Commonwealth ex rel. Beshear v. Commonwealth ex rel. Bevin

Decision Date22 September 2016
Docket Number2016 CA-000738-MR,2016-SC-000272-TG,2016-CA-000745-MR,2016-SC-000273-TG
Citation498 S.W.3d 355
Parties Commonwealth of Kentucky, ex rel. Andy Beshear, Attorney General, Appellant v. Commonwealth of Kentucky Office of the Governor, ex rel. Matthew Bevin, in his Official Capacity as Governor; Commonwealth of Kentucky Finance and Administration Cabinet, ex rel. William M. Landrum, in his Official Capacity as Secretary; Commonwealth of Kentucky Office of the State Budget Director, ex rel. John Chilton, in his Official Capacity as State Budget Director; Commonwealth of Kentucky Department of the Treasury, ex rel. Allison Ball, in her Official Capacity as Treasurer; Jim Wayne, in his Official Capacity as State Representative; Darryl Owens, in his Official Capacity as State Representative; Mary Lou Marzian, in her Official Capacity as State Representative, Appellees and Jim Wayne, in his Official Capacity as State Representative; Mary Lou Marzian, in her Official Capacity as State Representative; Darryl Owens, in his Official Capacity as State Representative, Appellants v. Commonwealth of Kentucky Office of the Governor, ex rel. Matthew Bevin, in his Official Capacity as Governor; Commonwealth of Kentucky Finance and Administration Cabinet, ex rel. William M. Landrum, in his Official Capacity as Secretary; Commonwealth of Kentucky Office of the State Budget Director, ex rel. John Chilton, in his Official Capacity as State Budget Director; Commonwealth of Kentucky Department of the Treasury, ex rel. Allison Ball, in her Official Capacity as Treasurer; Commonwealth of Kentucky, ex rel. Andy Beshear, Attorney General, Appellees
CourtUnited States State Supreme Court — District of Kentucky

498 S.W.3d 355

Commonwealth of Kentucky, ex rel. Andy Beshear, Attorney General, Appellant
v.
Commonwealth of Kentucky Office of the Governor, ex rel.
Matthew Bevin, in his Official Capacity as Governor; Commonwealth of Kentucky Finance and Administration Cabinet, ex rel. William M. Landrum, in his Official Capacity as Secretary; Commonwealth of Kentucky Office of the State Budget Director, ex rel. John Chilton, in his Official Capacity as State Budget Director; Commonwealth of Kentucky Department of the Treasury, ex rel. Allison Ball, in her Official Capacity as Treasurer; Jim Wayne, in his Official Capacity as State Representative; Darryl Owens, in his Official Capacity as State Representative; Mary Lou Marzian, in her Official Capacity as State Representative, Appellees
and
Jim Wayne, in his Official Capacity as State Representative; Mary Lou Marzian, in her Official Capacity as State Representative; Darryl Owens, in his Official Capacity as State Representative, Appellants
v.
Commonwealth of Kentucky Office of the Governor, ex rel.
Matthew Bevin, in his Official Capacity as Governor; Commonwealth of Kentucky Finance and Administration Cabinet, ex rel. William M. Landrum, in his Official Capacity as Secretary; Commonwealth of Kentucky Office of the State Budget Director, ex rel. John Chilton, in his Official Capacity as State Budget Director; Commonwealth of Kentucky Department of the Treasury, ex rel. Allison Ball, in her Official Capacity as Treasurer; Commonwealth of Kentucky, ex rel. Andy Beshear, Attorney General, Appellees

2016-SC-000272-TG
2016 CA-000738-MR
2016-SC-000273-TG
2016-CA-000745-MR

Supreme Court of Kentucky.

SEPTEMBER 22, 2016


COUNSEL FOR COMMONWEALTH OF KENTUCKY, EX REL. ANDY BESHEAR, ATTORNEY GENERAL: Andy Beshear, Attorney General of Kentucky, John Michael Brown, Deputy Attorney General, La Tasha Arnae Buckner, Executive Director Civil Division, Mitchel Terence Denham, Assistant Deputy Attorney General, Joseph Newberg, Office of the Attorney General, Capitol Building, 700 Capital Avenue, Suite 118, Frankfort, Kentucky 40601

COUNSEL FOR COMMONWEALTH OF KENTUCKY OFFICE OF THE GOVERNOR, EX REL. MATTHEW BEVIN, IN HIS OFFICIAL CAPACITY AS GOVERNOR; COMMONWEALTH OF KENTUCKY FINANCE AND ADMINISTRATION CABINET, EX REL. WILLIAM M. LANDRUM, IN HIS OFFICIAL CAPACITY AS SECRETARY; COMMONWEALTH OF KENTUCKY OFFICE OF THE STATE BUDGET DIRECTOR, EX REL. JOHN CHILTON, IN HIS OFFICIAL CAPACITY AS STATE BUDGET DIRECTOR: Michael T. Alexander, Mark Stephen Pitt, Stephen Chad Meredith, Office of the Governor, 700 Capital Avenue, Suite 101, Frankfort, Kentucky 40601

COUNSEL FOR COMMONWEALTH OF KENTUCKY DEPARTMENT OF THE TREASURY, EX REL. ALLISON BALL, IN HER OFFICIAL CAPACITY AS TREASURER: Noah Robert Friend, 1050 U.S. Highway 127 South, Suite 100, Frankfort, Kentucky 40601

