Opinion ID: 2446605
Heading Depth: 1
Heading Rank: 10

Heading: may the general assembly, in enacting laws pertaining to the budget and the budgetary process, authorize the lrc to exercise certain reporting and oversight powers?

Text: The next subject deals with controversial statutes relating to the budgetary enactment process and with reporting an oversight following the passage of the budget. KRS 48.040 provides that the governor, the chief justice and the LRC shall provide their budget requests on forms prescribed by the LRC. KRS 48.130 requires each branch of government, when submitting a budget request to the General Assembly, to develop and submit a plan for a reduction of that budget in the event the Commonwealth suffers a revenue shortfall in the amount of 2½% to 5% of the basic revenue estimates upon which the overall budget was premised. [22] The statute specifically provides that the plan of reduction shall be acted upon by the General Assembly. KRS 48.130(3). If and when actual revenue shortfall develops, the reduction plan as approved by the General Assembly shall be implemented by the head of each of the submitting branches of government. KRS 48.130(4). [23] The trial court declared this statute unconstitutional because it may permit the LRC to veto executive decisions administering the budget and because a budget, after enactment, is purely within the purview of the executive. KRS 48.400 provides that the Finance and Administration Cabinet shall continuously monitor the financial situation of the Commonwealth. It is directed to give monthly reports to the Governor, the Chief Justice, and the Legislative Research Commission. If the Cabinet determines there is a change in the estimated revenue of the Commonwealth that would require action to be taken under the contingency plans enacted by the General Assembly, then notification of such fact is to be given to all branches of government. KRS 48.400(2). The trial court declared this statute unconstitutional for the same reasons it declared KRS 48.130 unconstitutional. KRS 48.500 requires each branch of government to interpret provisions of the appropriation act in conformity with the budget memorandum adopted by the General Assembly. Such interpretation however, shall be reviewed by the Interim Joint Legislative Committee on Appropriations and Revenue. That Committee may disagree with the governmental branch's interpretation(s) and in that event, such interpretation shall not be implemented until it is reviewed and determined to be in compliance with that of the Interim Committee or until such branch of government informs the committee of its intention not to comply and proffers an explanation for its noncompliance. KRS 48.500(2), (3), (4). The trial court also held this statute unconstitutional, giving the same reasons as for the two previous statutes. KRS 48.600 provides for the situation when revenue shortfalls exceed 5% of the estimates. [24] In such a circumstance, the Governor, the Chief Justice, and the LRC . . . shall make such allotment reductions for the budget units of their respective branches of government as are deemed necessary.. . KRS 48.600(1). The revisions made shall be reported to the Standing and Interim Appropriations and Revenue Committee. The trial court declared this statute unconstitutional, giving the same reasons as above. KRS 48.310 requires that the budget be introduced as a resolution, rather than as a bill. It further provides that the budget should be subordinate to the Kentucky Revised Statutes and prohibits the budget from containing any language which exempts it from the operation of a statute. The trial court also declared this act unconstitutional because the statute purported to denigrate the budget bill to the level of a joint resolution. The court reasoned that Ky. Const. Sec. 88 requires the budget to be enacted by a bill that the Governor may veto on a line-by-line basis. The budget, which provides the revenue for the Commonwealth and which determines how that revenue shall be spent, is fundamentally a legislative matter. Ky. Const. Sec. 230 empowers the General Assembly to make appropriations; Ky. Const. Sec. 49-50 empowers the General Assembly to contract debts; and Ky. Const. Sec. 53 empowers the General Assembly to provide for investigations into the accounts of the Treasurer and Auditor of Public Accounts. [25] Certainly, we acknowledge that the Governor, as executive, may recommend to the General Assembly such measures as he deems expedient including a budget. Ky. Const. Sec. 79. However, it is equally clear that such budget is not binding on the General Assembly. Constitutionally speaking, the Governor does not have to submit such a document. Moreover, the Governor may utilize a line-by-line veto of the appropriation act passed by the General Assembly. [26] The General Assembly may, however, override this veto, and enact its desired appropriations. In a word, the final action on the enactment or adoption of the budget is a legislative matter. It is, of course, the duty of the Governor as the Chief Executive to carry out and to implement the budget which is passed by the General Assembly. Ky. Const. Sec. 81. It was stated by the trial court and argued by the appellees, that the acts in question constitute an interference by the General Assembly in the purely executive function of administrating the budget. We do not agree. The trial court declared KRS 48.040 to be invalid. The statute provides that the General Assembly, in exercising its constitutional prerogatives with respect to the preparation and adoption of the budget of this Commonwealth, directs its agent, the LRC, to prepare certain standardized forms upon which all branches of government shall make their budget requests. This statute provides for a mechanism to provide information to the General Assembly. It does not prevent any or all branches of government from providing additional information, in any form they may desire. This requirement comports with the duty of the General Assembly to approve and adopt a budget. KRS 48.130 simply provides that the submitting branch of government shall provide a plan for reducing expenditures in the event of a revenue shortfall of between 2½% and 5%. The General Assembly may adopt or