downing: stemming the tide of fiscal crisis

NATE COVER PAGE ON REMAND (DO NOT DELETE) 4/17/2013 11:12 AM

In Tribute: Nathaniel S. Downing

The staff of the New England Law Review respectfully dedicates this Issue to Nate Downing—an editor; a colleague; a friend.

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265

Stemming the Tide of Fiscal Crisis: The Case for Gubernatorial Budget

Reductions

NATE DOWNING*

ABSTRACT

In the summer of 2010, the Massachusetts state legislature included an outside section in the state budget creating a fund to hold enhanced payments under the Medicaid program called Federal Medical Assistance Percentages (“FMAP”), or the federal portion of the Medicaid budget. The

FMAP funds accounted for $689 million in projected revenues that were used in budget calculations that year. The funds were then split among several line items within the state budget with a specific percentage of the line item coming from the FMAP account. Governor Deval Patrick vetoed the outside section as well as all of the individual funding splits.

In a difficult economic climate, with revenue collection volatile and

federal aid unpredictable, the extent of the Governor’s authority in budgetary matters is a central question. Faced with a structural deficit of nearly $2 billion in fiscal year 2012, the likelihood of budget difficulties and disagreements between the executive and legislative branches continues to

increase. These difficult budget cycles serve to expose the tensions underlying the statutory and constitutional scheme for budget-related matters.

This Note argues that in order to adapt to modern fiscal realities courts

should liberally construe legislation that delegates authority to a Governor to reduce funds allotted to an agency in the face of a revenue shortfall.

* Nathaniel "Nate" Downing was an Executive Articles Editor on Volume 46 of the New

England Law Review. Nate passed away unexpectedly in the spring of 2012, leaving behind a

world that would forever miss his incisive legal mind and biting sense of humor. As a tribute

to Nate's contributions to the Law Review and to celebrate the impact his life had on those

around him, the editorial boards of Volume 46 and Volume 47 elected to publish Nate's Law

Review Note. May his memory live on through the words of his article. R.I.P. Nathaniel S.

Downing—September 15, 1985 to April 13, 2012.

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266 New England Law Rev iew v. 47 | 265

Moreover, recent legislative attempts to restrain the Governor’s authority to reduce budget allotments during periods of fiscal crisis (“9C authority”) by designating what funds will pay for a particular appropriation are legally ineffective. The Governor is able to veto language creating funds and then act later in the fiscal year under 9C, a result suggested by the

liberal construction that the Massachusetts Supreme Judicial Court (“SJC”) has given to the Governor’s budget-cutting power. The combination of the Governor’s constitutional and statutory authority concerning the budget provides the Governor with more than sufficient power to veto spending restrictions such as the funding splits in the fiscal year 2011 budget.

INTRODUCTION

he General Appropriations Act is the state budget for the Commonwealth of Massachusetts.1 While the line items that make appropriations2 for various agencies are of considerable importance,

the hundreds of so-called outside sections are just as significant.3 In addition to presenting an important opportunity for legislative log-rolling,

they often embody legislative attempts to restrain, direct, and influence executive power.4 Indeed, buried in the arcane language of the fiscal year 2011 budget, a battle between the executive and legislative branches of state government smoldered.5

In the summer of 2010, the Massachusetts State Legislature included an

outside section in the General Appropriations Act providing a repository for anticipated federal revenues.6 The federal money was in the form of

1 Budget Glossary, BUDGET SUMMARY FY2012, http://www.mass.gov/bb/gaa/fy2012/dnld_12/

hglossary.htm (last updated July 11, 2011) [hereinafter Budget Glossary]. 2 An appropriation is “[a] specified sum of money authorized by the Legislature for a

specific period of time to accomplish a specific purpose.” Id. 3 Outside sections, as defined by the Massachusetts budget website, are “[s]ections in a

budget act following section 3, which contain specific provisions of law which govern the

particular appropriations contained in the budget, make other special laws that usually apply

for only one fiscal year, and amend the General Laws to implement permanent changes

included in the budget.” Id. 4 See infra Parts I-II. 5 See infra Part A. 6 See Audrey Dutton, MEDICAID: FMAP Extension Means States Could Revisit Budgets, THE

BOND BUYER (Wash.), Aug. 16, 2010, at 5, available at 2010 WLNR 16179225. The fund, created

as a repository for the FMAP payments, was formally titled the “FMAP Budget Relief Fund.”

OUTSIDE SECTION 190: FMAP BUDGET RELIEF FUND, BUDGET SUMMARY, FISCAL YEAR 2011

(2010), http://www.mass.gov/bb/gaa/fy2011/os_11/h190.htm [hereinafter OUTSIDE SECTION

190]. The budget that went to the Governor for his approval or veto was the product of a

T


2012 Stemming the Tid e o f F isc al Cris i s 267

enhanced payments under the Medicaid program called Federal Medical Assistance Percentages (“FMAP”), or the federal portion of the Medicaid budget.7 The FMAP funds accounted for $689 million in projected revenues that were used in budget calculations that year.8 The funds were then split among several line items within the state budget with a specific percentage

of the line item coming from the FMAP account.9 Governor Deval Patrick vetoed the outside section as well as all of the individual funding splits.10 The legislature considered overriding the Governor’s vetoes until the U.S. Congress acted on a spending bill that essentially mooted the issue.11

In a difficult economic climate, with volatile revenue collection and

unpredictable federal funding, the extent of the Governor’s authority in budgetary matters is a central question.12 Faced with a structural deficit of over $1 billion in fiscal year 2012, the likelihood of budget difficulties and disagreements between the executive and legislative branches continues to increase.13 These difficult budget cycles serve to expose the tensions

budget conference committee between the House and Senate. See H.R. 4800, 186th Gen. Court,

2d Sess. (Mass. 2010), available at

http://www.mass.gov/legis/bills/house/186/ht04pdf/ht04800.pdf; see also H. JOURNAL, 186th

Gen. Court, 2d Sess. 863, 1500-01 (Mass. 2010). The conference committee is comprised of

members of the House and Senate appointed by the party leadership in each chamber and is

charged with creating a compromise budget. See Budget Glossary, supra note 1. 7 Dutton, supra note 6. 8 See David Pepose, Berkshire Budget Cuts Coming, THE BERKSHIRE EAGLE (Pittsfield, Mass.),

June 27, 2010, available at http://www.berkshireeagle.com/ci_15386408?source=most_viewed. 9 See generally EXEC. OFFICE OF ADMIN. & FIN., THE GOVERNOR’S FY 2011 VETOES:

ATTACHMENT A – LINE ITEMS, http://www.mass.gov/anf/docs/anf/fy11veto-attacha.pdf (last

visited Feb. 5, 2013) [hereinafter ATTACHMENT A – LINE ITEMS] (describing the Governor’s

reasoning for vetoing language related to FMAP and reducing the allotted amounts

accordingly). The percentage division of each total appropriated amount will be referred to in

this Note as a funding split. 10 See OUTSIDE SECTION 190, supra note 6. The Governor vetoed Outside Section 190, the

“FMAP Budget Relief Fund,” and then reduced each line item with an FMAP funding split. Id.

See generally ATTACHMENT A – LINE ITEMS, supra note 9 (describing the Governor’s reasoning

for vetoing language related to FMAP and reducing the allotted amounts accordingly). 11 See Dutton, supra note 6; see also Press Release, John Kerry, U.S. Senator for Mass., Senate

Prevents Lay-Offs of Teachers, First Responders, Strengthens Medicaid (Aug. 4, 2010),

http://www.kerry.senate.gov/press/release/?id=1eba1f63-422d-4c17-834f-04287e680719. 12 See generally Tyler J. Siewert, Note, The Cloying Use of Unallotment: Curbing Executive

Branch Appropriation Reductions During Fiscal Emergencies, 95 MINN. L. REV. 1071 (2011)

(analyzing a Minnesota case to illustrate the growing importance of regulating gubernatorial

authority over budgetary matters). 13 See The Governor’s Fiscal Year 2012 Budget, MASS. BUDGET & POL’Y CENTER (Feb. 3, 2011),

http://www.massbudget.org/reports/pdf/Monitor_Gov_FY12.pdf (noting a projected fiscal

budget gap of approximately $1.9 billion in 2012); see also Facts at a Glance: Long-Term Causes of

the Fiscal Crisis, MASS. BUDGET & POL’Y CENTER (Jan. 14, 2009),

http://www.massbudget.org/documentsearch/findDocument?doc_id=642 (describing the



underlying the statutory and constitutional scheme for budget-related matters.14

This Note argues that in order to adapt to modern fiscal realities,

courts should liberally construe legislation that delegates authority to a Governor to reduce funds allotted to an agency in the face of a revenue shortfall. Moreover, recent legislative attempts to restrain the Governor’s authority to reduce budget allotments during periods of fiscal crisis (“9C authority”) by designating what funds will pay for a particular appropriation are legally ineffective because the Governor is able to veto

language creating funds and then act later in the fiscal year under 9C. This result is suggested by the liberal construction that the Massachusetts Supreme Judicial Court (“SJC”) has given to the Governor’s budget-cutting power.15

