German v. Com.

• Decision Date: 18 June 1991
• Citation: 574 N.E.2d 336,410 Mass. 445
• Parties: Marjory A. GERMAN v. COMMONWEALTH, et al. 1
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 336

574 N.E.2d 336

410 Mass. 445

Marjory A. GERMAN v. COMMONWEALTH, et al. ¹

Supreme Judicial Court of Massachusetts Suffolk.

Argued May 9, 1991.

Decided June 18, 1991.

Marjory A. German, pro se.

William W. Porter, Asst. Atty. Gen., for Com., et al.

Gordon P. Ramsey, Boston, for Massachusetts State Managers Association, amicus curiae, submitted a brief.

Sandra C. Quinn, Boston, for Massachusetts Teachers Ass'n, amicus curiae, submitted a brief.

Augustus J. Camelio, Matthew D. Jones & David B. Rome, Boston, for Alliance, ASCME-SEIU, AFL-CIO, CLC, amicus curiae, submitted a brief.

Before LIACOS, C.J., and WILKINS, ABRAMS, NOLAN, LYNCH, O'CONNOR and GREANEY, JJ.

NOLAN, Justice.

We are called upon to pass on the constitutionality of St.1991, c. 6, § 90, the so-called "furlough" law. Specifically, we are asked to decide whether § 90 imposes a discriminatory and unconstitutional graduated "tax" on State employees, and whether it effects a governmental "taking" of the plaintiff's property without reasonable compensation in violation of art. 10 of the Massachusetts Declaration of Rights. We determine that § 90 does not impose a "tax" on State employees. Furthermore, § 90 does not deprive the plaintiff State employee of any property right and, therefore, does not violate art. 10.

On March 22, 1991, c. 6 of St.1991 was approved by the Governor. Section 90(a ) declares that "[a] state of fiscal emergency exists in the commonwealth.... Therefore, as a matter of paramount public policy, ... the general court finds and declares that a temporary program of furloughs for employees and officers ... is the least painful means of conserving and utilizing the commonwealth's available monies." The section then outlines the terms of the furlough program, which is to be in effect from April 15 to June 30, 1991. The program affects all employees of the Commonwealth (except judges) whose annual salary exceeds $20,000. Each covered employee is to be furloughed for a number of days determined by the employee's annual compensation. ²

Section 90(b ) specifies that affected employees may elect one of three options. The first option provides that the employee may take the days as unpaid days off, with the limitation that essential State employees may not choose this option. Under the second option, the employee may choose to continue to work the days and receive a number of bonus paid vacation days, at a rate of one and one-quarter days for each furlough day worked. As a third option, the employee may continue to work the days without pay and receive a lump sum payment within thirty days after leaving State employment. The furlough law has no effect on an employee's seniority status or employee benefits such as health and accident insurance and retirement benefits. ³ Under § 90(m ), every public employee who is a member of the contributory retirement system established under G.L. c. 32, and who is required to participate in the furlough program, is authorized to borrow on the accumulated total deductions in the employee's account in the annuity savings fund of the system to which the employee belongs. This amount must be repaid with interest within five years or by the employee's retirement date, whichever is sooner.

The plaintiff, Ms. Marjory German, is an attorney employed by the Massachusetts Committee for Public Counsel Services, a statutory agency of the Commonwealth which provides defense services for indigent defendants facing criminal charges. Ms. German receives an annual salary of between $40,000 and $50,000, which, under the program, requires her to be furloughed for eight days. Ms. German, acting pro se, filed a complaint for declaratory and injunctive relief in the Superior Court in Suffolk County. The complaint challenges the constitutionality of the furlough law. The plaintiff is a nonunion State employee. On April 22, 1991, a Superior Court judge reserved and reported, pursuant to G.L. c. 231, § 111, and Mass.R.Civ.P. 64, 365 Mass. 831 (1974), the issues presented by the complaint to the Appeals Court. We transferred the case to this court on our own motion.

The plaintiff argues that the furlough program is, in effect, an unconstitutional tax on State employees. She argues that this violates art. 44 of the Amendments to the Massachusetts Constitution ⁴ because it is a "graduated tax," ⁵ and that it denies State employees "equal protection" under both the United States Constitution and the Massachusetts Constitution. These arguments fail because § 90 does not implement a tax.

The Justices have defined a tax as "a revenue-raising exaction imposed through generally applicable rates to defray public expense." Opinion of the Justices, 393 Mass. 1209, 1216, 471 N.E.2d 1266 (1984). When the characterization of a monetary exaction is in doubt, "the intention of the Legislature, as it may be expressed in part through its characterization ... deserves judicial respect, and especially so where the constitutionality of the exaction depends on its proper characterization." Emerson College v. Boston, 391 Mass. 415, 424, 462 N.E.2d 1098 (1984), quoting Associated Indus. of Mass., Inc. v. Commissioner of Revenue, 378 Mass. 657, 667-668, 393 N.E.2d 812 (1979). In the final analysis, however, the nature of a monetary exaction will be decided by studying its operation rather than how it has been characterized by the Legislature. Emerson, supra 391 Mass. at 424, 462 N.E.2d 1098.

First, we look to how the furlough program operates in fact. Section 90 does not result in the raising of new revenue for the Commonwealth. It is simply a decrease in expenditures, a cost-saving mechanism to conserve the amount of capital already in the General Fund. The furlough program does not result in the payment of new funds into the General Fund by State employees, nor does it involve an "exaction." The program is simply a prospective decrease in the amount of funds paid out to compensate State employees.

Second, § 90 does not refer in its language to a "tax" or "assessment." It simply describes the implementation of a program for the purpose of "conserving and utilizing the commonwealth's available monies during this extraordinary period of fiscal constraint." In fact, § 90(b ) describes the furlough program as "a savings in personnel expenditures."

While the Legislature's characterization of the program is not determinative, it will be given deference when the actual operation of the monetary action is consistent with that characterization. In this case, the furlough program is in actuality an expenditure decreasing mechanism. It simply defers the compensation of the State employees. In light of the actual expenditure decreasing operation of the furlough program, and its characterization by the Legislature, we determine that § 90 does not implement a "tax" on State employees. ⁶

Next, the plaintiff argues that the furlough law results in an unconstitutional "taking" of her property, without reasonable compensation, in violation of art. 10. ⁷ The plaintiff contends that, as a public employee, she has a vested right to the portions of her salary which are being withheld. We disagree.

In deciding whether governmental conduct results in a "taking," we focus on both the character of the action and the extent of the interference with property rights. See Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 130-131, 98 S.Ct. 2646, 2662, 57 L.Ed.2d 631 (1978); Moskow v. Commissioner of Envtl. Management, 384 Mass. 530, 533, 427 N.E.2d 750 (1981). Government action does not constitute a "taking" if the plaintiff does not have a property right in the affected property. As we stated in Flynn v. Cambridge, 383 Mass. 152, 160, 418 N.E.2d 335 (1981), "[c]learly the government is not required to compensate an individual for denying him the right to use that which he has never owned."

In this case, the plaintiff has no employment contract for any definite period of time. Therefore, she does not have a property interest in future wages (for future services) for which the Commonwealth has decided not to pay. Ossinger v. Newton, 26 Mass.App.Ct. 831, 834, 533 N.E.2d 228 (1989). By enacting the furlough law, the Commonwealth has altered prospectively the terms of the employer-employee relationship. To say that the plaintiff has a property right in the amount of money by which her salary was reduced would be to say that all State employees have a constitutional guarantee that the Commonwealth, acting as employer, may never reduce their pay. This we are not...