustees of the Kentucky Employees Retirement System, intervened to assert limitations on the Governor’s power to suspend statutes or to spend unappropriated funds. Common Cause of Kentucky, an unincorporated self-styled “non-profit, non-partisan organization which advocates ethics and constitutional law in Kentucky,” intervened on the relation of its chairman, a self-described “Kentucky taxpayer,” seeking an injunction against the Governor to preclude him “from implementing any spending plan which would draw

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money from the State Treasury without appropriations made by the Legislature” in contravention of Section 230 of the Constitution of Kentucky

  On June 28, 2004, Governor Fletcher promulgated Executive Order 2004-650, adopting an executive department budget which he denominated a “Public Services Continuation Plan.” The Order noted that:

        Through its adoption of House Bill 396, the General Assembly has made appropriations for the use of the Judicial Branch totaling $234,648,400, and in House Bill 397 for the Legislative Branch totaling $40,731,400, leaving $20,739,752,600 in previously estimated revenues identified for use by the Executive Branch, as modified by the Consensus Forecasting Group estimates of June 8, 2004, for the operation and function of the Executive Branch of government.

  On December 15, 2004, the Franklin Circuit Court declared the Public Services Continuation Plan unconstitutional but authorized its continuation until June 30, 2005,2 after which, “absent legislative action, no public funds shall be expended from the State Treasury …, with the exception of those funds demonstrated to be for limited and specific essential services previously approved in Quertermous [Miller v. Quertermous, 304 Ky. 733, 202 S.W.2d 389 (1947))." On January 13, 2005, the Governor and the Secretary of the Finance and Administration Cabinet appealed. We granted transfer, CR 74.02, ordered an expedited briefing schedule, and set oral arguments for March 9, 2005. On March 8, 2005, during the course of its thirty-day regular legislative session, the General Assembly enacted both an executive department budget bill for the 2004-06 biennium and a tax bill. As it had done in its 2003 session, the General Assembly also ratified all executive department actions taken pursuant to the Public Services Continuation Plan, nunc pro tunc."

"  On three occasions within a ten-year period, the General Assembly convolved itself into a partisan deadlock and adjourned sine die without enacting an executive department budget bill. After the two most recent such occasions, the respective governors promulgated their own budgets and ordered appropriations drawn from the treasury in accordance therewith. On each occasion, lawsuits were filed to test the constitutionality of those actions. On each occasion, the General Assembly enacted an executive department budget bill and ratified the governor's actions before the issue could be finally resolved by the Court of Justice. Having no assurance that similar partisan brinkmanship will not recur in the General Assembly, resulting in future gubernatorially promulgated budgets, we conclude that this issue is capable of repetition, yet evading review, and will address its merits. See Burlington Northern R. Co. v. Bhd. of Maint. of Way Employees, 481 U.S. 429, 436 n.4, 107 S.Ct. 1841, 1846 n.4, 95 L.Ed.2d 381 (1987) ("Because these same parties are reasonably likely to find themselves again in dispute over the issues raised in this petition, and because such disputes typically are resolved quickly by ... legislative action, this controversy is one that is capable of repetition yet evading review.")."

 

"... The President of the Senate suggests that when a budget deadlock occurs, a court can supervise the Governor's expenditures on an item-by-item basis to ensure that they do not exceed the constitutional exception for "essential services" allegedly created in Miller v. Quertermous, 304 Ky. 733, 202 S.W.2d 389 (1947). The Governor responds that budgetary matters, including determinations of what services are essential or not, are nonjusticiable political questions that should be reserved to the other departments of government.

        The "political question" doctrine is grounded primarily in the separation of powers. Baker v. Carr, 369 U.S. 186, 210, 82 S.Ct. 691, 706, 7 L.Ed.2d 663 (1962). Under this doctrine, the judicial department should not interfere in the exercise by another department of a discretion that is committed by a textually demonstrable provision of the Constitution to the other department, Powell v. McCormack, 395 U.S. 486, 518, 89 S.Ct. 1944, 1962, 23 L.Ed.2d 491 (1969), or seek to resolve an issue for which it lacks judicially discoverable and manageable standards, Vieth v. Jubelirer, 541 U.S. 267, ___, 124 S.Ct. 1769, 1776, 158 L.Ed.2d 546 (2004). See, e.g., Philpott v. Haviland, 880 S.W.2d 550, 554 (Ky. 1994) (determination of what is a "reasonable time" within which to report a bill out of a legislative committee under Section 46 of the Constitution is a purely legislative issue); Dalton, 304 S.W.2d at 345 (wisdom of fiscal policy, levy of taxes, and appropriation of revenue is outside the purview of judicial authority); Lakes v. Goodloe, 195 Ky. 240, 242 S.W. 632, 635 (1922) ("The expediency of a statute, or whether or not the public weal demands its enactment, are political questions, which address themselves to the legislative department of the government...."). We agree with the Governor that the judicial department should neither inject itself nor be injected into the details of the executive department budget process. What constitutes an essential service depends largely on political, social and economic considerations, not legal ones. Vaughn v. Knopf, 895 S.W.2d 566, 567 (Ky. 1995) (declaring the statute requiring circuit court oversight of sheriff's budget unconstitutional: "In acting on these annual budget requests, the judges would, per se, be injected into the political side of the executive branch offices.").