Part I examines the constitutional and statutory bases of the Governor’s

budget-cutting authority. Specifically, it considers the numerous SJC advisory opinions and cases in this area to better understand the importance of liberally construing the 9C authority to implement constitutional balanced-budget requirements. Part II considers the potential legal implications of the legislature’s attempt to direct the

Governor on how to reduce appropriations without exempting them from a 9C reduction—a situation similar to that confronted by legislative and executive officials in Massachusetts in the FY 2011 budget debate. Part III argues that the combination of the Governor’s constitutional and statutory authority concerning the budget provides the Governor with more than sufficient power to veto spending restrictions, such as the funding splits in

the FY 2011 budget. In addition, it contends that funding splits would not constrain the Governor’s ability to adjust the appropriation down under his statutory authority—a decision supported by the constitutional frame of government, the SJC’s decisions, and sound public policy.

I. Foundations of Gubernatorial Budget Power

The Governor has both constitutional and statutory powers to control, limit, and reduce spending.16 The Governor derives his or her constitutional powers primarily from an early twentieth century amendment to the state constitution which enhanced executive budget

causes of the structural deficit in the Massachusetts budget). 14 See infra Part II. 15 See, e.g., New Eng. Div. of the Am. Cancer Soc’y v. Comm’r of Admin., 769 N.E.2d 1248,

1253 (Mass. 2002). 16 See MASS. CONST. amend. art. LXIII, § 5 (outlining the Governor’s authority to veto items

in the budget); MASS. GEN. LAWS ch. 29, § 9C (2010) (defining the Governor’s authority to

reduce appropriated amounts during the fiscal year).



powers.17 To further the constitutional scheme, the legislature also delegated power to the governor to reduce appropriated amounts in the face of a fiscal emergency.18 When read together, the Governor’s powers provide substantial power over state budgetary matters while maintaining respect for the legislative role in the appropriations process.19

A. Constitutional Amendments Granting the Governor Specific Budgetary Authority Were Designed to Strengthen Executive Control Over the Budget.

The Governor’s direct authority in budgetary matters flows from

Article 63 of the Massachusetts Constitution.20 Article 63 was added to the state constitution during the 1917 Constitutional Convention in order to enhance the Governor’s authority over the budget.21 In addition to directing the Governor to propose and submit a budget to the legislature,22 Article 63 grants the Governor line-item veto authority.23 Amending the constitution to grant the Governor authority to veto items within the

17 See infra Part I.A (examining the Governor’s power under Article 63 of the Massachusetts

Constitution). 18 See infra Part B (discussing the Governor’s 9C authority to reduce appropriated

amounts). 19 See infra Part II (analyzing the scheme in Massachusetts for dividing budgetary power

between the executive and the legislature and concluding that Article 63 and section 9C strike

an effective balance between competing concerns of separation of powers and modern fiscal

practices). 20 MASS. CONST. amend. art. LXIII. Section 2 directs the Governor to prepare a budget and

submit it to the legislature, section 3 specifies that appropriations should be made through a

single bill, and section 5 grants the Governor the authority to “disapprove or reduce items or

parts of items in any bill appropriating money.” Id. §§ 2-3, 5. 21 See Op. of the Justices to the House of Representatives, 425 N.E.2d 750, 752-53 (Mass.

1981) (discussing the history of Article 63). 22 MASS. CONST. amend. art. LXIII, § 2. Section 2 requires in part:

Within three weeks after the convening of the general court the governor

shall recommend to the general court a budget which shall contain a

statement of all proposed expenditures of the commonwealth for the

fiscal year, including those already authorized by law, and of all taxes,

revenues, loans and other means by which such expenditures shall be

defrayed.

Id. 23 Id. § 5 (affording the Governor the right to “disapprove or reduce items or parts of items

in any bill appropriating money”). A line item is defined as follows: “Unit by which the

Legislature appropriates money. Line items consist of an account number, language that

outlines how the money may be spent, the amount, and the fund designation. Where no fund

designation is given, the appropriation is charged to the General Fund.” Budget Glossary, supra

note 1.



general appropriation bill was a direct attempt to give the Governor expansive budgetary powers.24

Prior to the adoption of Article 63, the Governor was limited to the

unitary veto power provided in the original state constitution.25 The unitary veto allowed the Governor to veto legislation in its entirety.26 However, the framers of Article 63 recognized that the political pressures related to the budget rendered the unitary veto ineffective: faced with accepting some unfavorable policies or wholesale rejection of the state spending plan, a Governor was likely to accept the former.27 The line-item

veto strengthened the executive’s hand by allowing the governor to excise particular items from the budget, reduce appropriations, or eliminate unfavorable language.28

The line-item veto is a significant power: the Governor is able to

eliminate items, reduce items, and remove language from the state budget.29 It is not, however, a license for the Governor to return the budget to the form it was in when he submitted it to the legislature.30 By its terms, Article 63 grants the Governor the authority to “disapprove or reduce items or parts of items” in the budget.31 It is well-settled that this power allows the Governor to disapprove or reduce any individual item in the

24 See Op. of the Justices to the House of Representatives, 425 N.E.2d at 752 (discussing the

intent of the framers of Article 63 during the 1917 Constitutional Convention “to give the

executive a central role in the state budgetary process”). 25 Id. at 752-53 (analyzing the adoption of Article 63 and the Governor’s veto power). 26 Mark S. Kaduboski, Note, A Skirmish in the Battle for the Soul of Massachusetts State

Government: Privatization of Government Services and the Constitutionality of Appropriation

Restriction Measures, 38 B.C. L. REV. 541, 545-46 (1997) (discussing the Governor’s veto powers

relative to the state budget). 27 See Op. of the Justices to the House of Representatives, 425 N.E.2d at 753 (“Without the item

veto, the Governor might ‘be obliged to veto an entire bill merely on account of one item

which does not meet his approval.’” (quoting 3 DEBATES IN THE MASSACHUSETTS

CONSTITUTIONAL CONVENTION 1146 (1920))). 28 See Op. of the Justices to the House of Representatives, 428 N.E.2d 117, 119 (Mass. 1981)

(discussing the line-item veto power provided by section 5 of Article 63). 29 See Op. of the Justices to the Senate, 643 N.E.2d 1036, 1039 (Mass. 1994) (analyzing the

Governor’s line-item veto authority). The Governors of forty-three states have a line-item veto

power; all Governors except the Governor of Maryland have the authority to veto the state’s

major appropriation bill in full (Maryland legislators are prohibited from adding any

spending to the Governor’s proposed budget). See Nat’l Conf. of State Legis., Gubernatorial

Veto Authority with Respect to Major Budget Bill(s), NCSL.ORG, http://www.ncsl.org/issues-

research/budget/gubernatorial-veto-authority-with-respect-to-major.aspx (last visited Feb. 5,

2013) (cataloguing different types of gubernatorial powers related to budgets and finance). 30 See Attorney Gen. v. Admin. Justice of the Bos. Mun. Ct. Dep’t of the Trial Ct., 427

N.E.2d 735, 737-38 (Mass. 1981) (discussing the limits of the line-item veto to “separable

provisions” in the budget). 31 MASS. CONST. amend. art. LXIII, § 5.



budget.32 The more complicated question is whether the Governor is able to strike wording from within a particular item.33

The SJC has held that an item is a “‘separable fiscal unit’” and any

language can be reached by the line-item veto unless the language qualifies the appropriated funds or instructs the executive how to use the funds.34 An item does not need to be in its own section to qualify as a separable fiscal unit.35 This means that the Governor can veto or reduce funding for a program within a department without vetoing or reducing the department’s entire appropriation.36

The line-item veto does not allow the Governor to eliminate legislative restrictions or conditions thereby enlarging an appropriation.37 If the Governor had the authority to remove all restrictive language, he could essentially reallocate funds appropriated for one purpose for an entirely

different purpose.38 Language that is conditional or restrictive, while not determinative, will tend to tilt the balance away from a finding that there is a separable provision susceptible to the line-item veto.39 However, the language must relate to the legislative purpose underlying the

