Opinion ID: 2108798
Heading Depth: 1
Heading Rank: 12

Heading: Item Vetoes of HF 692.

Text: We now consider whether the Governor constitutionally exercised his item veto power in item vetoing provisions of HF 692. The first issue that must be considered is whether HF 692 is an appropriation bill. See Iowa Const. art. III, § 16. The Governor contends it is and asserts it is subject to item veto because several provisions in the bill bring it under the definition of an appropriation bill provided in Junkins II. 448 N.W.2d at 484-85. Each of these provisions, he believes, contains an appropriation which could significantly affect [his] budgeting responsibility. Id. In support of this argument, he offers evidence that these provisions allocate amounts which the Governor deems significant from the general fund or from a revenue-producing bill, into a separate and distinct fund that the State can no longer utilize for other purposes absent subsequent legislation. Id. at 483. In the presence of these allocations, the Governor argues, he could properly item veto provisions of HF 692. In counterpoint, the Legislature argues that HF 692 is not an appropriation bill because no portion of the bill allocates funds or operates in either of the methods described by our prior cases. See id. Instead, it contends that HF 692 is a typical legislative bill that includes several policy provisions related to economic development. Thus, if the Governor wished to exercise his veto powers in relation to the bill, he was limited to exercising only the general or pocket veto power, not the item veto power. In short, the Legislature contends that the Governor was not permitted to item veto provisions of HF 692. In scrutinizing the parties' arguments, a further fundamental interpretive difference is revealed. At nearly every turn, the Governor contends that a simple reference to HF 683 or other matters reveals that HF 692 is an appropriation bill. The Legislature argues that taking this step in the item veto analysis goes beyond the analytical principles elucidated in our prior cases, lacks support of any type, and presents a significant threat to the separation of powers. The Legislature essentially argues that the Governor's item veto power must be applied in light of the nature of the bill sought to be vetoed. For several reasons, we agree. Clearly, HF 683 and HF 692 are related in numerous ways. Yet, none of these ways is relevant for the constitutional analysis of whether the item veto power has been properly exercised in relation to HF 692. In fact, the Governor has failed to cite any true authority in support of an approach that looks to another pending bill to determine whether the bill sought to be item vetoed is an appropriation bill, offering only general statements on separation of powers principles in support of his approach. [4] Yet, we believe his approach poses the graver threat to the separation of powers. If we were to accept and apply the Governor's approach, we would be condoning a vast expansion of the scope and reach of the governor's item veto power, contrary to the intent of article III, section 16. Feasibly, every bill that is somehow linked to another bill that contains a related appropriation  which HF 683 undoubtedly does  could be reached by the governor's item veto power. However, the item veto power is a limited, negative power and cannot be expanded in this way. See Welden, 229 N.W.2d at 711; accord Colo. Gen. Assembly, 704 P.2d at 1385-86; Cason, 495 S.W.2d at 392; Drummond, 503 S.E.2d at 457. Instead, we must examine the face of the bill sought to be item vetoed to determine if it is subject to the item veto power, as we have in each of our prior cases in this area. See, e.g., Junkins II, 448 N.W.2d at 484; Colton, 372 N.W.2d at 185-86; Turner, 186 N.W.2d at 149. The Governor does not contend that HF 692 is a traditional appropriation bill marked by the inclusion of at least one allocation of a monetary amount on the face of the bill. Instead, he claims four portions of HF 692, encompassing several sections of the bill, when read in light of our decision in Junkins II, are appropriations, and pursuant to our prior expressed definition of an appropriation bill, render the whole of HF 692 subject to item veto. On closer analysis, however, we believe the Governor has misconstrued our prior item veto holdings, which instead reveal HF 692 does not contain any appropriations. The first provision identified by the Governor as an appropriation is section 84 of HF 692, which creates the framework for the Values Fund. See 2003 Iowa Acts ch. 1, § 84 (extraordinary session). The Governor contends that this section is an appropriation based on a provision providing [p]ayments of interest, repayments of moneys loaned pursuant to this chapter, and recaptures of grants or loans shall be deposited in the fund. Id. Further, he contends that this section altered the method by which funds leftover in the Values Fund would revert at the end of the fiscal year. Id. He contends both of these provisions are appropriations because both allocate funds whether from the general fund or from a revenue-producing bill, into a separate and distinct fund that the State can no longer utilize for other purposes absent subsequent legislation. Junkins II, 448 N.W.2d at 483. We do not believe section 84 is an appropriation. We have previously rejected a governor's item vetoes of similar reversionary provisions in Welsh and Welden. See 470 N.W.2d at 649; 229 N.W.2d at 708, 713-14. More importantly, section 84, on its face, does not involve the