COUNSEL FOR JIM WAYNE, IN HIS OFFICIAL CAPACITY AS STATE REPRESENTATIVE; DARRYL OWENS, IN HIS OFFICIAL CAPACITY AS STATE REPRESENTATIVE; MARY LOU MARZIAN, IN HER OFFICIAL CAPACITY AS STATE REPRESENTATIVE: Pierce Butler Whites, Speaker's Office, Senior Counsel, 303 Capitol Annex, Frankfort, Kentucky 40601

OPINION OF THE COURT BY JUSTICE NOBLE

This case presents two questions. First, does the Attorney General or an individual member of the General Assembly have

498 S.W.3d 359

standing to challenge the Governor's actions as violating a statute or the constitution? The Court concludes that the Attorney General has standing but that the individual legislators in this case do not. Second, may the Governor reduce the amount of money made available to a state university under a legislative appropriation whether by revising the university's allotment under KRS § 48.620(1), by withholding the allotment to the extent the university has adequate trust and agency funds under KRS § 45.253(4), or by otherwise requiring a state university not to spend appropriated funds? This Court concludes that the Governor does not have that authority. The judgment of the Franklin Circuit Court is thus reversed.

I. Background

Upon taking office in 2016, Governor Matt Bevin ordered an across-the-board 4.5% budget reduction for the executive branch in the fourth quarter of the 2015-2016 fiscal year. This reduction extended to the state's nine institutions of higher education, which consist of several universities and the community college system (collectively, “the Universities”).

The Universities' reductions were delineated in a letter to the Secretary of the Finance and Administration Cabinet and the State Budget Director directing that their fourth-quarter allotments be reduced. The letter was dated March 31, 2016 and stated in relevant part:

Pursuant to the authority provided to me in KRS § 48.620(1), this is to certify that the allotments for the following budget units of the Executive Branch for April 1, 2016 drawn-downs [sic] by each unit under the 2015-2016 Executive Branch budget should be reduced by 4.5% of the 2015-2016 allotments:

Eastern Kentucky University

Kentucky State University

Morehead State University

Murray State University

Northern Kentucky University

University of Kentucky

University of Louisville

Western Kentucky University

Kentucky Community and Technical College System

On April 19, 2016, the Governor sent another letter, again to the Secretary of the Finance and Administration Cabinet and the State Budget Director. This letter recounted the previous letter's contents and then ordered “pursuant to the same statutory authority that the 2015-2016 allotments to each ... institution[ ] should be further revised.” As to Kentucky State University, the 4.5% reduction was restored. As to the other eight institutions, the letter ordered that their budget reductions be amended from 4.5% to 2%.1

The Attorney General filed a declaratory-judgment action against the Governor, the State Budget Director, the Secretary of the Finance and Administration Cabinet, and the State Treasurer challenging this action.2 Three members of the House of Representatives joined as intervening

498 S.W.3d 360

plaintiffs. By agreed order, the funds at issue were placed in a separate account and were “recorded as a disbursement of FY 2016 appropriations but w[ould] not be transferred until further order of the Court at which time the funds w[ould] be disbursed to the institutions or returned to the Commonwealth's general fund.”

The Governor moved to dismiss the case, claiming both that the Attorney General and the legislators lacked standing and that his actions were legal. As to the latter claim, he relied primarily on two statutes, KRS § 48.620(1), which was cited in his letters, and KRS § 45.253(4). He claimed that KRS § 48.620(1) allowed him to reduce the “allotments” to the Universities without changing the legislative appropriations. He claimed that KRS § 45.253(4) allowed him to withhold appropriations until the Universities had spent their trust and agency funds (that is, funds generated by tuition, etc.). The statutes combined, he claimed, gave him “great discretion” in whether to provide the appropriated funds.

The Attorney General disputed that KRS § 48.620 gave the Governor such broad authority and argued that any such reading of the statute would violate the separation-of-powers doctrine and constitute an improper delegation of authority by the General Assembly. The Attorney General also claimed that the Governor's actions would unlawfully suspend the budget bill and that KRS § 45.253(4) did not apply to the Universities, which had elected to operate under KRS Chapter 164A.

The Franklin Circuit Court concluded that the Attorney General had standing to bring the suit, but nevertheless granted summary judgment in the Governor's favor on the merits. The court concluded primarily that KRS § 48.620(1) and KRS § 45.253(4) delegated the authority “to address budget concerns within the executive branch.” Specifically, the court concluded that these “statutes ... grant [the Governor] the authority to revise downward the Universities' allotments.” The court also stated: “The Universities ... are under the Governor's control as part of the executive branch,” at least in the context of the budget bill. The court concluded that the Governor's actions did not violate Kentucky's strict separation-of-powers doctrine. In this respect, the court concluded that the allotment revision was not, in fact, a reduction in the appropriation by another name, and was instead an exercise of legislatively granted power. Finally, the court concluded that there remained a check on the Governor's power, in that the judiciary could “realign[ ] the balance of power” if he “purports to wield divine power over another branch, or even over a division, cabinet or program within the executive branch, to the point that funding levels reached constitutionally impermissibly low levels.”

The Attorney General and the House members filed notices of appeal and a motion to transfer the case from the Court of Appeals to this Court. That motion was granted, and thus the appeal is before this Court.

II. Standing

Before reaching the merits of this dispute, this Court must address the claim that the Attorney General and intervening state representatives lack standing to prosecute this action. We answer this question first because if neither the Attorney...

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