32 See Attorney Gen., 427 N.E.2d at 737. The general appropriations bill is organized by

numbered items, which specify the amount to be spent on particular programs or

departments; the items are commonly identified by eight digits such as 0000-0000. See, e.g., Op.

of the Justices to the Senate, 643 N.E.2d at 1038 (discussing gubernatorial vetoes of items 0640-

0000 and 4405-2000 in the fiscal year 1995 budget). 33 See Op. of the Justices to the Senate, 643 N.E.2d at 1039 (analyzing what constitutes an item

for purposes of the Governor’s line-item veto power). 34 Id. (quoting Op. of the Justices to the House of Representatives, 425 N.E.2d 750, 751

(Mass. 1981)). 35 Op. of the Justices to the House of Representatives, 425 N.E.2d at 752-53 (discussing how a

broad reading of the term “item” in Article 63 best effectuates the intent of the amendment’s

framers). 36 See Op. of the Justices to the Senate, 643 N.E.2d at 1039-40. 37 Id. at 1040 (analyzing the constitutionality of line-item vetoes according to whether they

altered the legislative purpose of the appropriation). 38 See id. For instance if the legislature appropriated $1,000,000 for the Department of

Conservation and Recreation and directed that $200,000 be used for signage in state parks, the

Governor would not be able to excise the language concerning signage. See id. If the Governor

could do so, the line-item veto power would be transformed into an ability to increase

appropriations because by eliminating the restriction the $200,000 would be freed for the

Department’s general use. Id. (“The Governor may not disapprove such restrictions without

disapproving the item as a whole.”). 39 See Att’y Gen. v. Admin. Justice of the Bos. Mun. Ct. Dep’t of the Trial Ct., 427 N.E.2d

735, 738 (Mass. 1981) (“While we do not intimate that skillful drafting may transform a

separable provision of general legislation to a restriction or condition, we note that the

Legislature here did not use conditional or restrictive wording in the disapproved

provisions.”).



appropriation, rather than simply the appropriation of funds.40

B. The 9C Authority to Reduce Appropriated Amounts Furthers the

Constitutional Scheme Granting the Governor Significant Budgetary Powers.

In addition to the constitutional line-item veto authority, the Governor also has important statutory powers related to the state budget.41 Section 9C of chapter 29 of the Massachusetts General Laws grants the Governor the power to reduce appropriations during periods of fiscal crisis.42 The 9C authority was created in 1976 in an effort to modernize state financial

40 See Op. of the Justices to the Senate, 643 N.E.2d at 1039 (discussing the Governor’s line-item

veto authority). 41 See Kenneth L. Manning, The Massachusetts Constitution: Liberty and Equality in the

Commonwealth, in THE CONSTITUTIONALISM IN THE AMERICAN STATES 35, 43 (George E. Connor

& Christopher W. Hammons eds., 2008) (“The governor’s primary responsibility is to work

with the legislature in a lawmaking capacity. In practice, this has often centered on

developing spending plans and the inevitable budget battles that such plans entail.”). 42 MASS. GEN. LAWS ch. 29, § 9C (2010). The section reads as follows:

Whenever, in the opinion of the commissioner of administration,

available revenues as determined by him from time to time during any

fiscal year under section 5B will be insufficient to meet all of the

expenditures authorized to be made from any fund, whether by

appropriation or distribution, he shall within 5 days notify in writing the

governor and the house and senate committees on ways and means of the

amount of such probable deficiency of revenue and the governor shall,

within 15 days after such notification, reduce allotments under section 9B,

and submit in writing a report stating the reason for and effect of such

reductions, or submit to the general court specific proposals to raise

additional revenues by a total amount equal to such deficiency. Any

action challenging the legality of an allotment reduction pursuant to this

section shall be commenced in the supreme judicial court for Suffolk

county.

Whenever the governor reduces allotments under the preceding

paragraph, the governor shall notify the house and senate committees on

ways and means in writing 15 days before any alterations to the original

allotment reduction plan. Any alterations to the original allotment

reduction plan that would seek to increase an allotment must provide an

equal reduction in other allotments or propose to raise additional

revenues to total the amount of the allotment increase.

As an alternative to the submission of such proposals to raise additional

revenues and to the extent funds are available, the governor may

recommend an appropriation equal to such deficiency from the

Commonwealth Stabilization Fund in the manner provided in section 2H.

Id.



practices and “reflect the practical reality of how state finances operate.”43 Understanding how state finances operate is essential to developing an understanding of the 9C authority.44

1. The Operation of State Finances

Massachusetts operates its finances using a system of varying funds, totaling more than one hundred accounts.45 Each fund usually has a dedicated revenue stream that the fund balance is credited with; the statute authorizing the creation of the fund generally specifies the purposes for which the revenue may be expended.46 At the end of each fiscal year, the

state comptroller accounts for how the funds were used and matches appropriations to credited revenues.47

The yearly accounting is necessary because revenues are not usually deposited in the fund.48 Rather, revenues collected by the state are

maintained in pooled accounts.49 While this means that some funds may appear to be running a deficit, “[s]o long as the total revenues are adequate to meet expenditures expected to be charged to every fund, a deficiency in any particular fund does not present a fiscal shortfall or crisis situation.”50 The legislature can require that a fund not operate in deficit, but in practice most funds are allowed to operate with deficits.51

2. The Governor’s 9C Authority Is Triggered by an Overall Budget Deficit.

The operation of the state fund system is intimately related to the triggering of the Governor’s authority under 9C.52 The Governor is

43 New Eng. Div. of the Am. Cancer Soc’y v. Comm’r of Admin., 769 N.E.2d 1248, 1253

(Mass. 2002) (analyzing the operation of the Governor’s 9C power). 44 See id. 45 Id. at 1254 (describing state finance in Massachusetts in the context of 9C analysis). 46 Id. As the SJC explained: “For example, G.L. c. 64C, § 7C, provides that revenues

collected on cigarettes are to be credited to the Health Protection Fund, G.L. c. 29, § 2GG, and

expended, subject to appropriation, primarily on education, advertising, and various

programs devoted to smoking prevention and cessation.” Id. at 1254 n.18. 47 Id. at 1254. A fund is “[a]n accounting entity in [the state accounting system] to which all

receipts are credited and against which all expenditures and other liabilities are charged. . . .

The law specifies which receipts shall be deposited to which funds. Budget acts specify which

expenditures shall be charged to which funds.” Budget Glossary, supra note 1. 48 New Eng. Div. of the Am. Cancer Soc’y, 769 N.E.2d at 1254. 49 Id. (“As a matter of cash management and flow, however, the Commonwealth maintains

its cash resources in pooled accounts entirely disassociated with any particular fund.”). 50 Id. 51 Id. at 1254 & n.19. 52 Id. at 1255 (discussing state finances and the necessity for an overall deficit to exist before



required to divide appropriations into periods of at least one month but no more than four months.53 In the event of a revenue shortfall, section 9C directs the Governor to exercise his line-item veto by reducing this allotment.54 Before the Governor may act to reduce allotments under 9C, an overall budget deficit must exist.55 If actual collected revenues are below

projected revenues, the statutory scheme, of which 9C is one part, requires the Governor to propose reductions in allotments.56

3. The 9C Authority Has Been Used Sparingly During Fiscal Emergencies.

The Governor’s authority under 9C has been used sparingly since the statute’s enactment in 1976.57 The employment of 9C tracks the history of the state’s fiscal woes: sudden revenue reductions in the early 1990s led Governor Michael Dukakis to use 9C;58 Governor Jane Swift used 9C to close a nearly $300 million budget gap in the post-September 11th economic slump;59 and Governor Deval Patrick used 9C in 2008 amid a

nationwide economic downturn that seriously impacted state revenues.60 When the Governor acts using 9C, he or she may only reduce allotments—a massive reshuffling of the budget is not authorized.61 In addition, the

the Governor may act under 9C). 53 MASS. GEN. LAWS ch. 29, § 9B (2010). Allotment is:

The process of making money that has been appropriated by the

Legislature available for expenditure. Although obligations can be

incurred without money being allotted, money must be allotted before

money can be paid out. A fraction of the money in budgetary accounts is

automatically allotted periodically: between [one-twelfth] for one month

and [one-third] for four months. If an account needs to spend at a greater

rate than the periodic allotment, the agency submits an allotment request.

Budget Glossary, supra note 1.

