Tirapelle v. Davis

• Decision Date: 08 December 1993
• Docket Number: No. C012772,C012772
• Citation: 26 Cal.Rptr.2d 666,20 Cal.App.4th 1317
• Court: California Court of Appeals Court of Appeals
• Parties: David J. TIRAPELLE, Director, etc., Plaintiff and Respondent, v. Gray DAVIS, Controller, etc., Defendant and Appellant; California State Employees Association et al., Intervenors and Appellants.

Page 666

26 Cal.Rptr.2d 666

20 Cal.App.4th 1317

David J. TIRAPELLE, Director, etc., Plaintiff and Respondent, v. Gray DAVIS, Controller, etc., Defendant and Appellant California State Employees Association et al., Intervenors and Appellants.

No. C012772.

Court of Appeal, Third District, California.

Dec. 8, 1993.

Review Denied March 3, 1994.

[20 Cal.App.4th 1318] D. Robert Shuman, Richard J. Chivaro and James R. Tucker, Sacramento, for defendant and appellant.

[20 Cal.App.4th 1319] Gary P. Reynolds, Howard Schwartz, Darrell S. Steinberg, Sacramento, Harry J. Gibbons, San Jose, Carroll, Burdick & McDonough, Ronald Yank, Gary M. Messing, Richard M. Pattison, Sacramento, Dennis F. Moss, Sherman Oaks, Joel H. Levinson, Suzanne L. Branine, Beeson, Tayer & Bodine and John Provost, Sacramento, for intervenors and appellants.

Christopher W. Waddell, K. William Curtis and Roy J. Chastain, Sacramento, for plaintiff and respondent.

OPINION ON REHEARING

SPARKS, Acting Presiding Justice.

In this appeal we consider the authority of the State Controller (Controller) to refuse to implement salary reductions established in 1991 by the Department of Personnel Administration for certain employees of the state who are not entitled to engage in collective bargaining under the Ralph C. Dills Act. ¹ (Gov.Code, § 3512 et seq., especially § 3524 [unless otherwise specified further section references are to the Government Code].) We hold that the Controller may not refuse to implement the salary reductions in dispute.

I

At the outset of the 1991-1992 fiscal year, the State of California faced what has been called an unprecedented budgetary crisis. The crisis was precipitated by a significant projected revenue to expenditure shortfall. (See Department of Personnel Administration v. Superior Court (1992) 5 Cal.App.4th 155, 163, 6 Cal.Rptr.2d 714.) Except in certain narrowly defined circumstances, our state Constitution forbids the state from engaging in deficit spending. (Cal. Const., art. XVI, § 1; ² see § 13337.5.)

In the Budget Act of 1991, the Legislature and the Governor attempted to deal with the shortfall in a number of ways. One of those ways is found in section 3.90 of the act, which provides: "Notwithstanding any other provision of this act, each item of appropriation in this act shall be reduced, as appropriate, to reflect a $351,000,000 reduction in General Fund employee compensation items. [p] The Director of Finance shall allocate the necessary reductions to each item of appropriation to accomplish the reductions required by this section. [p] This section shall not apply to appropriations made by Items 0110-001-001 [appropriations to the Senate], 0120-011-001 [appropriations to the Assembly], and 0160-001-001 [appropriations to the Legislative Counsel Bureau] of Section 2.00 of this act." (Stats.1991, ch. 118, § 3.90.) ³ The Governor also reduced the funds provided by the Legislature for employee compensation and benefit increases, gave his reasons for the reductions, and then approved the Budget Act of 1991 on July 16, 1991. (Stats.1991, ch. 118, Governor's objections to Budget Act of 1991.)

In our governmental scheme of things, the Department of Finance has general powers of supervision over all matters concerning the financial and business policies of the state. (Gov.Code, § 13070.) Every state agency or court for which an appropriation has been made must submit to the Department of Finance a complete and detailed budget setting forth all proposed expenditures and estimated revenues for the ensuing fiscal year. ⁴ (§ 13320.) In the budget submitted to the Department of Finance, each agency must estimate and call attention to the sums necessary for employee compensation, including merit salary adjustments. (§ 19835.5.) Until enactment of the budget act containing appropriations for the fiscal year, the Department of Finance may revise, alter or amend the budget of any state agency. (§ 13322.) The Department of Finance then assists the Governor in preparing the budget which the state Constitution requires the Governor to submit to the Legislature. (§ 13337.)

