Court hears ‘unallotment’ case: How much power does the governor have?

Indubitably, Minnesota law provides the governor with the power — highly unusual among the states — to decline to spend funds that have been properly appropriated (in bills passed by the Legislature and signed by the governor himself) if that rescission is necessary to prevent the state from going into deficit. (The Minnesota Constitution prohibits deficit spending.)

That is the “unallotment” power that all the arguing is about. And that argument gets an important (but certainly not final) airing today in Ramsey County District Court.

The governor’s unallotment power has been used before, has been challenged in court before, and has been upheld as valid and constitutional. But it has never been used under the circumstances that Pawlenty used it at the end of the 2009 legislative session.

The statute establishing the unallotment power says it is for situations in which “the commissioner [of management and budget] determines that probable receipts for any other fund, appropriation, or item will be less than anticipated.”

The previous unallotments occurred when the Legislature was out of session and revenue came in below projections.

This year, before the legislative session was over, Pawlenty announced that he would veto any tax increases and would not call a special session to work out a compromise with the Legislature.  Instead, he declared, he would balance the budget himself by selective use of the line-item veto and unallotment.

On May 18, the last day of the legislative session, the Legislature passed a bill that would have raised enough new revenue to pay for the spending it had approved (at least based on then-current projections). The governor signed the spending bills but vetoed the revenue bill. He then used his line-item veto power to reduce some of the spending, and when he reached the limits of that power, he used unallotment to eliminate other categories of spending that were beyond the reach of his line-item veto.

Two arguments: Statutory and constitutional

DFLers argue that this is not a case of “unanticipated” shortfalls, but a case where the shortfall was known while the Legislature was in session. The statutory challenge to what Pawlenty did is that the guv used the power in a situation not intended when the unallotment power was enacted.

The constitutional argument is that Pawlenty’s action alters the balance of powers between the executive and legislative branches. If he gets away with this, the constitutional portion of the argument goes, he will have greatly increased the governor’s power over state spending and state priorities, at the expense of the Legislature’s power.

The current court case

The subject of today’s hearing is a suit filed by six very poor Minnesotans against Pawlenty and three of his commissioners.

The six plaintiffs have been receiving a monthly check from the state to help them afford a special diet that is necessary for their health. The program that paid that subsidy has been completely unallotted. The unallotment just took effect, on Nov. 1. On behalf of themselves and “all others similarly situated” — which I take to mean all recipients of the special dietary subsidies, but which logically could also mean anyone who has lost a state benefit under the unallotment — the plaintiffs are asking Ramsey Chief Judge Kathleen Gearin to issue a temporary restraining order on the unallotment so that the plaintiffs will continue to get their subsidy until the case is decided.

I’ve read the pre-trial briefs of the two sides and this goal of this post is to preview the arguments. One thing that comes across in both briefs is that one of the key criteria a judge must consider in deciding for or against a temporary restraining order is which of the sides seems likely to prevail when the underlying question is finally decided.

In other words, without hearing the full argument on whether Pawlenty’s current unallotment was legal, Gearin is supposed to think about which side might win in the end. Gearin, a former high school social studies teacher and a former prosecutor, is now serving her fourth six-year term. Although she has no overt partisan associations, conservatives suspect her of being a liberal.

The issue of a restraining order is a short-term matter, but it will be interesting to see what she says, when she rules on that question, about which side is likely to prevail on the underlying issue.

The plaintiffs’ brief

The plaintiffs qualify for the special aid they’ve been receiving because they are low-income, disabled and because their doctors have prescribed special diets for them to maintain their health.