54 See Op. of the Justices to the Senate, 376 N.E.2d 1217, 1225 (Mass. 1978) (discussing the

procedure mandated by 9C). 55 New Eng. Div. of the Am. Cancer Soc’y v. Comm’r of Admin., 769 N.E.2d 1248, 1255

(Mass. 2002) (“9C . . . would be of little practical utility in the absence of an over-all budget

deficit.”). 56 Town of Brookline v. Governor, 553 N.E.2d 1277, 1279 (Mass. 1990) (examining the

predicate conditions necessary for the Governor to act under 9C). 57 New Eng. Div. of the Am. Cancer Soc’y, 769 N.E.2d at 1255 n.22 (“The parties agree that

G.L. c. 29, § 9C, has been invoked very sparingly.”). 58 See Town of Brookline, 553 N.E.2d at 1278. 59 See New Eng. Div. of the Am. Cancer Soc’y, 769 N.E.2d at 1250. 60 Jennifer Huberdeau, Looming State Budget Cuts a Driving Force for Barrett, N. ADAMS

TRANSCRIPT (North Adams, Mass.), Oct. 31, 2009, available at 2009 WLNR 21765152. 61 See MASS. GEN. LAWS ch. 29, § 9C (2010).



appropriated amount remains in effect; if revenues recover, the Governor must act in accord with the legislative judgment and expend the full appropriated amount.62

The ability to reduce allotments in the face of unanticipated drops in

revenue helps the Governor comply with the constitutional mandate of a balanced budget.63 It also embodies a legislative belief in sound fiscal policy and a faith that the executive can be trusted to craft that policy.64 While it vests considerable power in the executive, it is not an unconstitutional delegation of legislative power in derogation of the

separation of powers principle contained in Article 30 of the Massachusetts Constitution.65

62 See New Eng. Div. of the Am. Cancer Soc’y, 769 N.E.2d at 1257 (“Section 9C confers on the

Governor neither the authority to set aside money from the treasury to be spent for a

particular purpose, nor the authority to direct that any money so appropriated be spent in a

manner different from what the Legislature intended.”). 63 Id. (citing MASS. CONST. amend. art. 63, § 2). Not every state has a constitutional

requirement for a balanced budget. See Condon v. Hodges, 562 S.E.2d 623, 631 (S.C. 2002)

(discussing the absence of a requirement that the Governor sign into law a balanced budget in

South Carolina). 64 See New Eng. Div. of the Am. Cancer Soc’y, 769 N.E.2d at 1257 (“[9C] reflects a legislative

determination that the Commonwealth’s need to remain solvent overrides particular

statements of social policy contained in those appropriation items subject to allotment.”). Not

all appropriations are subject to allotment and are thus not reached by the 9C authority. See

Town of Brookline v. Governor, 553 N.E.2d 1277, 1278-79 (Mass. 1990). For an appropriation

to be subject to allotment it must be under the control of the Governor or one of his cabinet

secretaries; therefore, appropriations to other executive branch elected officials, the

legislature, the courts, and public authorities are not reached by the 9C authority. See id. at

1279. 65 New Eng. Div. of the Am. Cancer Soc’y, 769 N.E.2d at 1256 (“The plaintiffs assert that § 9C

thus constitutes an unlawful delegation of the Legislature’s authority to appropriate funds in

violation of art. 30. We disagree.”). Article 30 reads:

In the government of this commonwealth, the legislative department shall

never exercise the executive and judicial powers, or either of them: the

executive shall never exercise the legislative and judicial powers, or either

of them: the judicial shall never exercise the legislative and executive

powers, or either of them: to the end it may be a government of laws and

not of men.

MASS. CONST. pt. I, art. XXX. The separation of powers provision found in the Massachusetts

Constitution is not unique; most states have a similar provision and “the Massachusetts

Constitution of 1780 typifies the strict separation of powers approach found in thirty-five

states.” Michael E. Libonati, The Legislative Branch, in 3 STATE CONSTITUTIONS FOR THE TWENTY-

FIRST CENTURY: THE AGENDA OF STATE CONSTITUTIONAL REFORM 37, 37-38 (G. Alan Tarr &

Robert F. Williams eds., 2006); see also GERHARD CASPER, SEPARATING POWER: ESSAYS ON THE

FOUNDING PERIOD 12-15 (1997) (discussing the drafting and adoption of the Massachusetts

Constitution and attendant controversies concerning separation of powers in the original draft

of the proposed constitution).



The Governor’s authority under 9C is a potent budget-cutting tool, but

it is also carefully circumscribed66 by the strong separation of powers principle contained in Article 30.67 Article 30 exists amidst the requirement for a balanced budget as well as the full weight of the executive’s power under the constitution.68 The result is a constitutional budget-cutting

authority implemented by statutory tools that allow the Governor to be financially nimble.69 Considering the Governor’s informational advantage regarding state spending, it makes sense to grant him the authority to make informed decisions on a case-by-case basis rather than imposing generic cuts in every department.70

The legislature is not without its own tools: it can act to alter the

Governor’s proposed 9C cuts, or it can attach conditions to appropriations that exempt them from 9C.71 Essentially, the budgetary regime is one where the legislature is as involved as it wants to be: the Governor is required to take fiscally prudent actions, but if the legislature disagrees

with the Governor’s chosen course then they have specific remedies available.72 Moreover, the Governor is not allowed to make the allotments under the cover of darkness; the statutory requirement that the legislature be informed of the Governor’s decisions ensures legislative involvement and awareness of spending reductions.73

ANALYSIS

II. Life Without the FMAP Bailout: A Liberal Construction of the

Governor’s 9C Authority Best Comports with the Constitutional Budget Scheme.

The federal government rescued the states in the summer of 2010:

66 New Eng. Div. of the Am. Cancer Soc’y, 769 N.E.2d at 1256. 67 See id. (discussing Article 30 and section 9C). 68 See id. 69 See id. at 1256-57 (“[9C] is an expression of the Legislature’s recognition that the

executive branch has the ‘detailed and contemporaneous knowledge regarding spending

decisions’ to enable necessary reductions to be made on an expedited basis . . . .” (quoting Op.

of the Justices to the Senate, 376 N.E.2d 1217, 1223 (Mass. 1978))). 70 See id. at 1255 n.24 (“A requirement that a budget shortfall must be addressed with

uniform allotment reductions is noticeably absent from the statute and, in our opinion, could

produce arbitrary results.”). But see Siewert, supra note 12, at 1102-03 (articulating a proposal

for a model statute that would require uniform reductions in most cases). 71 See New Eng. Div. of the Am. Cancer Soc’y, 769 N.E.2d at 1257 (“To the extent that the

Legislature chooses, it retains full authority to restore funding to programs affected by § 9C

allotment reductions . . . .”). 72 See id. 73 See id.



without enhanced federal Medicaid payments, state budget-writers in Massachusetts would have had to close a nearly $700 million gap.74 The hard reality of fiscal year 2011 was that the budget picture remained bleak for Massachusetts: the state faced a structural deficit of nearly $2 billion in fiscal year 2012 as federal stimulus spending expired.75 More importantly,

the federal bailout in 2010 left the central legal questions presented by the legislature’s effort to restrain the governor’s 9C authority unresolved.76

The legislature’s effort to direct spending of anticipated revenues through the creation of a new fund and implementation of funding splits is

legally ineffective in the face of a gubernatorial veto.77 Accordingly, the Governor would be free to reduce allotments for executive spending in line with the requirements of 9C.78 The fact that the legislature included the section creating the FMAP fund and directed specific percentage reductions in numerous line items in the event the funds did not materialize indicates a legislative interest in ultimate budgetary decisions.79

However, it also betrays a misunderstanding of how to exercise that power and authority.80 If the legislature wishes to exercise a greater quantum of its constitutional budget powers, it must do so within the established constitutional and statutory scheme or change the current process.81

A. The Governor’s 2010 Budget Vetoes

Governor Patrick issued a total of $457.6 million in line-item vetoes to the General Appropriations Act in the summer of 2010.82 A total of $372 million of the vetoes related to the anticipated FMAP revenues.83 The Governor vetoed section 190 of the budget, the FMAP Budget Relief Fund, as well as all of the language related to FMAP revenue in individual line

items.84 The FMAP revenues were not confined to programs related to

74 Dutton, supra note 6, at 5.

75 MassBudget: Fiscal Year 2012 Budget Preview, MASS. BUDGET & POL’Y CENTER 1-2 (Jan. 4,

2011), http://www.massbudget.org/file_storage/documents/FY2012_Budget_Preview.pdf. 76 See infra Part II.A. 77 See infra Parts II.A-B. 78 See infra Part II.B. 79 See infra Part II.B. 80 See infra Parts II.C, A. 81 See infra Part II.A. 82 Press Release, Deval Patrick, Governor of Mass., Governor Patrick Signs On-Time,

Balanced Budget (June 30, 2010), available at

http://www.mass.gov/governor/pressoffice/pressreleases/2010/fy2011-budget-signed.html

