Judy v. Schaefer

• Decision Date: 01 September 1992
• Docket Number: No. 138,138
• Citation: 627 A.2d 1039,331 Md. 239
• Parties: , Medicare & Medicaid Guide P 41,611 Joyce JUDY et al. v. William Donald SCHAEFER et al. ,
• Court: Maryland Court of Appeals

Page 239

331 Md. 239

627 A.2d 1039, Medicare & Medicaid Guide P 41,611

Joyce JUDY et al. v. William Donald SCHAEFER et al.

No. 138, Sept. Term, 1992.

Court of Appeals of Maryland.

July 22, 1993.

J. Peter Sabonis, argued and on brief (Marylee Hannan, Leslie K. Dick and Charles J. Morton, Jr., Kollman & Sheehan and Susan Goering, American Civ. Liberties Union on brief), Baltimore, for petitioner.

Evelyn O. Cannon, Asst. Atty. Gen., argued and on brief (J. Joseph Curran, Jr., Atty. Gen. of Maryland, Maureen M. Dove, Cecilia Januszkiewicz, and Steven D. Keller, Asst. Attys. Gen., on brief), Baltimore, for appellee.

Amicus Curiae for appellant Joyce Judy, et al.

James A. Mayhew, John C. Eidleman, Legal Aid Bureau, Inc., of Towson, for Linda Powell and Tony Cage.

Argued before ELDRIDGE, RODOWSKY, McAULIFFE, CHASANOW, KARWACKI and ROBERT M. BELL, JJ., and CHARLES E. ORTH, Jr., Judge of the Court of Appeals (Retired, Specially Assigned).

ELDRIDGE, Judge.

The petitioners in this case are indigent individuals representing themselves and certified classes of recipients of General Public Assistance, Aid to Families with Dependent Children, and Medical Assistance State Only. They challenge the validity of the Governor's action reducing appropriations pursuant to Maryland Code (1985, 1988 Repl.Vol.), § 7-213 of the State Finance and Procurement Article.

Section 7-213 of the State Finance and Procurement Article authorizes the Governor, with the approval of the Board of Public Works, to reduce, by not more than 25%, any appropriation that the Governor deems unnecessary. ¹ Pursuant to § 7-213, on September 30, 1992, the Governor submitted a plan for the reduction of many appropriations for Fiscal Year (FY) 1993 to the Board of Public Works for approval. A reduction of $30.8 million appropriated to the Department of Health and Mental Hygiene (DHMH) and a reduction of approximately $20 million appropriated to the Department of Human Resources (DHR) were proposed. The $30.8 million DHMH reduction represented the elimination of health care coverage under the grant for Medical Assistance State Only. The $20 million DHR cut resulted from reducing grants to disabled indigents in the General Public Assistance program and from reducing assistance to families under the Aid to Families with Dependent Children program. The Boa rd of Public Works approved the Governor's proposed reductions with amendments not relevant to this case. Thereafter, pursuant to an order signed by the Governor, the Comptroller adjusted the accounts of all state agencies to reflect the reduced appropriations.

²

On November 2, 1992, the petitioners filed in the Circuit Court for Baltimore City a complaint seeking to enjoin the Governor, the Treasurer, the Comptroller, the Secretary of the Department of Human Resources and the Secretary of the Department of Health and Mental Hygiene from reducing their public assistance benefits and from eliminating their medical coverage. On November 16, 1992, the circuit court issued an interlocutory injunction preventing these officials from implementing the challenged reductions. On November 18, 1992, in response to a petition by the State, the Court of Special Appeals stayed the circuit court's interlocutory order.

Thereafter, the parties filed in the circuit court cross motions for summary judgment. The plaintiffs argued, inter alia, that § 7-213 was inconsistent with Art. III, § 52, of the Maryland Constitution and was thereby unauthorized. They further argued that the General Assembly's grant of authority to the Governor to reduce appropriations under § 7-213 violated the principle of separation of powers set forth in Art. 8 of the Maryland Declaration of Rights because it failed to set forth sufficient standards to guide the Governor's discretion. ³ The plaintiffs contended that the Governor's action in reducing these appropriations and the Board of Public Works's action in approving them was arbitrary, capricious and unsupported by substantial evidence. Finally, the plaintiffs claimed that the 25% limitation on reductions under § 7-213 was violated when the sum appropriated to DHMH was reduced by eliminating the Medical Assistance State Only grant.

The State contended that § 7-213 did not violate the principle of separation of powers and was consistent with Art. III, § 52, of the Maryland Constitution. It further asserted that action of the Governor and the Board of Public Works pursuant to § 7-213 was not judicially reviewable for arbitrariness capriciousness or lack of evidentiary support. The State also argued that the elimination of the Medical Assistance State Only grant did not violate the terms of § 7-213.

