Fent v. State ex rel. Office of State Fin.

• Decision Date: 22 January 2008
• Docket Number: No. 104,777.,104,777.
• Citation: 2008 OK 2,184 P.3d 467
• Parties: Jerry R. FENT, as a resident taxpayer, citizen and voter of the State of Oklahoma, and all other similar persons, Petitioners, v. STATE of Oklahoma, ex rel. OFFICE OF STATE FINANCE, and Tony Hutchison, as State Finance Director; State of Oklahoma, ex rel. Office of the State Treasurer, and Scott Meacham, as State Treasurer, Respondents.
• Court: Oklahoma Supreme Court

184 P.3d 467

2008 OK 2

Jerry R. FENT, as a resident taxpayer, citizen and voter of the State of Oklahoma, and all other similar persons, Petitioners, v. STATE of Oklahoma, ex rel. OFFICE OF STATE FINANCE, and Tony Hutchison, as State Finance Director; State of Oklahoma, ex rel. Office of the State Treasurer, and Scott Meacham, as State Treasurer, Respondents.

No. 104,777.

Supreme Court of Oklahoma.

January 22, 2008.

ORIGINAL PROCEEDING FOR DECLARATORY RELIEF AND INJUNCTION AND/OR MANDAMUS.

¶ 0 Petitioner filed an application to assume original jurisdiction and petition for declaratory and injunctive/mandamus relief. Petitioner alleged the Legislature violated the Oklahoma Constitution, art. V, §§ 55, 56, and 57, and art. X, § 23, when it authorized the expenditure of more than 135 Million Dollars of surplus funds in the General Revenue Fund in House Bill 1105, 2007 Okla.Sess. Laws, ch. 204. Petitioner requested a temporary stay restraining any further allocation, transfer, or expenditure of funds under House Bill 1105, an accounting of all transfers and expenditures of funds previously made under House Bill 1105, and oral argument before this Court. This Court denied the request for a temporary restraining order and scheduled oral argument before the Court en banc on the validity of House Bill 1105, the propriety of an injunction or a writ of mandamus, and the necessity of an accounting. At the conclusion of the oral argument, we assumed original jurisdiction.

INJUNCTION OR WRIT OF MANDAMUS DENIED; PROSPECTIVE APPLICATION TO TAKE EFFECT ON JULY 1, 2008.

Petitioner Jerry R. Fent, pro se, Oklahoma City, OK.

Scott D. Boughton and Stephen J. Krise, Assistant Attorneys General, Office of the Oklahoma Attorney General, Oklahoma City, OK, for respondents State of Oklahoma ex rel. Office of State Finance, Tony Hutchison, State Finance Director, and State of Oklahoma ex rel. Office of the State Treasurer.

Respondent State Treasurer, Scott Meacham, pro se, Oklahoma City, OK.

TAYLOR, J.

¶ 1 In this original proceeding, we are asked to issue an extraordinary writ to restrain the State Finance Director, the State Treasurer, and/or heads of agencies, if necessary, from transferring, allocating, or paying out any state money pursuant to Enrolled House Bill 1105 (H.B.1105) of the First Regular Session of the Fifty-first Oklahoma Legislature, 2007 Okla.Sess.Laws, ch. 204. Having fully considered the record, the arguments, and the authorities presented, we deny the petition for injunction or writ of mandamus.

I. H.B.1105

¶ 2 On May 24, 2007, both houses of the Oklahoma Legislature passed H.B.1105. On May 25, 2007, the Governor received H.B. 1105 and the First Regular Session of the Fifty-first Oklahoma Legislature finally adjourned sine die in accordance with the Okla. Const., art. V, § 26.¹ On June 4, 2007, the Governor approved H.B.1105. Effective July 1, 2007, H.B.1105 transfers some 135 Million Dollars of surplus accrued in the General Revenue Fund as of June 30, 2007, for expenditure by some sixteen state agencies.

¶ 3 H.B.1105 contains five sections of law: one section allocates and transfers the surplus funds, two sections create and govern a revolving fund, and two sections declare an effective date for the act and an emergency. Section 1, to be codified in the Oklahoma Statutes as § 46.3 of Title 62, consists of subsections (A) and (B). Subsection 1(A) directs the transfer of more than 135 Million Dollars of surplus funds which may accrue in the General Revenue Fund for the State of Oklahoma for the fiscal year ending June 30, 2007,² and allocates the funds for expenditure by agencies in the executive branch of state government. Subsection (1)(B) lifts the fiscal year budgetary category and amount limitations on the transfers.³

¶ 4 In twenty-three enumerated paragraphs, subsection 1(A) of H.B. 1105 transfers and allocates specific amounts of the surplus funds to state agencies or agency revolving funds.⁴ The paragraphs prioritize the allocations. Paragraph 1 sets aside the "first Ten Million Dollars ... to fund employer contribution rate increases" to teachers retirement for the common schools and higher education, paragraph 2 sets aside the "next Ten Million Dollars ... to the State Emergency Fund," paragraph 3 sets aside the "next Twenty-two Million Dollars ... for purposes of a teacher salary increase," and so on.