[hereinafter Patrick Press Release]. 83 Id. 84 See ATTACHMENT A – LINE ITEMS, supra note 9 (describing the Governor’s reasoning for

vetoing individual line items in the FY 2011 budget); EXEC. OFFICE OF ADMIN. & FINANCE, THE



Medicaid or even health care; rather, the legislature spread the funds among programs as diverse as higher education, parks, and public safety.85 The effect of the Governor’s vetoes was essentially to purge the budget of any reference to FMAP money.86

1. The Veto of the FMAP Budget Relief Fund Was a Legal Exercise of the Governor’s Line-Item Veto Authority.

If the Governor’s veto of the section establishing the FMAP fund had been challenged, it would have been found legal under the Supreme Judicial Court’s decision in Opinion of the Justices to the House of

Representatives.87 In fact, the case contemplates the exact situation encountered in 2010 and permits the Governor to veto sections that establish funds from which appropriated monies are supposed to be distributed.88 The recent veto of the FMAP fund and the type of fund discussed in Opinion of the Justices to the House of Representatives are indistinguishable.89 Even in the absence of the SJC’s guidance in this case,

an outside section purporting to establish a fund is susceptible to the Governor’s line-item veto authority as a separable provision or item.90 The legislature considered overriding the Governor’s vetoes and could very

GOVERNOR’S FY 2011 VETOES: ATTACHMENT B – OUTSIDE SECTIONS 2,

http://www.mass.gov/anf/docs/anf/fy11veto-attachb.pdf (describing the Governor’s reasoning

for vetoing various outside sections in the FY 2011 budget). 85 ATTACHMENT A – LINE ITEMS, supra note 9, at 12 (Medicaid administration, line-item

4000-0300); id. at 27 (higher education, line-item 7066-0000); id. at 11 (parks, line-item 2800-

0100); id. at 31 (public safety, line-item 8000-0000). 86 See Patrick Press Release, supra note 82 (discussing the Governor’s vetoes of all FMAP

language in the FY 2011 budget). 87 See Op. of the Justices to the House of Representatives, 582 N.E.2d 504, 511 (Mass. 1991)

(holding that the Governor’s veto of a budget fund created in an outside section of a budget is

susceptible to the Governor’s line-item veto authority). The SJC reasoned that because an

outside section is a separable provision, the Governor may veto such a section regardless of its

effect on provisions that would not otherwise be subject to a veto. Id. 88 See, e.g., id. (“Section 50, which establishes both the environmental management fund

and the metropolitan parks revolving fund, is an outside section, which is separable and

therefore was properly disapproved in its entirety.”). 89 Compare id. at 510-11 (describing a fund in an outside section that the SJC held was

improperly disapproved by the Governor), with An Act Making Appropriations for the Fiscal

Year 2011, ch. 131, § 190, 2010 Mass. Acts 316, 710-11 (creating the FMAP Budget Relief Fund

in the FY 2011 budget). 90 Op. of the Justices to the House of Representatives, 425 N.E.2d 750, 751-53 (Mass. 1981)

(discussing the line-item veto power and reasoning that the Governor’s power to disapprove

of an item is “coextensive with the authority” of the legislature to include such items).



well have done so here.91 However, if unable to do so, there remained the question of the effect of the Governor’s vetoes on the remaining FMAP language.

2. The Governor’s Vetoes of the FMAP Funding Splits

Removed a Restriction on an Appropriation and Exceeded the Line-Item Veto Authority.

The SJC would likely find the Governor’s vetoes of the FMAP funding splits unconstitutional because the Governor would be removing a restriction placed on the appropriation rather than vetoing an item or a

part of an item.92 By striking the FMAP language the item would presumably be funded from the general fund or any other unrestricted source of funds; the veto would invade the legislative appropriation power and exceed the power granted to the Governor through the line-item veto.93 Because the legislature would be required to override each veto individually, overriding the numerous vetoes of FMAP funding splits

would have been a significant task in a difficult budget year.94

If the federal government failed to provide enhanced FMAP payments in 2010, Massachusetts would have been left with a budget that specified a non-existent fund to be used to pay for particular appropriations;95 in the

absence of those funds, specific appropriations should be reduced.96 However, the budget is but one part of the Commonwealth’s constitutional and statutory financial scheme.97 The requirements spelled out in the budget interact with other constitutional and statutory laws; the budget

91 A two-thirds vote of both the house and senate is required to nullify the effect of the

Governor’s veto. See Budget Glossary, supra note 1.

92 See Op. of the Justices to the House of Representatives, 582 N.E.2d at 511 (holding that a veto

that changed the source of funding, meaning that the funds would not have to be collected

before expenditure, “remove[d] legislatively imposed restrictions on the appropriation and

would alter the legislative purpose”). 93 Id.; see also Op. of the Justices to the House of Representatives, 425 N.E.2d at 752-53; In re Op.

of the Justices, 2 N.E.2d 789, 790-91 (Mass. 1936). 94 See Steve LeBlanc, Mass. Casinos Loom Again After Vote on Federal Aid, BOSTON.COM (Aug.

11, 2010),

http://www.boston.com/news/education/higher/articles/2010/08/11/mass_casinos_loom_again

_after_vote_on_federal_aid/ (reporting disagreements between legislative leadership and the

Governor after his vetoes of the FMAP provisions in the budget). 95 See H.R. 4800, 186th Gen. Court, 2d Sess. (Mass. 2010), available at

http://www.mass.gov/legis/bills/house/186/ht04pdf/ht04800.pdf. 96 See Patrick Press Release, supra note 82. 97 See Op. of the Justices to the House of Representatives, 425 N.E.2d at 752 (discussing the

Commonwealth’s statutory and constitutional scheme for dealing with state finances).



language is just the beginning.98

B. The Governor Maintains the Authority to Make Reductions

Under 9C Absent a Clear Legislative Intent to Exempt the Appropriation from Such a Reduction.

The legislature does not write on a blank slate when it passes restrictive language in an appropriations measure.99 Rather, the language of the budget is read in light of the general scheme of Massachusetts’s constitutional and statutory framework.100 When language purports to control the Governor’s authority as head of the executive branch to spend

(or refuse to spend) authorized funds, then the 9C authority is implicated.101

In a scenario where the legislature purports to control the Governor’s ability to expend funds, the SJC assumes that the legislature is aware of

9C.102 This assumption carries with it an important negative inference: where the legislature fails to state that an appropriation is not subject to reduction under 9C, the SJC has held that the Governor may still reduce the appropriation using the 9C authority.103 Therefore, it is highly likely that the Governor would have been able to reduce the appropriations subject to an FMAP funding split.104 Part of the rationale for the SJC’s

assumption of legislative knowledge is rooted in the operation of 9C: the Governor acts alone in reducing allotments, but the legislature must be notified when the Governor invokes the authority. The legislature then has an opportunity to propose different reductions that would eliminate the projected deficit.105 Importantly, the legislature cannot simply override the

98 See id. at 752-53 (discussing the importance of effectuating the framers’ intent regarding

constitutional budget provisions rather than hewing closely to legislative commands in the

budget). 99 See, e.g., Op. of the Justices to the House of Representatives, 582 N.E.2d 504, 510 (Mass.

1991) (discussing the extent of the Governor’s power to veto line-item language and stating

that “[t]he fact that line-item 9221-1000 characterizes the disapproved language as a

‘condition’ is not controlling”). 100 See, e.g., Att’y Gen. v. Admin. Justice of the Bos. Mun. Court Dep’t of the Trial Court,

427 N.E.2d 735, 737 (Mass. 1981). 101 See generally New Eng. Div. of the Am. Cancer Soc’y v. Comm’r of Admin., 769 N.E.2d

1248, 1253-54 (Mass. 2002) (discussing the Governor’s use of 9C authority and the ability of

the legislature to exempt appropriations from reduction under 9C). 102 See id. at 1254. 103 Id. at 1257 (“[T]he Legislature may pass ‘conditions’ to items in an appropriation bill,

exempting the funds in question from allotment reductions under § 9C.”). 104 See id. at 1252-54. 105 Id. at 1257 (“It should not be overlooked either that § 9C requires that the Legislature be

put on notice when a projected budget deficit triggers the statute’s operation.”).