allocation of funds by either directly ordering an expenditure or commanding alterations to standing allocations within sections of the Iowa Code resulting in the expenditure of funds absent subsequent legislation to stop the expenditure or somehow redirect it. Instead, section 84 is dependent on further legislative action outside of the policy provisions crafted in HF 692 to make the Values Fund contemplated in section 84 functional. Thus, HF 692 differs from the bill in Junkins II, where no further legislative action was needed to permit the expenditure of funds as directed, with alterations, by the bill. Admittedly, further legislative action related to section 84 was contemplated in HF 683. See 2003 Iowa Acts ch. 2 (extraordinary session). Yet, as we have noted, there is nothing to warrant reading the two bills together for an item veto analysis, which focuses on the face of the bill sought to be item vetoed to determine if it is subject to the item veto power. In effect, we believe the provisions of HF 692 create a savings account for the Values Fund and describe how the fund will operate, but do not place funds or alter funds that are to be spent pursuant to mandatory statutory language that are currently placed in that account. It is that placement or alteration of funds which is at the heart of the appropriation power and which triggers the Governor's ability to item veto. A similar conclusion obtains when we examine the other provisions contended by the Governor to be appropriations. These provisions provide for compensation and expense payments for members of boards created in HF 692, change fines and surcharges related to the workers' compensation act, and reduce income tax rates. See 2003 Iowa Acts ch. 1, §§ 44-72, 78, 80, 81, 85, 106, 122, 127 (extraordinary session). We do not believe the provisions providing for compensation and expense payments for board members are allocations of any sort. These provisions call for the director of the department of economic development and state auditor to budget for the positions but do not allocate funds to fulfill those budget items. 2003 Iowa Acts ch. 1, §§ 78, 80, 81, 85, 106 (extraordinary session); see also Iowa Code § 8.2(2) (discussing the nature of budgetary authority). Any such allocation is dependent on later legislative action, which, presumably, would constitute a traditional appropriation bill by the inclusion of at least one allocation of a monetary amount on the face of the bill. See Iowa Code § 7E.6(6). The Governor's contention that changes to fees related to the workers' compensation act are appropriations is similarly infirm. The first change, arising from section 122 of HF 692, would increase the possible assessment that may result if an employer fails to file certain reports pursuant to the workers' compensation act. 2003 Iowa Acts ch. 1, § 122 (extraordinary session). This series of possibilities is contingent on matters extraneous to HF 692, which does not, on its face, allocate funds by either directly ordering an expenditure or commanding alterations to standing allocations within sections of the Iowa Code resulting in the expenditure of funds absent subsequent legislation to stop the expenditure or somehow redirect it. The second change, arising from section 127, adjusts an unemployment fund surcharge. Id. ch. 1, § 127. Yet, this surcharge does not order an expenditure or affect a standing allocation because any allocation from the fund is dependent on later legislative action not contemplated in HF 692. See Iowa Code § 96.7(12)( c ). Finally, the Governor contends that alterations to the state tax code to reduce income tax rates provided for in HF 692 are appropriations. 2003 Iowa Acts ch. 1, §§ 44-72 (extraordinary session). This contention is divorced from our prior case precedents and basic logic. The effect of the provisions altering the tax code would result in the reduction of the state general fund. We simply cannot comprehend how a reduction in the general fund could be considered the allocation of funds from the general fund or from a revenue-producing bill, into a separate and distinct fund that the State can no longer utilize for other purposes absent subsequent legislation. Junkins II, 448 N.W.2d at 483. Indeed, as one court has observed, `[T]axation and appropriation are more nearly antonyms than synonyms.' State ex rel. Finnegan v. Dammann, 220 Wis. 143, 264 N.W. 622, 624 (1936) (citation omitted); see also Black & White Taxicab Co. v. Standard Oil Co., 25 Ariz. 381, 218 P. 139, 144 (1923); City of Camden v. Byrne, 82 N.J. 133, 411 A.2d 462, 468 (1980); State ex rel. Sundby v. Adamany, 71 Wis.2d 118, 237 N.W.2d 910, 918 (1976). A reduction in state revenues is not an allocation of funds and is thus not an appropriation. See Junkins II, 448 N.W.2d at 483. Ultimately, none of the sections that the Governor identifies as appropriations is an appropriation. Thus, there is no need to consider the further question of whether these provisions significantly affect [his] budgeting responsibility. Id. at 484-85. Moreover, it is not necessary for us to examine each of the Governor's item vetoes to determine whether each fell within one of the three types and circumstances subject to the item veto power. Without an appropriation on its face, HF 692 is not an appropriation bill. For this reason, HF 692 was subject only to the Governor's general or pocket veto power and, accordingly, could not be item vetoed but only approved or disapproved as a whole. In attempting to item veto its provisions, the Governor acted unconstitutionally.