At the risk of wearing you out, here’s how the plaintiffs’ brief describes the first of the named defendants:

“Deanna Brayton suffers from a variety of health problems. She has been diagnosed with an autoimmune disorder, rheumatoid arthritis, degenerative disc disease, osteoporosis, high cholesterol, elevated blood sugar, underactive thyroid, irritable bowel syndrome, traumatic brain injury, irregular heartbeat, anxiety, migraine headaches and visual disturbances. She suffers from frequent blood clots, kidney stones and multiple ill-defined leg fractures. As a result, Ms. Brayton is unable to work…

“Multiple health impairments force Ms. Brayton to carefully monitor her health. Not only does she take numerous medications, but she must also follow a strict diet. Ms. Brayton’s doctor requires that Ms. Brayton follow both a lactose-free diet and a gluten-free diet. She must also eat between 40 and 60 grams of protein each day. And she must follow an anti-dumping diet. If Ms. Brayton violates any one of these dietary restrictions, she becomes ill.”

According to the brief, Brayton has been receiving benefits from several federal, state and local programs, totaling $1,089 a month, of which $334.40 was represented by the dietary aid. Her monthly expenses were $1,221. Before she lost that benefit, the brief says, she was able to get by by leaving one bill unpaid each month then catching up the next month and leaving another one unpaid. (I can’t see how this can work out in the long run.)

But without the $334 a month that she will lose because of unallotment, “Ms. Brayton does not know how she will be able to buy the foods she needs to maintain her diet with this significant reduction in her income. She is afraid that if she is unable to follow her diet, she will end up in the hospital.”

I’ll spare you the tales of the other five plaintiffs, but take my word for it, according to the brief, they are very similar. The lawsuit says the effect of the lost dietary aid would be “devastating and places [the plaintiffs] on the precipice of disaster.”

This is a very sad story on a human basis. On a legal basis, the plaintiffs attorney, Galen Robinson of Mid-Minnesota Legal Assistance, makes the two arguments I summarized above.

1.The statutory intent argument: The unallotment power exists for an unforeseen shortfall in the middle of a biennium, not for a governor to impose his own preferred tradeoffs between taxes, spending and cuts before the biennium has begun, when the Legislature is in session and the shortfall is already projected.

2.The constitutional balance of power argument: Taxes to raise revenues and the appropriations to spend those revenues are constitutionally entrusted to the Legislature. One check on this power is the power of the governor to veto bills or even line items. But the check on that power is for the Legislature to override those vetoes. Pawlenty has asserted an unprecedented and balance-of-power-altering authority over taxes and spending that leaves the Legislature as a bystander. As summarized in the plaintiffs’ brief: “The Governor simply may not arrogate to himself the power to rewrite appropriations.”

The defense brief

Arguing on behalf of the governor and his commissioners, Solicitor General Alan Gilbert presented several strong counterarguments. Here, based on the defense brief, is an overview some of those facts and arguments:

1. The unallotment statute simply does not say that the governor cannot use the power at the beginning of a biennium, nor that the Legislature and the governor have to agree to a balanced budget at the beginning of a biennium.

2. Trying to infer the mystical intent of the authors of the unallotment statute is not permissible, Solicitor General Gilbert argues. The court must construe the law from the words in the law. As the brief states it: “The plain language of the statute controls and ‘shall not be disregarded under the pretext of pursuing the spirit [of the statute.]’”

That last portion is a quote from Minnesota Statute 645.16.  But it did not quote the full sentence from the law, which reads: “When the words of a law in their application to an existing situation are clear and free from all ambiguity, the letter of the law shall not be disregarded under the pretext of pursuing the spirit.”

Presumably it will be for the courts to decide whether the words of the unallotment law are clear and free from all ambiguity, specifically as to the question of what it means for a revenue shortfall to be “unforeseen.”

3. The system that is implied by the plaintiffs’ argument would lead to a government shutdown. If there is a gap between state’s projected income and its appropriated expenditures at the beginning of a biennium, and if the governor can’t unallot, the brief argues, then “spending would continue until the State simply ran out of money before the biennium ended, resulting potentially in a government shutdown, at least as to non-core functions.”

4. The unallotment statute is not an unconstitutional alteration of the balance of powers between the branches. It was enacted by the Legislature itself. It has been challenged and upheld by the courts previously. (This argument seems to assume away, or perhaps ignore, some of the principle arguments of the other side: that the previous court rulings occurred when unallotment was used at the proper time and in the proper way; and that use by Pawlenty is not what the Legislature intended.)

