Brayton v. Pawlenty

• Decision Date: 05 May 2010
• Docket Number: No. A10-64.,A10-64.
• Parties: Deanna BRAYTON, et al., Respondents, v. Tim PAWLENTY, et al., Appellants.
• Court: Minnesota Supreme Court

781 N.W.2d 357

Deanna BRAYTON, et al., Respondents, v. Tim PAWLENTY, et al., Appellants.

No. A10-64.

Supreme Court of Minnesota.

May 5, 2010.

Lori Swanson, Attorney General, Alan I. Gilbert, Solicitor General, John S. Garry, Jeffrey J. Harrington, Assistant Attorneys General, St. Paul, MN, for appellants.

Patrick D. Robben, General Counsel, Office of the Governor, St. Paul, MN, for appellant Governor Tim Pawlenty.

Galen Robinson, David Gassoway, Mid-Minnesota Legal Assistance, Minneapolis, MN, and; Ralonda J. Mason, St. Cloud, MN, for respondents.

Jonathan F. Cohn, Matthew D. Krueger, Sidley Austin LLP, Washington, D.C., and; David F. Herr, Maslon Edelman Borman & Brand, LLP, Minneapolis, MN, for amici curiae Professor David Stras, et al.

Charles D. Roulet, Roulet Law Firm, P.A., Maple Grove, MN, for amici curiae Representative Tom Emmer, et al.

David L. Lillehaug, Lousene M. Hoppe, Fredrikson & Byron, P.A., Minneapolis, MN, for amicus curiae Minnesota House of Representatives.

Martin A. Carlson, Law Offices of Martin A. Carlson, Ltd., Minneapolis, MN, for amici curiae Common Cause Minnesota and League of Women Voters Minnesota.

Thomas L. Grundhoefer, Susan L. Naughton, League of Minnesota Cities, St. Paul, MN, for amici curiae League of Minnesota Cities, et al.

OPINION

MAGNUSON, C.J.

This case presents questions about the authority of Minnesota's executive branch under Minn.Stat. § 16A.152, subd. 4 (2008), to reduce allotments in order to avoid deficit spending. The Ramsey County District Court held that use of the statutory unallotment authority to reduce funding for the Minnesota Supplemental Aid-Special Diet Program in the circumstances of this case violated separation of powers principles. We affirm, although on different grounds.

Six Minnesota residents who qualify for payments under the Minnesota Supplemental Aid—Special Diet (Special Diet) Program brought an action seeking declaratory and injunctive relief. These plaintiffs, respondents on appeal, challenge the validity of reductions made by the executive branch to unexpended allotments of appropriated funds available for payments under the Special Diet Program for the 2010-2011 biennium, which began July 1, 2009, and ends June 30, 2011. The plaintiffs assert that the reductions in allotments to the Special Diet Program violate the terms of the unallotment statute, Minn.Stat. § 16A.152, subd. 4, and are unconstitutional as a violation of separation of powers. The defendants, appellants on appeal, are Governor Tim Pawlenty and the Commissioners of the Departments of Management and Budget, Human Services, and Revenue.¹

As part of the obligation to "manage the state's financial affairs," Minn.Stat. § 16A.055, subd. 1(a)(2) (2008), the Commissioner of Minnesota Management and Budget (MMB), is required to "prepare a forecast of state revenue and expenditures" in February and November of each year. Minn.Stat. § 16A.103, subd. 1 (2008). The Commissioner's November 2008 forecast for the 2010-2011 biennium projected a deficit of $4.847 billion, based on anticipated revenues of $31.866 billion. The Commissioner's February 2009 forecast projected a deficit of $4.57 billion, based on anticipated revenues of $30.7 billion.

In January 2009, the Governor submitted a proposed budget to the Legislature with anticipated revenues of $31.07 billion. In March 2009, after the February 2009 forecast, the Governor submitted a revised budget to the Legislature based on anticipated revenues of $29.905 billion. An April 2009 economic update from MMB showed February and March revenues as $46 million less than projected in the February forecast.

On May 9, 2009, the Governor vetoed a revenue bill that increased taxes in order to meet the anticipated revenue shortfall. The Legislature was unsuccessful in its attempt to override the veto. Between May 4 and May 18, the Legislature passed and presented to the Governor appropriation bills for the 2010-2011 biennium. These appropriation bills reduced spending below the levels projected in the February 2009 forecast so that the projected deficit of $4.57 billion was reduced to $2.7 billion. The Governor signed the appropriations bills into law, exercising a limited number of line-item vetoes not at issue here. House File 1362, the Omnibus Health and Human Services Bill, which provided funding for the Special Diet Program that is at issue in this case, became law on May 14. Act of May 14, 2009, ch. 79, 2009 Minn. Laws 690.

