Anderson v. Regan

• Decision Date: 06 July 1981
• Citation: 425 N.E.2d 792,53 N.Y.2d 356,442 N.Y.S.2d 404
• Parties: , 425 N.E.2d 792 Warren ANDERSON et al., Appellants, v. Edward V. REGAN, as New York State Comptroller, et al., Respondents.
• Court: New York Court of Appeals Court of Appeals

Page 404

442 N.Y.S.2d 404

53 N.Y.2d 356, 425 N.E.2d 792

Warren ANDERSON et al., Appellants, v. Edward V. REGAN, as New York State Comptroller, et al., Respondents.

Court of Appeals of New York.

July 6, 1981.

John F. Haggerty, Michael R. Lanzarone, Edward F. C. McGonagle and William Y. Crowell, III, Albany, for appellants.

Robert Abrams, Atty. Gen. (Shirley Adelson Siegel, Sol. Gen. and Maurice K. Peaslee, Asst. Atty. Gen., of counsel), for James H. Tully and others, respondents.

OPINION OF THE COURT

GABRIELLI, Judge.

At issue in this appeal is whether Federal funds which are received by the State and placed in a joint custody account within the State treasury must be appropriated by the Legislature before they may be disbursed by the Executive Department. The appeal requires us to interpret and apply section 7 of article VII of the State Constitution, which provides that "money shall ever be paid out of the state treasury or any of its funds, or any of the funds under its management, except in pursuance of an appropriation by law". Relying upon past practices of the Executive Department and the Legislature, the Appellate Division, 80 A.D.2d 490, 439 N.Y.S.2d 776, concluded that the Federal funds in issue are not subject to this constitutional proscription. We now reverse and hold that because the money in question falls within both the literal language and the underlying purpose of the constitutional provision, it cannot be spent without legislative approval in the form of a duly enacted appropriation bill.

Over the past several decades, revenues derived from the Federal Government have played an increasingly important role in State governance. While the notion of Federal assistance to the States was all but unheard of in the mid-nineteenth century when the constitutional provision in issue was first adopted, ¹ such assistance now comprises approximately one third of the total budget for New York State. ² Indeed, the Federal Government now provides substantial subsidies for such traditional and diverse State activities as law enforcement, aid to the needy, housing, education and maintenance of public highways. The vast majority of Federal funding programs are subject to various "matching" formulae, and there are strict regulatory systems which circumscribe the manner in which some of the Federal funds may be spent. Nevertheless, it is undisputed that the State retains a measure of discretion in determining where and how some of the Federal moneys should be spent.

Yet, despite the significance of Federal assistance in the over-all State budget, there has heretofore been little or no legislative participation in the expenditure of Federal moneys. Instead, it has been the practice of the executive branch to place the Federal funds received in the State treasury for "administrative convenience" ³ and from there to disburse them directly to the various responsible State agencies. ⁴ It is this practice which plaintiffs are challenging in the instant action for declaratory relief. ⁵

Initially, we note that the wording of the constitutional provision governing the expenditure of State funds is clear and uncomplicated. Section 7 of article VII of the State Constitution, quite simply, requires that there be a specific legislative appropriation each time that moneys in the State treasury are spent. The constitutional provision does not differentiate among funds on the basis of their source, and there is thus no logical justification for excluding Federal funds from its ambit on the theory that they are derived from Federal taxation programs and are given to the States to promote national goals. So long as the funds are placed within the State treasury, the clear language of the Constitution prevents their removal without legislative authorization.

Contrary to defendants' contentions, our ruling in Saratoga Harness Racing Assn. v. Agriculture & N. Y. State Horse Breeding Dev. Fund, 22 N.Y.2d 119, 291 N.Y.S.2d 335, 238 N.E.2d 730, does not suggest an alternative conclusion. To be sure, we noted in that case that "not every fund made up of public moneys raised through taxation or otherwise comes within the purview of section 7 of article VII" (22 N.Y.2d, at p. 123, 291 N.Y.S.2d 335, 238 N.E.2d 730). Our holding in Saratoga, however, was clearly predicated upon the fact that the money in issue there, although raised through legislative assessment, never became the property of the State and was never placed within the State treasury, but rather was immediately deposited in a separate fund administered by a legislatively created public benefit corporation. The issue with which we were concerned in Saratoga was thus limited to the narrow question whether a fund not covered by the literal wording of section 7 of article VII should nevertheless be considered subject to its mandate in light of the underlying purposes of that constitutional provision (id., at pp. 123-124, 291 N.Y.S.2d 335, 238 N.E.2d 730; see, also, Metropolitan Transp. Auth. v. County of Nassau, 28 N.Y.2d 385, 322 N.Y.S.2d 228, 271 N.E.2d 213; Matter of Clark v. Sheldon, 106 N.Y. 104, 12 N.E. 341; cf. People ex rel. Evans v. Chapin, 101 N.Y. 682). The ruling in Saratoga is obviously inapplicable in a situation such as this where the moneys in issue are included in the State treasury and are therefore unquestionably within the precise language of the constitutional proscription.