The power of appropriation resides exclusively in the Legislature. (California State Employees' Assn. v. State of California (1973) 32 Cal.App.3d 103, 107-108, 108 Cal.Rptr. 60.) ⁵ In the budget act the Legislature provides appropriations for the support of various state agencies during the ensuing fiscal year. Upon the request of an agency during the fiscal year, the Department of Finance may authorize transfers between its budget allotments, including reserves. (§ 13323.) However, "[n]o appropriation may be combined or used in any manner to avoid budgeting the salary or operating expenses of any position or to achieve any purpose which has been denied by any formal action of the Legislature." (§ 13332.15.) No one may incur any expenditure in excess of the allotments or other provisions of the fiscal year budget as approved by or changed by or with the approval of the Department of Finance, and any person doing so is liable both personally and on his or her official bond for the amount of the excess expenditure. (§ 13324.)

The Department of Finance exercises general supervisorial powers over the state's fiscal affairs, which include control and enforcement of the budgets of various state agencies. (§§ 13070, 13320, 13323, 13337; State Board of Education v. Levit (1959) 52 Cal.2d 441, 459, 343 P.2d 8.) However, the Department of Finance is not given plenary authority over all state activities. Section 3.90 of the Budget Act of 1991 required the Director of Finance to allocate reductions in the appropriations for employee compensation in each item of the budget in order to provide for overall reductions in employee compensation in the amount of $351 million. An agency's allotments for employee compensation, after allocation of reductions by the Director of Finance as provided in section 3.90, provided the maximum amount that the agency could incur for employee compensation during the fiscal year. (§ 13324; Vandegrift v. Riley (1934) 220 Cal. 340, 355, 30 P.2d 516; see Cal. Const., art. XVI, § 7.) Thereafter the role of the Department of Finance was one of supervision and enforcement of the budget; the Department of Finance was not delegated the responsibility for achieving the reduced spending necessitated by the budget reductions. ⁶

The task of determining how to achieve budget reductions in employee compensation items fell largely to the DPA. The Legislature created the DPA in 1981 for the purpose of managing the nonmerit aspects of the state's personnel system. (§ 19815.2, Stats.1981, ch. 230, § 55, p. 1169.) The DPA succeeded to certain powers and duties formerly exercised by the State Personnel Board, the State Board of Control, the Department of General Services, and the Department of Finance. (§ 19816.) ⁷ In general, the DPA has jurisdiction over the state's financial relationship with its employees, including matters of salary, layoffs and nondisciplinary demotions. (§§ 19816, 19816.2, 19825, 19826.) ⁸ For purposes of collective bargaining the director of the DPA was designated as the Governor's representative to meet and confer with recognized employee organizations under the Ralph C. Dills Act. (§§ 3517, 19815.4, subd. (g).)

A difficult employee compensation situation confronted state agencies, particularly the DPA, in the 1991-1992 fiscal year. In addition to trigger reductions, other reductions imposed by the Legislature, and the Governor's "blue pencil" reductions, the Legislature ordered that all allotments for employee compensation (except those applicable to the Senate, Assembly and Legislative Counsel Bureau) be allocated a share of an aggregate $351 million reduction. In prior years employee compensation budgetary concerns revolved around whether, and if so to what extent, appropriations would be made available for compensation increases. In making appropriations for compensation increases the Legislature would often direct the manner in which the appropriations should be distributed. (See, e.g., Stats.1943, ch. 62, § 2, item 228, p. 297 [$25 increase for employees earning less than $300 per month, $20 increase for employees earning more than $300 per month]; Stats.1963, Second Ex.Sess. of 1962, ch. 1, § 2, item 282, pp. 485-486 [six percent salary increase for employees earning up to $19,800 per year]; Stats.1969, ch. 355, § 2, item 297.1, pp. 784-785 [salary increase for employees earning less than $950 per month and who were 7 percent or more below the prevailing rate]; Stats.1976, ch. 341, § 15, p. 938 [$120 increase for the California Highway Patrol, $70 per month increase for other employees].) In other instances the Legislature itself allocated or directed the allocation of appropriations for compensation increases to particular budget items. (See Stats.1969, ch. 1479, § 1, p. 3030 [$3.6 million to increase salaries of psychiatric technicians]; Stats.1970, ch. 1614, § 1, p. 3390 [$4.1 million to increase salaries of the California Highway Patrol]; Stats.1972, ch. 512, § 1, p. 891 [$5 million to increase salaries of the Department of Corrections and the California Youth Authority].) In the Budget Act of 1991, the Legislature imposed reductions in agency budget allotments available for employee compensation but did not provide directions as to how those reductions should be accomplished.

Although the Legislature chose not to provide explicit directions for accomplishing employee compensation reductions, there are a number of restrictions which are implicit in the Budget Act of 1991. First, an agency's allotment for employee compensation, as determined after allocation of its share of the reduction required by section 3.90 of the Budget Act of 1991, is the maximum sum the agency can incur for employee compensation during the fiscal year. (§ 13324.) Second, the Legislature obviously did not intend for agencies to...