¶ 5 A large part of the 135 Million Dollars of surplus funds is allocated to support public education. In three different paragraphs, subsection 1(A) of H.B.1105 allocates more than 27 Million Dollars to the State Department of Education for teacher retirement and teacher pay increases and pay incentives and, in four different paragraphs, it allocates nearly 43 Million Dollars to the State Regents Revolving Fund of the Oklahoma State Regents for Higher Education for operational expenses and capital improvements. The surplus funds are also allocated for several different and unrelated governmental purposes, including 15 Million Dollars to the Oklahoma Capitol Complex and Centennial Commemoration Commission Revolving Fund, 2.5 Million Dollars to the Rural Fire Equipment Grant Revolving Fund, 6.5 Million Dollars to the Research Support Revolving Fund, 6.5 Million Dollars to the Department of Public Safety Revolving Fund, 2 Million Dollars to the School for Deaf/Blind Revolving Fund, and 5 Million Dollars to the Private Prison and Halfway House Capacity Development Revolving Fund.

¶ 6 Section 2 of H.B.1105 creates the Private Prison and Halfway House Capacity Development Revolving Fund to be expended by the Department of Corrections. Section 3 of H.B.1105 authorizes the Department of Corrections to utilize the funds in the Private Prison and Halfway House Capacity Development Revolving Fund for payments on contracts in effect on July 1, 2007, for the purpose of funding up to five percent increase in payments to be made pursuant to such contracts. Sections 4 and 5 of H.B.1105 provide the act will be effective on July 1, 2007, and declare an emergency in accordance with the Okla. Const., art. V, § 58.⁵

II. The Proceedings

¶ 7 Petitioner filed an application to assume original jurisdiction and petition for declaratory relief and writs of injunction and/or mandamus and supporting brief on June 21, 2007, before H.B.1105 became effective. The petition challenged H.B.1105 under art. V, §§ 55, 56, and 57 and art. X, § 23 of the Oklahoma Constitution. Petitioner requested a temporary stay restraining allocation, transfer, or expenditure of funds under H.B.1105, an accounting of all transfers and expenditures of funds previously made under H.B.1105, and oral argument before this Court. This Court denied the request for a temporary restraining order and scheduled oral argument before the Court en banc on the validity of H.B.1105, the propriety of an injunction or a writ of mandamus, and the necessity of an accounting. At the conclusion of the oral argument on October 16, 2007, this Court assumed original jurisdiction and submitted the case for an opinion.

III. The Parties' Arguments

¶ 8 Petitioner challenged H.B.1105 as attempting to transfer funds from the Constitutional Reserve Fund in violation of art. X, § 23(4) of the Oklahoma Constitution. He also challenged H.B.1105 as an appropriation bill that contains general law provisions contrary to the one-subject rule in art. V, § 57 and that contains multiple-agency appropriations contrary to the one-subject rule in art. V, § 56 and the necessity rule in art. V, § 55 of the Oklahoma Constitution. Petitioner argued that the appropriations in H.B.1105 constitute illegal "log rolling," citing Campbell v. White, 1993 OK 89, 856 P.2d 255; Johnson v. Walters, 1991 OK 107, 819 P.2d 694; Draper v. State, 1980 OK 117, 621 P.2d 1142.

¶ 9 The State Finance Director, the Office of State Finance, and the Office of State Treasurer responded that petitioner's entire challenge is based upon the incorrect premise that H.B.1105 transfers money out of the Constitutional Reserve Fund. These respondents contended that the Legislature is authorized by art. X, § 23 of the Oklahoma Constitution to transfer the surplus cash on hand in the General Revenue Fund to other funds in the State Treasury under Calvey v. Daxon, 2000 OK 17, 997 P.2d 164. They urged that H.B.1105 is presumed valid, citing Bethany v. Public Employees Relations Bd., 1995 OK 99, ¶ 14, 904 P.2d 604, and that any constitutional limitation or restriction on the Legislature must be strictly construed, citing Tate v. Logan, 1961 OK 136, ¶ 19, 362 P.2d 670. They argued that the Legislature has the authority to establish the state's fiscal policy and that this Court has no authority to consider the desirability, wisdom, or practicality of the transfers of unappropriated cash on hand from one fund to another in H.B.1105.

¶ 10 The State Treasurer asserted that H.B.1105 does not violate the one-subject requirement in art. V, §§ 56 and 57 because all its provisions relate to the common theme of allocation of surplus funds and the common theme of establishing and managing accounts under the Okla. Const., art. X, § 30.⁶ He argued that H.B.1105 does not direct money to be paid out of the State Treasury so that art. V, § 55 does not apply. He also argued that H.B.1105 merely transfers and allocates funds within state government, does not appropriate for expenses of the three branches of government, and therefore is not "other appropriations" to fund agency operations under art. V, § 56.

IV. The Constitutional Provisions

a. Article X, § 23

¶ 11 We begin with the challenge to H.B. 1105 under art. X, § 23 of the Oklahoma Constitution. The people of Oklahoma adopted art. X, § 23 to require the Legislature to balance the state's expenditures with its revenues. Draper v. State Bd. of Equalization, 1966 OK 87, 414 P.2d 276. Referred to as the balanced budget law, art. X, § 23 is a detailed plan to assure the State operates...