On May 18, 2009, the same day it was required to adjourn, the Legislature passed House File 2323, another revenue bill that would raise taxes to address the $2.7 billion projected deficit remaining after enactment of the appropriations bills. As he had done with the prior revenue enactment, the Governor vetoed the second revenue bill. Because the Legislature had adjourned by the time of the veto, the $2.7 billion projected deficit remained. The Governor did not call a special session of the Legislature.

The Minnesota Constitution allows the state to borrow money for only limited purposes. See Minn. Const. art. XI. As a result, the state's biennial operating budget must be balanced—that is, expenditures cannot exceed revenues for the biennium. The statute at issue in this case, Minn.Stat. § 16A.152, subd. 4 (the unallotment statute), provides the executive branch with a means to address a budget deficit, including creation of and authorization to use a budget reserve fund and, if the reserve fund is depleted, authority to reduce unexpended allotments. The statute provides:

(a) If the commissioner determines that probable receipts for the general fund will be less than anticipated, and that the amount available for the remainder of the biennium will be less than needed, the commissioner shall, with the approval of the governor, and after consulting the Legislative Advisory Commission, reduce the amount in the budget reserve account as needed to balance expenditures with revenue.

(b) An additional deficit shall, with the approval of the governor, and after consulting the legislative advisory commission, be made up by reducing unexpended allotments of any prior appropriation or transfer. Notwithstanding any other law to the contrary, the commissioner is empowered to defer or suspend prior statutorily created obligations which would prevent effecting such reductions.

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

(d) In reducing allotments, the commissioner may consider other sources of revenue available to recipients of state appropriations and may apply allotment reductions based on all sources of revenue available.

(e) In like manner, the commissioner shall reduce allotments to an agency by the amount of any saving that can be made over previous spending plans through a reduction in prices or other cause.

Minn.Stat. § 16A.152, subd. 4. An "appropriation" is the Legislature's authorization "to expend or encumber an amount in the treasury." Minn.Stat. § 16A.011, subd. 4 (2008). The executive branch "allots" the appropriated funds for spending throughout the biennium. Minn.Stat. § 16A.011, subd. 3 (2008) ("`Allotment' means a limit placed by the commissioner on the amount to be spent or encumbered during a period of time pursuant to an appropriation.").

In a June 4, 2009, letter, the Commissioner informed the Governor that the conditions to trigger application of the unallotment statute existed and that it would be necessary to reduce allotments to avoid a deficit. In the letter, the Commissioner stated: "I have determined, as defined in Minnesota Statute 16A.152, that `probable receipts for the general fund will be less than anticipated, and that the amount available for the remainder of the 2010-2011 biennium will be less than needed.'" The Commissioner further explained that the February 2009 forecast projected revenues for the biennium of $30.7 billion—$1.2 billion less than anticipated in the November 2008 forecast—and that based on the bills enacted by the Legislature and signed by the Governor, forecasted revenues would result in a $2.7 billion shortfall for the biennium. The Commissioner also noted that the national economy had worsened since the February forecast and that year-to-date receipts for Fiscal Year (FY) 2009 were down $70.3 million compared to the February forecast.

On June 16, 2009, in accordance with subdivision 4 of section 16A.152, the Commissioner proposed allotment reductions to the Governor. The Commissioner met twice with the Legislative Advisory Commission to report on the allotment reductions. The Governor approved proposed allotment reductions of approximately $2.5 billion on July 1, the first day of the biennium, and the Commissioner implemented the unallotments beginning that month. The Commissioner notified the legislative budget committees of the unallotments within 15 days, as required by Minn.Stat. § 16A.152, subd. 6 (2008). Some of the unallotments were effective for both the first and second years of the biennium; some were effective for only the second year of the biennium which begins on July 1, 2010. These changes were effected not only by reducing the number of dollars for specific allotments, but in some instances, by changing substantive criteria that established eligibility for payments or formulas for spending.² In addition to the $2.5 billion of unallotments, the Commissioner implemented $210 million in administrative savings to make up the remainder of the $2.7 billion projected deficit.

The unallotment at issue in this appeal affected funding for the Special Diet Program. The Special Diet Program is...