5. If they believed that the need for Special Diet aid was reason enough to raise taxes, counties or local governments could have decided to step in and raise taxes, cut other programs or pursue other potential funding sources so they could provide the aid to their residents. The governor announced the unallotment in July. In September, the Department of Human Services sent a specific bulletin to all counties alerting them to the unallotment, effective Nov. 1, and informing them that they had the option of continuing the aid at their own expense.

6. The governor could not have used his line item veto power to eliminate the Special Diet program, because that program is not the subject of a separate appropriation. Rather, the funding for MSA-SD (Minnesota Supplemental Aid- Special Diet)  it is a small portion of the larger appropriation for Minnesota Supplement Aid in general, which covers many other forms of aid, some of which were not unalloted.  The line item veto can only be used to strike whole appropriations.

Ultimately, the defense went straight into the plaintiffs’ face, asserting that since the governor is going to win the case in the end, Judge Gearin has no basis on which to issue the temporary restraining order. And the argument that they are going to win in the end is stated simply: Pawlenty is going to in the end because “Defendants have complied with applicable law.”

The word “unallotment,” by the way, is not really a word (and my spellchecker is about to meltdown from having to point that out so many times in the writing of this post). “Unallotment” doesn’t even occur in Minn. Statute 16A.152.subd 4.c., which creates the power. (This also gives me the opportunity to close with the actual legislative language, in case you you want to decide for yourself what it means. The subsection says:

“If the commissioner [of management and budget] determines that probable receipts for any other fund, appropriation, or item will be less than anticipated, and that the amount available for the remainder of the term of the appropriation or for any allotment period will be less than needed, the commissioner shall notify the agency concerned and then reduce the amount allotted or to be allotted so as to prevent a deficit.”

What think?

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Comments (9)

  1. Submitted by Jeff Klein on 11/16/2009 - 08:29 am.

    It seems clear to me the spirit of the law was violated, but I’ll be curious to see what the judge thinks as to whether the language of the law allows Pawlenty to wriggle through.

  2. Submitted by Annalise Cudahy on 11/16/2009 - 09:23 am.

    “Unanticipated” being the key word in the authorization of the unallotment process.

    Gearin is a good, no-nonsense judge and perfect for this case. She did well during the recount, and will shine here. Good thing we have her to hear this because she will make a point of explaining her decision in plain English. We’ll need that.

  3. Submitted by Dick Novack on 11/16/2009 - 09:31 am.

    It would seem the key is in the real statutory language quoted above:

    “and that the amount available for the remainder of the term of the appropriation…. ”

    That word “remainder” is, to me, the key, implying if not directly stating that the period has already commenced, rather than the current situation where the period had not yet commenced.

    My real concern is with Pawlenty SIGNING (not vetoing) an appropriations bill he had preexisting knowledge that he as governor would not allow to be fully funded (by signing a matching funding bill) and for which SIGNED appropriations bill he had no intention of honoring when he signed it.

    Had you or I signed a contract of any kind with such prior knowledge and such prior intention we would be hauled into the criminal side of the courts system. Is such conniving suddenly legal if it is performed by one titled as “Governor”?.

  4. Submitted by Greg Kapphahn on 11/16/2009 - 10:05 am.

    IMHO, the phrase which renders Timmy’s actions by which he violated, not just the “spirit” but the letter of the law, and flushed poverty-stricken Minnesotans down the sewer in his attempt to run for President is “less than anticipated.”

    In order to be on the right side of the law, the shortfalls have to be UNanticipated. Since Timmy CREATED this shortfall by vetoing a bill duly passed by the legislature, the shortfalls were NOT unanticipated. They were deliberately and purposefully caused so that the Timmy could usurp the power of Minnesota’s duly-elected legislature to set the budget and tax policy of the state and crown himself king of the state’s fiscal policy.

    His announcement, while the legislature was still in session, that he attended to reduce allotments clearly indicates that these shortfalls WERE anticipated (and even celebrated by Timmy).