On December 2, 1992, the circuit court granted the State's motion for summary judgment and denied that of the plaintiffs. The trial court expressed the reasons for his action as follows:

"It is my conclusion from the undisputed facts in evidence that the Governor's action and that of ... the Board of Public Works, on September 30th was lawful and constitutional. I believe that the Governor and the Board of Public Works took the actions that they did on September 30th pursuant to Section 7-213, and I believe that Section 7-213 was constitutionally enacted pursuant to the provisions of Article III, Section 52, Subsection 13 of the Maryland Constitution.

"I also believe that not only did the Governor act pursuant to that statute which I find to be lawful and constitutional, but I find that he exercised the authority and powers vested in him under that statute properly and in accordance with the law.

* * * * * *

"I do not think there has been any violence done in these enactments to the separation of powers of the State of Maryland.... I think that the total picture that emerges from our constitution is, as the defendants suggest, a very strong and powerful Governor, particularly when it comes to budgetary matters.... So I think that our mothers and fathers over the years constructed the type of separation of powers on the state level that vests considerable power and authority to the Governor.

* * * * * *

"I think we have to look at Section 7-213 in that light and harmonize it with the overall budgetary process that the Maryland Constitution sets forth. To me, the Legislature, with all of this framework in mind, I believe did have the authority to say that in view of our framework, and for a more orderly government, we believe the Governor should have this power, that is to the peoples' interest that he have this power, and that we not have gridlock. I don't think its surrendering legislative power to the Governor. I think it is the Legislature's intent to further define and expurgate just what the Governor is able to do with a State budget, and reinforces the preeminent role which ... the Governor has in the State of Maryland in the budgetary process."

The plaintiffs noted an appeal to the Court of Special Appeals on December 17, 1992, and then filed in this Court a petition for a writ of certiorari. Prior to argument in the Court of Special Appeals, we issued a writ of certiorari to consider the important issues presented. 329 Md. 168, 617 A.2d 1085.

I.

As the trial court recognized, fundamental to the resolution of this dispute is the nature of Maryland's executive budget system. This Court, on several occasions, has discussed the requirements and history of that system. See Kelly v. Marylanders for Sports Sanity, 310 Md. 437, 450-461, 530 A.2d 245, 251-257 (1987); Bayne v. Secretary of State, 283 Md. 560, 567-569, 392 A.2d 67, 71-72 (1978); Md. Act. for Foster Child. v. State, 279 Md. 133, 140-153, 367 A.2d 491, 495-502 (1977); Panitz v. Comptroller, 247 Md. 501, 505-509, 232 A.2d 891, 893-895 (1967); McKeldin v. Steedman, 203 Md. 89, 96-103, 98 A.2d 561, 563-567 (1953); Dorsey v. Petrott, 178 Md. 230, 241-244, 13 A.2d 630, 636-647 (1940); Baltimore v. O'Conor, 147 Md. 639, 644-646, 128 A. 759, 761, 40 A.L.R. 1058 (1925). We have not, however, dealt with the authority of the Governor to reduce an appropriation after the budget bill has passed.

In 1916, in response to fiscal irresponsibility which led to deficits, the voters of the State of Maryland ratified an amendment to the Constitution which established an executive budget system, Art. III, § 52, of the Maryland Constitution. See Md. Act. for Foster Child. v. State, supra, 279 Md. at 145, 367 A.2d at 497-498; McKeldin v. Steedman, supra, 203 Md. at 96, 98 A.2d at 564; Goodnow Commission Report, Journal of Proceedings of the Senate of Maryland, for the Legislative Session of 1916, at 129-134 ("Goodnow Commission Report"); Hooper S. Miles, The Maryland Executive Budget System and a Review of its Administration, 1916-1941, at 7-8 (1942) ("Miles"). The amendment had been proposed by the "Commission on Economy and Efficiency on the Budget System" ⁴ and was designed "to bring about a fundamental change in State appropriations" by vesting in the Governor responsibility for the fiscal affairs of the State. Md. Act. for Foster Child. v. State, supra, 279 Md. at 145, 367 A.2d at 498. The driving force behind the implementation of a budget system in which the executive plays a dominant role was the desire to avoid further deficits and to ensure a balanced budget. In order to fully understand the context of the constitutional arguments raised in this case, a description of the budgetary process under § 52 is appropriate.

There have been some changes to the budget amendment since 1916. Currently, the system functions as follows. Ordinarily, on the third Wednesday in January, the Governor submits to the General Assembly a comprehensive budget and a budget bill for the ensuing fiscal year, Art. III, § 52(3). ⁵ In this budget, the Governor estimates the State's revenues and establishes the fiscal priorities of the State by setting forth a complete plan of proposed expenditures. Ibid. The authority to revise estimates received from State...