        The issue in this case, however, is not the efficacy or necessity of a particular appropriation, but whether the Governor has any constitutional authority to determine what are essential services or to unilaterally order any appropriations from the treasury."

"... The issue presented by this case is a constitutional issue, not a political one; thus, it is justiciable. Cf. Rose v. Council for Better Educ., Inc., 790 S.W.2d 186, 209 (Ky. 1989) ("To allow the General Assembly (or, in point of fact, the Executive) to decide whether its actions are constitutional is literally unthinkable.")"

"... No money shall be drawn from the State Treasury, except in pursuance of appropriations made by law....

        We have consistently held that this provision means exactly what it says. Commonwealth ex rel. Armstrong v. Collins, 709 S.W.2d 437, 441 (Ky. 1986) ("It is clear that the power of the dollar — the raising and expenditure of the money necessary to operate state government — is one which is within the authority of the legislative branch of government. The Constitution of the Commonwealth so states and we have so stated."); L.R.C. v. Brown, 664 S.W.2d at 925 ("The budget, which provides the revenue for the Commonwealth and which determines how that revenue shall be spent, is fundamentally a legislative matter."); Ferguson v. Oates, 314 S.W.2d 518, 521 (Ky. 1958) ("[T]he purpose of [Section 230] was to prevent the expenditure of the State’s money without the consent of the Legislature.”) (internal citation and quotation omitted).”

“…  The Governor asserts that Section 230 applies only if the General Assembly has enacted a budget bill. As noted at the outset of this opinion, there is no provision in the Constitution of Kentucky requiring the General Assembly to enact a budget bill. Such is purely a statutory requirement. Since Section 230 preexisted that statutory scheme, the Framers could not have intended for the Section to apply only when the General Assembly enacts a budget bill. Accordingly, we hold that, in the absence of a specific appropriation, or a statutory, constitutional, or federal mandate as discussed below, the unambiguous language of Section 230 prohibits the withdrawal of funds from the state treasury.”

“… V. STATUTORY, CONSTITUTIONAL AND FEDERAL MANDATES.

        KRS 41.110 provides:

        No public money shall be withdrawn from the Treasury for any purpose other than that for which its withdrawal is proposed, nor unless it has been appropriated by the General Assembly or is a part of a revolving fund, and has been allotted as provided in KRS 48.010 to 48.800, and then only on the warrant of the Finance and Administration Cabinet. The provisions of this section do not apply to withdrawals of funds from state depository banks for immediate redeposit in other state depository banks or to funds held in trust for the security of bond holders.

        Where the General Assembly has mandated that specific expenditures be made on a continuing basis, or has authorized a bonded indebtedness which must be paid, such is, in fact, an appropriation. Otherwise, the General Assembly has not delegated its constitutional power of appropriation to the executive department. It has even forbidden the expenditure of surplus monies in the general and road funds. KRS 48.700(8); KRS 48.710(8).”

“… VI. CONTINUATION BUDGET.

        The Attorney General posits that, in addition to statutory, constitutional, and federal mandates, the Governor ought to be able to look to the immediately preceding biennial budget as a “guide” for additional appropriations, i.e., a kind of “quasi-continuation budget.”