    The only way he could have been on the right side of the law would have been to sign the bill or call a special session to negotiate a solution, then reduce allotments if an unanticipated shortfall developed (which, given the economy, it likely would have).

    Can you imagine the shrieking if a Rudy Perpich or Wendy Anderson had found a way to single-handedly raise taxes and increase spending while sidestepping-Republican dominated legislatures?

    They could not do so, of course, but neither should any other governor have the power to do so, or to do the opposite.

  5. Submitted by Brian Simon on 11/16/2009 - 10:24 am.

    The Law reads
    “If the commissioner [of management and budget] determines …”

    I’m curious; is Gov Pawlenty the commissioner to which the law refers? Or is that role performed by someone else & if so, how did this play out with regards to how the ‘unallotment’ process was done?

    Greg & Dick, above, make compelling arguments. I’m curious to hear which arguments the court finds most persuasive.

  6. Submitted by John E Iacono on 11/16/2009 - 01:04 pm.

    On “Unanticipated”

    Since Pawlenty told the legislature BEFORE they adjourned:

    “His announcement, while the legislature was still in session…”

    it seems to me that the legislature COULD have taken the warning, passed a funding bill or an amended spending bill which Pawlenty could and would sign, and the issue would have been resolved without “unallotment.”

    When they failed to do so, hoping to force a special session which the governor — who has pretty much always done what he said he would do — said he would not call, it seems to me that the shortfall became “unanticipated” once they went home without resolving the issue in the proper way by passing bills the governor could and would sign.

    Playing “chicken” is not a good way to run a legislature, particularly when the bear has clearly stated his intent. Sometimes you eat the bear, but sometimes the bear eats you.

  7. Submitted by Howard Miller on 11/16/2009 - 03:09 pm.

    I wonder if it is time to reconsider the straight-jacket that the Mn Constitutional balanced budget requirement can be.

    Minnesota suffered less in the financial freeze-up in part because stimulus money was used by the state to keep public employees working providing services – and purchasing as employed consumers. For now.

    Absent that infusion from Washington, things would be worse in the state – foreclosures up, poverty up, unemployment up, consumer spending down, needed state services curtailed. The federal tax infusion masked how bad it was in the state.

    At some point, you can’t cut your way out of a recession – it becomes a snowball, out of control, crashing downhill. Obama and his administration have been trying to avoid that specific result. That’s why deficit spending techniques by government are used.

    We in Minnesota face a bigger budget problem in the next budget biennium, current rumor has it. If our governor and legislature can not agree, do we unallot until we simply shut down?

    Is the state balanced budget requirement a straightjacket that ensures the next downturn will be amplified?

  8. Submitted by Bernice Vetsch on 11/16/2009 - 03:47 pm.

    Since the governor CREATED the shortfall by vetoing the revenue bill, how can he then claim it was “unforeseen?” He is one devious guy!

  9. Submitted by John E Iacono on 11/17/2009 - 04:00 pm.

    On “Balanced Budget”

    The federal government from the beginning has been able to “deficit spend” due to the nature of its basic obligation to defend the nation from all enemies foreign and domestic. It has abused this power greatly many times, but must still have it to meet unforseen threats to our very existence.

    I cannot, on the other hand, think of a single state which has the authority to deficit spend, although many states have tinkered with this by delaying payments into the next budget period (they are are all on a “cash basis”, so a bill is not a bill until it is paid.)

    They have also played with the facts by allowing for the impact of inflation in revenue projections and failing to do so in expense projections.

    In the end, however, they are required to spend within the constraints of anticipated income.

    This is a good thing, if one looks at the abuses committed over and over again by a Congress eager to buy a vote with largesse, but slow to pay for that largesse with vote-costing taxes. Like credit card holders run amok, they spend like there was no tomorrow, and count on inflation to make it easier to pay off the debt.

    Seeing the example of Congress as a guide, it seems to me that to allow deficit spending to the states — that is, still more bunches of vote-hungry politicians — would be a sure path to fiscal ruin for us all.

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