Governor’s determination that there is a projected deficit.106 The constitutional and statutory duties imposed on the Governor reflect a belief that the executive possesses superior information and ability in making difficult financial decisions.107 Further, the constitutional requirement of a balanced budget that applies to the executive branch applies equally to the

legislative branch.108

However, the question is not answered by the probable legal effectiveness of the Governor’s veto of the outside section creating the FMAP fund.109 If the Governor hadn’t been permitted to reduce the

appropriated items beyond the amount specified (or in a different manner than specified by funding splits), undue pressure would have been applied to the remaining accounts. Instead of being able to spread the budgetary pain over numerous agencies, the deficit would have been borne by relatively few.110 Moreover, due to the way that appropriated funds are distributed to executive agencies, delaying final information on the total

appropriation an agency can expect causes disproportionate belt tightening later in the fiscal year.111 An agency can more efficiently manage its operations, and more effectively deal with budget cuts, when they are spread over twelve months; a twenty-five percent reduction in an agency’s line item borne over a six-month period necessarily requires a fifty-percent reduction in the agency’s allotment.112

106 Cf. Op. of the Justices to the Senate, 376 N.E.2d 1217, 1225 (Mass. 1978) (discussing the

unconstitutionality of a legislative action that purports to interfere with an “action taken by

the executive department” such as fulfilling the constitutional balanced-budget requirement). 107 See New Eng. Div. of the Am. Cancer Soc’y, 769 N.E.2d at 1257; Op. of the Justices to the

House of Representatives, 425 N.E.2d 750, 752 (Mass. 1981) (discussing how one of the three

“fundamental points” that the framers of the Governor’s Article 63 duty to balance the budget

agreed on was giving “the executive a central role in the State budgetary process”). 108 Op. of the Justices to the Senate, 376 N.E.2d at 1225-26 (“It is thus appropriate, and

consistent with the over-all constitutional scheme, for the Legislature to require the assistance

of the executive branch in ensuring sufficient revenues will be available to avoid deficit

spending.”). 109 See New Eng. Div. of the Am. Cancer Soc’y, 769 N.E.2d at 1254 (holding that the

Governor’s use of 9C was appropriate given the existence of an overall budget deficit and that

this “conclusion is also supported by general principles under which our State finance system

operates”). 110 See H.R. 4800, 186th Gen. Court, 2d Sess. (Mass. 2010), available at

http://www.mass.gov/legis/bills/house/186/ht04pdf/ht04800.pdf. The FMAP revenues were

spread among scores of line items in the FY 2011 budget. Id. 111 See generally New Eng. Div. of the Am. Cancer Soc’y, 769 N.E.2d at 1254-57 (describing the

allotment procedure that would cause a late fiscal year reduction to have particularly harsh

consequences on the affected agencies). 112 Allotments can be for one to three month periods; all appropriated funds must be

allotted to agencies in these increments. See Budget Glossary, supra note 1.



The 9C authority is also intended to be an adaptable and nimble tool

for the executive to manage not only fiscal crisis, but also fiscal fluctuation.113 When a projected deficit does not materialize, the appropriation is returned to the original amount.114 In a situation such as what transpired in the summer of 2010, this would have allowed the

governor to reduce allotments in anticipation of the worst (that there would be no federal bailout); if the FMAP funds then materialized later in the year, appropriations would have been returned to their original amounts and allotments adjusted accordingly.115 In this way, 9C allows the Governor to manage the budget in a way that comports with constitutional requirements without stripping the legislature of its power in the

appropriations process.116

C. Funding Splits and 9C: Nowhere to Go but Down

If the federal government had not provided Massachusetts enhanced FMAP funds in the summer of 2010, the Governor would have been

required to invoke the 9C authority: a deficit is constitutionally prohibited.117 The difficulty comes in evaluating whether the line-item language specifying that a percentage of the appropriation would be funded from the FMAP Budget Relief Fund restricts or directs the Governor’s action under 9C.118 For instance, the Governor might have been required to abide by the recommended legislative reductions and only

invoke 9C in the event of an additional deficit.119 Or if the amount of the FMAP funds was less than anticipated, the remaining deficit would still

113 New Eng. Div. of the Am. Cancer Soc’y, 769 N.E.2d at 1257 (discussing the flexibility the

9C authority provides to the executive and the 9C authority for managing fiscal emergencies). 114 Id. (discussing the effect of a 9C reduction: “the underlying appropriation remains fully

in force to establish an upper limit on what may be spent for that line item, should sufficient

revenue be forthcoming”). 115 Id. (stating that in times of fiscal emergency the Governor can reduce allotments to

various funds, although the legislature remains able to restore this funding at a later date); see

Use of One-Time Resources, GOVERNOR’S BUDGET RECOMMENDATION FY 2010,

http://www.mass.gov/bb/h1/fyloh1/exec10/hbudbrief8.htm (last visited Oct. 24, 2012) (noting

that in 2010, Massachusetts faced an extreme fiscal crisis and the Governor planned to use

resources from the State’s Stabilization Fund and federal aid). 116 See Op. of the Justices to the Senate, 376 N.E.2d 1217, 1225-26 (Mass. 1978) (discussing

the interaction of the Governor’s 9C authority with the legislative appropriation power). 117 Op. of the Justices to the House of Representatives, 425 N.E.2d 750, 752-53 (Mass. 1981)

(explaining the usefulness of 9C); FY10 Current Year Update, GOVERNOR’S BUDGET

RECOMMENDATION FY 2011, http://www.mass.giv/bb/h1/fy11h1/exec_11/hbuddevupdate.htm

(last visited Oct. 24, 2012). 118 See Town of Brookline v. Governor, 553 N.E.2d 1277, 1279 n.5 (Mass. 1990) (leaving this

question unanswered). 119 See supra Part II.



need to be addressed (keeping in mind that the funding splits provided that a percentage of a specific dollar amount was to be funded from FMAP dollars).120

The likelihood that the Governor’s veto of the outside section creating

the FMAP fund would have been legally effective does not answer the question.121 The legislature could have overridden that one veto, allowed the vetoes of the funding splits to stand, and challenged the legality of the vetoes on the funding splits in court.122 The language in the funding splits is restrictive and therefore the Governor would have had to evaluate the

9C authority in light of the funding splits.123

The problem represents the difficulty of language which specifies that appropriations be drawn from specific funds.124 While this method of budgeting is somewhat helpful in conducting a tax expenditure analysis of

the state’s revenues, it also requires an accounting by the comptroller of the condition of the fund at the end of the fiscal year.125 Absent the receipt of the anticipated revenues that are supposed to constitute the fund, the Governor would still be required to make an allotment to the appropriate agency based on their full appropriation.126 If a line item directed the Department of Conservation and Recreation to spend $100,000 on park

security, the Governor might allot that amount in four $25,000 installments, dispersible to the Department quarterly.127 However, if the appropriation contained a funding split, directing that ninety percent of the appropriation be drawn from the general fund, and ten percent from a special fund (say, the FMAP fund), the problem is complicated.128

The Governor would be required to make the allotment to the agency

on the basis of the full appropriated amount, unable to account for the potential deficiency.129 This is not entirely unlike the standard operating

120 See supra Part II. 121 But see Op. of the Justices to the House of Representatives, 582 N.E.2d 504, 510-11 (Mass.

1991) (discussing how language in line items that related to a fund that was otherwise

properly vetoed would be rendered ineffective by the disapproval of the fund). 122 See, e.g., id. at 506-07 (evaluating the legality of gubernatorial vetoes at the request of the

House of Representatives). 123 See id. at 511. 124 See id. at 508 (explaining that the veto analysis begins with whether an appropriation is

severable—meaning whether or not a specific use was directed). 125 See New Eng. Div. of the Am. Cancer Soc’y v. Comm’r of Admin., 769 N.E.2d 1248,

1254-55 (Mass. 2002) (discussing the fund accounting system used in Massachusetts). 126 See id. at 1254. 127 See id. 128 See Op. of the Justices to the House of Representatives, 582 N.E.2d at 506-07 (discussing the

veto power as it relates to specific funds). 129 See New Eng. Div. of the Amer. Cancer Soc’y, 769 N.E.2d at 1254-55.



procedure of state finances; the budget reflects anticipated revenues, not dollars in a bank account.130 In that way, appropriations, and the agency allotments which are based on them, reflect an educated guess about how much money the state will have to spend.131 However, this also means that with each passing allotment period, the reduction in subsequent periods

would grow.132 Moreover, because the earlier allotments would have been drawn entirely from the general fund or another source, those funds would also be adversely affected.133 The result is that even those items which did not contain funding splits would need to be reduced because their revenue source would be depleted by over-allotment to other items in anticipation of other revenues.134