        From 1918 until 1983, there existed statutory authority for a continuation budget in Kentucky, subject to substantial executive department leeway, viz:

        If the General Assembly fails to make an appropriation for any fiscal year for any purpose required to be executed by provisions of existing laws, or if the Governor vetoes an appropriation essential to the carrying out of any such purpose, an appropriation equal in amount to the appropriation made, or deemed to have been made under this section, for that purpose for the fiscal year next preceding, exclusive of any such appropriations for extraordinary expenses and capital outlays, shall be deemed to have been made and shall continue available from year to year until an appropriation has been made as provided in this chapter and has become effective. If any such appropriation for the fiscal year next preceding is applicable alike for ordinary recurring expenses, extraordinary expenses, and capital outlays, the Executive Department for Finance and Administration shall determine what proportion thereof shall be deemed under the provisions of this section to have been appropriated for ordinary recurring expenses by the General Assembly for the next fiscal year. Each appropriation or the proportion of each appropriation that is continued under this section shall be included in the budget and made available for expenditure by allotments as provided in this chapter.”

”    KRS 45.120. The statute was repealed effective July 1, 1983. 1982 Ky. Acts, ch. 450, § 79. We interpret that repeal as a specific legislative rejection of the solution proffered by the Attorney General. Cf. Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. at 586, 72 S.Ct. at 866 (finding no Congressional authority for President’s seizure of steel mills partially because, “[w]hen the Taft-Hartley Act was under consideration in 1947, Congress rejected an amendment which would have authorized such governmental seizures in cases of emergency.”).

        Thus, we are left with KRS 48.310(1) (“No provision of a branch budget bill shall be effective beyond the second fiscal year from the date of its enactment.”) and the ancient principle that each legislature is a free and independent body and cannot control the conduct of its successor except by acts in the form of binding contracts. Bd. of Trustees v. Attorney Gen., 132 S.W.3d at 789; City of Mt. Sterling v. King, 126 Ky. 526, 104 S.W. 322, 322 (1907); Swift & Co. v. City of Newport, 70 Ky. (7 Bush) 37, 41 (1870). There presently exists no authority for a continuation budget in Kentucky.”

VII. GOVERNOR’S CONSTITUTIONAL POWERS.

        The Governor asserts that when the General Assembly fails to exercise its appropriations power to fund the operations of the executive department, he (the Governor) possesses the inherent power to order the appropriations necessary to prevent the imminent collapse of governmental services. He cites Sections 69 and 81 of the Constitution as the source of that power.

“… Section 69 provides: “The supreme executive power of the Commonwealth shall be vested in a Chief Magistrate, who shall be styled the `Governor of the Commonwealth of Kentucky.’” That provision only vests the Governor with executive powers, just as Section 29 vests the General Assembly with legislative powers and Section 109 vests the Court of Justice with judicial powers. Manifestly, Section 69 does not vest the Governor with legislative powers, which are specifically reserved by Sections 28 and 29 solely to the legislative department. Section 81 provides: “He shall take care that the laws be faithfully executed.” The Governor asserts that he cannot faithfully execute the laws enacted by the General Assembly without the funds necessary to do so. However, as noted earlier in this opinion, the mere existence of a law does not mean that it must be implemented if doing so requires the expenditure of unappropriated funds. Commonwealth ex rel. Armstrong v. Collins, 709 S.W.2d at 441.”

“… The Governor possesses no “emergency” or “inherent” powers to appropriate money from the state treasury that the General Assembly, for whatever reason, has not appropriated. Cf. Brown v. Barkley, 628 S.W.2d 616, 623 (Ky. 1982) (“Practically speaking, except for those conferred upon him specifically by the Constitution, [the Governor's] powers, like those of the executive officers created by Const. Sec. 91, are only what the General Assembly chooses to give him.”). Nor does the Court of Justice have the power to confer such authority. Miller v. Quertermous is overruled to the extent it holds or can be interpreted otherwise.”

“…    There is no constitutional mandate that the General Assembly enact a budget bill, and there is no statute providing for an alternative when it fails to do so. Despite much hand-wringing and doomsday forecasting by some of the parties to this action at the prospect that we would hold that Section 230 means what it unambiguously says, it is not our prerogative to amend the Constitution or enact statutes. When the General Assembly declines to exercise its appropriations power, that power does not flow over the “high wall” erected by Section 28 to another department of government.”

 Accordingly, we affirm that portion of the Franklin Circuit Court’s judgment that declares the Public Services Continuation Plan unconstitutional insofar as it requires expenditure from the treasury of unappropriated funds other than pursuant to statutory, constitutional, and federal mandates; and reverse that portion of the Franklin Circuit Court’s judgment that authorizes unappropriated expenditures for other “limited and specific services previously approved in Quertermous.”

        Graves, Johnstone, and Wintersheimer, JJ., concur. Lambert, C.J., concurs in part and dissents in part by separate opinion. Keller, J., concurs in part and dissents in part by separate opinion, with Scott, J., joining that opinion.

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