Similarly unpersuasive are defendants' efforts to compare their present practices with respect to Federal moneys to the legislative practice of creating "off budget" funds by expressly providing that certain revenues shall not be placed within the State treasury nor deemed to be the funds of the State (e. g., Agriculture and Markets Law, § 294, subd. State Finance Law, § 121). Since the constitutional appropriation requirement is, by its terms, addressed only to funds in the State treasury or "funds under its management", this simple expedient has heretofore enabled the Legislature to avoid the necessity of enacting a specific appropriation bill each time moneys in an "off budget" fund are expended.

While serious questions may be raised concerning the propriety of this practice in light of the purposes underlying section 7 of article VII (see 1939 Opns.Atty.Gen. 145; but cf. Wickham v. Trapani, 26 A.D.2d 216, 272 N.Y.S.2d 6), we need not consider such questions in this context, since the Federal moneys at issue here have never been expressly designated by the Legislature as "off budget" funds. Although the Legislature has on occasion indirectly recognized the practice of the executive branch of spending Federal funds without legislative appropriation (see, e. g., State Finance Law, § 22, subd. d), it has not unambiguously indorsed the practice by authorizing the State's fiscal officers to segregate Federal moneys from the general treasury fund. The absence of such an authorization is particularly significant in light of the provisions of section 121 of the State Finance Law, which contain a complete and detailed list of the types of funds that may be withheld from the treasury (cf. State Finance Law, § 11). Indeed, inasmuch as the Federal funds in issue have not been clearly designated by the Legislature as "off budget" funds and have, in fact, been deposited in the State treasury by the Comptroller, there can be no doubt that they are now within the literal mandate of the Constitution and any effort by defendants to analogize the present problem to that created by "off budget" funds can only be regarded as unavailing. ⁶

Despite the relative simplicity and clarity of the constitutional provision requiring appropriation of all treasury funds, it has been suggested in this case that the plain meaning of the provision should be ignored and that the contrary "practical construction" placed upon the clause by the Legislature should instead be adopted (see Matter of Kolb v. Holling, 285 N.Y. 104, 112, 32 N.E.2d 811; People ex rel. Einsfeld v. Murray, 149 N.Y. 367, 44 N.E. 146). We find this suggestion to be unpersuasive, however, since there is really no justification in this instance for departing from the literal language of the constitutional provision. It has never been the law in this State that the clear and unambiguous wording of a statute or constitutional provision may be overlooked entirely when it is seemingly inconsistent with the practice and usage of those charged with implementing the laws (see, e. g., Matter of Hellerstein v. Assessor of Town of Islip, 37 N.Y.2d 1, 371 N.Y.S.2d 388, 332 N.E.2d 279). To be sure, there have been instances in which we looked beyond the wording of a statute or constitutional provision when its applicability to a particular problem was uncertain (Matter of Kolb v. Holling, supra) or when wooden application of the literal language would lead to an absurd conclusion (see New York State Bankers Assn. v. Albright, 38 N.Y.2d 430, 436-437, 381 N.Y.S.2d 17, 343 N.E.2d 735). Where no such difficulty is present, however, "most compelling criterion in the interpretation of an instrument is, of course, the language itself" (People v. Carroll, 3 N.Y.2d 686, 689, 171 N.Y.S.2d 812, 148 N.E.2d 875). ⁷ As we noted in Matter of Wendell v. Lavin, 246 N.Y. 115, 120, 158 N.E. 42, "the interpretation of a doubtful and obscure clause in an act of the Legislature, or in a Constitution, may be aided by the practice which has grown up under it, but plain and clear provisions of a Constitution require no such aid; they are to be enforced and brought to life early or late, and must not be smothered by the accumulations of customs or violations".

Additionally, it must be stressed that the legislative view of the applicability of the constitutional appropriation requirement to funds derived from the Federal Government has not always been completely consistent. On the one hand, there are enactments such as subdivision d of section 22 and sections 53 and 53-a...