The Governor’s 9C authority would only be partially constrained by funding splits.135 If the projected deficiency was exactly the amount of the unexpectedly absent federal revenues, the funding splits would be evidence of what the legislature considered an acceptable reduction in the

appropriation.136 To the extent that 9C requires legislative consultation by the executive for a spending reduction, the Governor would be well-advised to take the amount into consideration.137 However, as the SJC has noted, a requirement that the Governor use the 9C authority to affect across-the-board, uniform cuts is “noticeably absent” from the statute.138 Because state revenues are co-mingled rather than segregated by particular

fund, any accounting would come at the end of the fiscal year by the state

130 See id. at 1254. 131 See id. 132 See infra note 134 and accompanying text. 133 See infra note 134 and accompanying text. 134 Hypothetical Agency 1 has an appropriation of $100, $10 of which is to be drawn from

the special fund. Hypothetical Agency 2 has an appropriation of $100; the entire appropriation

is from the general fund. The Governor makes allotments to each agency on a quarterly

basis—each agency gets $25 per quarter. Until the special fund revenues are received, the

entire amount will be drawn from the general fund. If after two allotment periods the federal

government were to announce that the anticipated revenues would not be forthcoming, the

Governor would face the following situation: an anticipated deficit of $10 to be borne by two

agencies—each of which planned for two more allotments in the fiscal year of $25 each. The

entire deficit would not necessarily be cut from the budget of Hypothetical Agency 1. The

critical point is that the state finances are in deficit, not that the particular fund is in deficit. In

that way, the deficit created by the special fund infects the entire budget. 135 See New Eng. Div. of the Amer. Cancer Soc’y, 769 N.E.2d at 1257 (noting that even in the

case of funding splits, the Governor is still able to reduce public expenditures in a time of

fiscal emergency). 136 Cf. id. (analyzing how the amount appropriated by the legislature retains legal

significance even after it has been reduced under 9C by the Governor). 137 See id. 138 Id. at 1255 n.24.



comptroller.139 This simply underscores that the Governor’s determination of whether to use 9C happens in the flow of fiscal events and with incomplete information.140

The “activity of withholding or spending money is an executive

task”141 and therefore the SJC should grant the Governor considerable discretion in reacting to a fiscal crisis.142 Without a specific exemption from a reduction under 9C, funding splits would not be sufficient to force the Governor to make cuts in other areas of the budget.143

III. The Legislature Retains Significant Budget Powers Under the 9C

Scheme.

The ineffectiveness of the legislature’s attempt to restrain gubernatorial budget authority raises important questions regarding the legislative and executive roles in the budget process.144 The task of “withholding or

spending money” may clearly be an executive task;145 however, that does not imply that the appropriation power is somehow divested from the legislature.146 There are steps that the legislature could take to curtail the Governor’s budgetary powers.147 The 9C authority is statutory and what the legislature has granted, the legislature can take away.148 In addition, the legislature has a substantial and often controlling role in the constitutional

amendment process.149 Changes to constitutional provisions concerning the budget could certainly strengthen the legislature’s hand in budget

139 See id. at 1254-55. 140 See generally Town of Brookline v. Governor, 553 N.E.2d 1277, 1278-79 (Mass. 1990)

(discussing an effort to invoke 9C in light of an anticipated decline in revenue). 141 38 AM. JUR. 2D Governor § 4 (2010) (citing New Eng. Div. of the Am. Cancer Soc’y, 769

N.E.2d at 1256) (discussing generally gubernatorial budget power in different states). 142 See New Eng. Div. of the Am. Cancer Soc’y, 769 N.E.2d at 1255-56. 143 See id. 144 See Siewert, supra note 12, at 1073 (describing the increased incidence of state budget

deficits). 145 38 AM. JUR. 2D Governor § 4 (2010) (discussing generally gubernatorial budget power in

different states) (citing New Eng. Div. of the Am. Cancer Soc’y, 769 N.E.2d at 1256). 146 Op. of the Justices to the Senate, 376 N.E.2d 1217, 1220-22 (Mass. 1978) (discussing the

significant appropriation power retained by the legislature even after the delegation of some

authority under 9C). 147 See id. at 1225-26. 148 See, e.g., id. 149 See generally Doyle v. Sec’y of the Commonwealth, 858 N.E.2d 1090, 1095-96 (Mass.

2006) (discussing the legislature’s role in the constitutional amendment process).



matters.150 Yet the concerns that motivated the constitutional amendments and statutory delegations of power concerning the budget are more pressing now than when those changes were wrought.151 Accordingly, while there is some potential for abuse of power by the Governor, the legislature would do well to maintain the current constitutional and

statutory scheme and embrace its prescribed role.152 The legislature remains free to take on the full measure of its current power and make the politically difficult decision of recommending cuts different from the Governor’s.

A. Legislative Options for Enhanced Budgetary Control

1. 9C Exemption Language

The legislature has an easy alternative to amending the current legal framework for budget decisions: it can exercise the full extent of its current power by including language in appropriations it wishes to exempt from the Governor’s 9C authority.153 There is no legal impediment to the legislature choosing to provide that a particular item is not subject to the Governor’s authority under 9C.154 This approach would allow the

legislature to protect certain programs and agencies that it regards as core state-government services and shift the deficit burden to less central ones.155 The burden-shifting effect of exemption language is its major drawback; the greater percentage of budget dollars that are exempted, the larger the cuts will be to the remaining accounts.156

Exempting some items from reduction under 9C allows the legislature

to have a greater say in the items they wish to protect; yet it also has the opposite effect.157 Because the Governor is required to prevent the state from operating in deficit condition, the remaining items are subject to

150 See Op. of the Justices to the House of Representatives, 425 N.E.2d 750, 752 (Mass. 1981)

(discussing the current constitutional power relationship between the executive and

legislative branches in budgetary matters). 151 See id. at 752-53 (discussing the history of the division of power concerning the budget). 152 See New Eng. Div. of the Amer. Cancer Soc’y v. Comm’r of Admin., 769 N.E.2d 1248,

1257 (Mass. 2002) (describing the “minimal” likelihood of a gubernatorial abuse of power

under 9C). 153 See id. (“To the extent that the Legislature chooses, it retains full authority to restore

funding to programs affected by § 9C allotment reductions . . . .”). 154 Id. 155 See Op. of the Justices to the Senate, 376 N.E.2d 1217, 1225-26 (Mass. 1978). 156 The budget is a zero-sum proposition: if one dollar cannot be touched by the Governor’s

9C authority, it necessarily makes the others more likely to be cut to address a deficit. See id. 157 See New Eng. Div. of the Am. Cancer Soc’y, 769 N.E.2d at 1257 (discussing 9C in the

context of the constitutional balanced-budget requirement).



increased reductions.158 While this might seem obvious, it is likely less so in a situation where unpredictable events occurring later in the fiscal year created a potential deficit.159 An exemption that seemed perfectly reasonable during the summer’s budget debate may seem less reasonable when the state is facing steep, unexpected declines in revenue.160 Language

exempting a particular line item from reduction under 9C also cuts against the constitutional requirement of a balanced budget.161 To the extent that the Governor is using 9C to meet a constitutional obligation, the legislature is setting up a clash between what amounts to a special law—the budget language exempting the item—and a constitutional command.162 While language exempting line items from 9C reduction may be useful in limited

instances, as a method of exerting control over large portions of the budget it leaves a great deal to be desired.163

2. Eliminating the 9C Authority Would Deprive the

Governor of a Powerful Budget-Balancing Tool Without Significant Benefit to the Legislature.

The legislature could also take the step of eliminating the Governor’s 9C authority.164 While the law is currently an important financial-management tool for the Governor, it has not always been at the executive’s disposal.165 The balanced-budget requirement existed for over fifty years before the Governor was granted the 9C authority to help meet

158 See id. at 1253. 159 See id. at 1249-51 (explaining that in response to an unanticipated $289 million revenue

shortfall in late 2001 and early 2002, the Governor exercised 9C authority to reduce

expenditures by $155 million); Levy v. Acting Governor, 767 N.E.2d 66, 69 (Mass. 2002)

(noting that the “economic downturn . . . was exacerbated by the terrorist attacks of

September 11, 2001”). 160 See New Eng. Div. of the Am. Cancer Soc’y, 769 N.E.2d at 1257. 161 See Op. of the Justices to the Senate, 376 N.E.2d at 1225-26 (analyzing the interaction of 9C

and the constitutional budget duties bestowed on the Governor). 162 Budget Glossary, supra note 1. A special law is one that generally applies only for one

fiscal year. Id. Language that directs a particular appropriation to be filled from a specific fund

of necessity applies only to the fiscal year, as appropriations are made one fiscal year at a

time. Id. 163 See New Eng. Div. of the Am. Cancer Soc’y, 769 N.E.2d at 1257 (discussing how 9C’s utility

derives in part from the discretion given to the Governor). 164 See generally Op. of the Justices to the Senate, 376 N.E.2d 1217, 1225 (Mass. 1978)