modify the plan. If and when such a shortfall occurs, the executive branch is directed to notify the three branches of government of that unhappy fact and the legislatively enacted reduction plan is to be implemented. No control is delegated to the LRC. Each branch of government is simply directed to carry out the reduction plan which was enacted by the General Assembly . As we see it, each branch of government is to do what the General Assembly has directed. Such is not a part of the administration of the budget. It is carrying out a legislative mandate. There are no constitutional infirmities here. KRS 48.600 provides for the situation when a revenue shortfall is in excess (sic) of 5% of the anticipated amount. While no specific plan is required to be submitted in advance, the General Assembly has declared that in the event of such shortfall each branch of government shall be the best judge of how to cope with its problems. The General Assembly, under the statute, recognizes that each branch is best equipped to make its own decisions during a revenue emergency and requires that the branch report its actions to the appropriate legislative committee. We find that this act comports with the separation of powers doctrine and is not an incursion into the executive duty to administer the budget of the executive branch of government. KRS 48.400 directs the Executive branch to monitor the Commonwealth's financial position and to give monthly reports to each branch. When a revenue shortfall is found, the resulting notification, presumably, will cause the three branches to take the action directed and authorized by KRS 48.130 and KRS 48.600. We are at a loss to find a constitutional violation here. The executive branch is directed to be a fact-finder, and to notify the affected branch of government when a shortage occurs. This statute simply provides a means whereby a branch of government is made cognizant of a shortfall and thereby may take the requisite statutory action to remedy the situation. There is no violation of an executive function here, in fact, it places the responsibility on the executive branch, to participate in the overall statutory scheme dealing with revenue shortfalls. The trial court determined that KRS 48.500 was void because it permitted a veto of executive action in administering the budget by a legislative committee. A careful reading of the statute shows that this is not true. [27] Under the terms of the act, each branch of government is required to interpret relative provisions of the appropriations act in conformity with the budget memorandum of the General Assembly. Such interpretation is to be reviewed by the Interim Joint Committee on Appropriations and Revenue. If the committee disagrees with the branch's interpretation, that branch may not implement its plan unless and until: (1) its interpretation is amended to conform to that of the committee, or (2) the branch notifies the committee of its intention not to agree with the committee and explains its view for noncompliance. When the branch complies with either of the conditions, it may proceed with its own interpretation. The decision is ultimately left up to the affected branch. While the committee may disagree or object to a contested interpretation, the bottom line is that it may not veto the decision of the affected branch. Thus, there is no legislative veto and there is no out of session action by the General Assembly or its designee, the LRC, that can effectively prevent the affected branch of government from acting on its own budget with respect to matters of interpretation. Our constitution prohibits the exercise of the functions of one branch of government by another branch, but it also envisions some cooperation between the branches. This statute does not permit a usurpation by the legislative branch of an executive function and the degree of intrusion is so limited as to render it entirely reasonable and without any substantial impact. KRS 48.310 gives us some pause. [28] As stated, this statute requires the budget to be introduced as a joint resolution, rather than as a bill. The statute provides that the joint budget resolution shall be subordinate to the Kentucky Revised Statutes and that the resolution shall not contain any language which exempts it from the operation of a statute. When the budget is enacted as a bill, the provisions thereof could repeal existing statutes. But if the budget document is introduced in the form of a resolution, it can not have the effect of repealing any existing statutes. This is one of the purposes of KRS 48.310. Ky. Const. Sec. 88 in describing the Governor's line-by-line veto power in appropriation matters refers to the budget document as a bill. Appellees and the trial court seize on this language and argue that a resolution denigrates the budget document to the level of a joint resolution. We agree. Ky. Const. Sec. 88, provides the method by which bills shall be sent to the Governor, for either approval or disapproval (veto). It also provides how the General Assembly may override the veto. Of particular note is the provision that allows a line-by-line veto of appropriation bills. The relevant part is as follows: The Governor shall have the power to disapprove any part or parts of appropriation bills embracing distinct items, and the part or parts disapproved shall not become a law unless reconsidered and passed, as in case of a bill.  (Emphasis added.) While the Governor's veto power applies to all bills, it is only in the case of appropriation bills that a line-by-line veto may be exercised. The appropriation bill is the main ingredient of the budget document, and is specially singled out in Sec. 88, which deals with bills, and bills only. Appropriations, therefore, must be in the form of a bill. In addition, Ky. Const. Sec. 47, requires that all revenue matters must be introduced in the House of Representatives and such documents are referred to as bills. We can only conclude that KRS 48.310, which authorizes the budget to be introduced as a joint resolution, flies directly in the face of the provisions of Ky. Const. Secs. 88, 47, and is therefore, unconstitutional to that extent, we affirm the trial court, but we reverse as to other statutes previously discussed.