(discussing proposed revisions to 9C, which as a general law is a legislative creation). 165 See 3 DEBATES IN THE MASSACHUSETTS CONSTITUTIONAL CONVENTION: 1917-1918, at

1141-216 (1920) (recording a number of different proposals for gubernatorial authority, none

of which amounted to the 9C authority).



that goal.166 Eliminating the Governor’s authority would necessarily increase pressure on budget negotiations at the beginning of the fiscal year; the revenue estimates used in computing initial budget recommendations would be subject to substantial downward pressure.167 Executive budget writers, conscious of the Governor’s duty to balance the budget, might be

unwilling to accept all but the most conservative revenue projections.168 In addition, the Governor, stripped of the authority to reduce appropriations in the event of an unexpected fiscal exigency, would be pressured to use the line-item veto to avoid running deficits later in the fiscal year.169

Overly conservative revenue estimates would also create a difficult

political situation for the legislature.170 Because collected revenues can (and do) exceed estimated revenues, the state could be left with surplus revenue due to such conservative estimates.171 While these revenues might have been expended for a public purpose under a more accurate revenue estimate, the legislature would face substantial pressure to return the

revenue to taxpayers.172 This would have a two-part effect: depriving state agencies of revenues that under less pressured estimates they came to rely on, and further politicizing the budget process at the change of every fiscal year.173

Eliminating 9C would also run directly counter to its spirit, which

motivated the amendment of the Massachusetts Constitution to include a balanced budget provision.174 Article 63 stands as a monument to the belief that the executive branch—specifically the Governor—is the most efficient and effective repository for budgetary power.175 The Governor is the best-

166 See generally Op. of the Justices to the Senate, 376 N.E.2d at 1220-26 (discussing the

Governor’s constitutional budget powers and then-recent statutory developments including

9C). 167 See New Eng. Div. of the Am. Cancer Soc’y, 769 N.E.2d at 1249-50 (describing the passage

of the budget and a subsequent revenue decline and how 9C gave the Governor a tool to react

to the declining revenues). 168 Revocation of 9C would leave the Governor with two options to restrain spending: the

line-item veto or withholding appropriated funds. See supra Part II. 169 See Op. of the Justices to the Senate, 643 N.E.2d 1036, 1039-40 (Mass. 1994) (discussing

the limits of the Governor’s line-item veto authority). 170 See Substantial Surpluses to Dangerous Deficits: A Look at State Fiscal Policies, MASS. BUDGET

& POL’Y CTR. 8 (Jan. 14, 2009), http://www.massbudget.org/reports/pdf/FiscalCrisisReport.pdf. 171 See id. at 7 (discussing circumstances in the past that have led to budget surpluses). 172 See id. at 8 (discussing tax breaks given after Massachusetts had budget surpluses

during the 1990s). 173 See id. 174 See Op. of the Justices to the House of Representatives, 425 N.E.2d 750, 752-53 (Mass.

1981) (describing the dominating purpose of the Governor’s enhanced budgetary authority

after the 1917-18 Constitutional Convention as counter-balancing legislative authority). 175 See id.



positioned official in the Commonwealth to make spending decisions because the executive possesses the most accurate and timely revenue and expenditure information; this is a result of the nature of each of the branches.176

The Governor oversees the vast majority of state government

agencies.177 With the exceptions of the court system, quasi-public agencies (not normally funded through the GAA), and independent executive branch agencies, the governor is in charge.178 Among the agencies overseen by the Governor is the Department of Revenue, which is responsible for

collecting most of the revenues distributed through the state budget.179 These two factors give the Governor a distinct informational advantage; detailed and timely information concerning revenues and expenditures puts the Governor first in line to know whether the state is likely to encounter a deficit.180 If the legislature revoked the Governor’s 9C authority, it would be effectively benching the Commonwealth’s most

valuable financial player.181

The informational advantage that the Governor and the executive agencies that oversee budgetary matters possess (notably the Executive Office for Administration and Finance, a cabinet-level agency whose

secretary reports directly to the governor)182 can be viewed in even sharper

176 See New Eng. Div. of the Am. Cancer Soc’y v. Comm’r of Admin., 769 N.E.2d 1248, 1256

(Mass. 2002). 177 See Cabinet, GOVERNOR DEVAL PATRICK (2012),

http://www.mass.gov/governor/administration/cabinet/; Governor, Lieutenant Governor, and the

Executive Department, MASS.GOV (2012), http://www.mass.gov/portal/government-

taxes/branches-agencies/executive/ (stating that multiple agencies comprise each executive

office, which are headed by cabinet secretaries who report to the Governor). 178 See MASS. BUDGET & POL’Y CTR., BUDGET BRIEF 1-2 (Oct. 29, 2009), available at

http://www.massbudget.org/reports/pdf/9CAuthority.pdf. 179 See Department of Revenue: About DOR, MASS.GOV (2013),

http://www.mass.gov/dor/individuals/taxpayer-help-and-resources/about-dor.html; Press

Release, Governor Deval Patrick, Bal Appointed Commissioner of the Department of Revenue

(Jan. 4, 2008), http://www.mass.gov/governor/pressoffice/pressreleases/2008/bal-appointed-

dor-commissioner.html (stating that the secretary for the Executive Office for Administration

and Finance, who is appointed by the Governor, appointed the Department of Revenue’s

Commissioner). 180 See New Eng. Div. of the Am. Cancer Soc’y, 769 N.E.2d at 1249-51, 1257. 181 See supra Part B (discussing the 9C power). 182 See Executive Office for Administration and Finance: Welcome, MASS.GOV (2012),

http://www.mass.gov/anf/welcomewelcomeglenshor.html (stating that under the Governor,

the Executive Office for Administration and Finance creates and carries out the

Commonwealth’s fiscal and administrative policies to maintain financial stability, as well as

an efficient and effective state government).



contrast when compared with the legislature.183 The legislature’s budget-writing committees, the House and Senate Ways and Means, are considered the most powerful committees in the Massachusetts legislature.184 Their primary responsibility is the work of the state budget.185 While they have professional staff far beyond the legislature’s other

committees, they rely on the executive branch for most of their information.186 Moreover, their authority to request information concerning budgetary matters from the Governor, while extensive, still entails additional complications.187 Added to this is the proliferation of decision-makers in the legislature.188 Although the executive branch has many important players, all power flows from the Governor. The legislature, by

contrast, has two houses—meaning two leaders, two ways and means chairpersons, and the countless other sources of power in each body.189

3. The Case for the Status Quo

The legislature can effectively gain a more prominent voice in times of

fiscal crisis by embracing the role it is provided in the current constitutional and statutory scheme.190 The ability to exempt funds from reduction under 9C and the required gubernatorial consultation provide ample opportunity for the legislature to flex its budgetary muscles.191

CONCLUSION

The Governor of Massachusetts has extensive authority to reduce

expenditures in the face of fiscal crisis.192 While the legislative impulse to rein in that power in any given fiscal year is understandable, one would do well to remember the rationale that brought about the current budgetary

183 See Mass. Budget & Policy Ctr., Budget Brief 2 (Oct. 29, 2009),

http://www.massbudget.org/reports/pdf/9CAuthority.pdf. 184 For a primer on the significant role these committees play in the budget process, see

Massachuetts Budget Process, 188TH GEN. CT. OF THE COMMONWEALTH OF MASS.,

http://www.malegislature.gov/Budget/Process (last visited Feb. 5, 2013). 185 See id. 186 See id. (stating that the annual budget process begins each year when the Governor files

recommendations as a bill with the House of Representatives). 187 See id. 188 See Leadership Chart, 188TH GEN. CT. OF THE COMMONWEALTH OF MASS.,

http://www.malegislature.gov/People/Leadership (last visited Feb. 5, 2013). 189 See id. 190 See supra Part III.A. 191 See supra Part III.A. 192 See supra Part I.B.



scheme.193 In increasingly turbulent fiscal times, the officials with the best information and the most tools to utilize that information need to be in control.194 The legislature has a significant and important role in the formulation of the commonwealth’s budget.195 The desire for greater budgetary power absent assurances of equally increasing fiscal

responsibility should be restrained.196

193 See supra Part I.B. 194 See supra Part I.B.2. 195 See supra Part III.A. 196 See supra Part III.A.2.

downing: stemming the tide of fiscal crisis

Documents

difficult economic climate

england law review

liberally construe legislation

powers principle contained

raise additional revenues

recent legislative attempts

infra part ii

patrick press release