Court Opinion

ID: 6928502
Source: CourtListenerOpinion
Date Created: 2022-07-23 23:42:41.931219+00
Date Added: 2024-06-11T16:07:02.008312
License: Public Domain

WIDENER, Circuit Judge,
concurring:
I agree with the majority that the district court should be reversed. I also agree that the claims which were not considered by the district court should be remanded.1 See op. at 1022 n. 14. I write separately, however, to note my disagreement with the majority’s view that the contracts were impaired. Because I believe that the terms of the Memo-randa of Understanding between the City and the police unions and the terms of the collective bargaining agreements between the City and the teachers’ unions necessarily included the statutory and charter authorization for the Board of Estimates’ actions, I would not reach the impairment issue. Simply put, I do not believe there was any impairment of the contracts, the police for either of two reasons, the teachers for one.
I
The majority correctly notes that contracts generally, as those at issue do, are understood to incorporate existing law, including city charters. Op. at 1015. Section 2(g) of the Baltimore City Charter provides:
*1023No temporary loan shall be authorized or made to pay any deficiency arising from a failure to realize sufficient income from all sources to meet the amounts provided in the Ordinance of Estimates.... In case of any such deficiency the Board of Estimates shall effect reductions (which need not be pro rata) in appropriations other than those for payment of the principal and interest of the City debt and such amounts as are fixed by law and contained in said Ordinance of Estimates, except to the extent that the City Council shall, upon the recommendation of the Board of Estimates, enact an ordinance which shall supply revenues to meet all or any part of such deficiency.
City of Baltimore, Md. Charter Art. VI, § 2(g). The question before us, then, is whether the Board of Estimates’ adoption of the furlough plan was action authorized by section 2(g).
The context in which the City was acting is pertinent to this dispute. The record in this ease reveals that the Budget Reconciliation Act of 1992, which contained a $4.78 million cut to the City, was approved by the Governor on October 18, 1991. The October cut brought the total reduction in state aid to Baltimore City for fiscal year 1992 to about $24.2 million. The City took action to offset the state aid cuts, including layoffs, job abol-ishments, and early retirements, but it did not implement the furlough program complained of here. In December, new legislation, the Second Budget Reconciliation Act, was pending in the legislature that contained further cuts in state aid. The proposed bill, House Bill No. 458, authorized additional cuts in state aid to the City of $13.3 million. In light of the bill, the City took steps to develop and implement the furlough plan. The furlough plan was implemented in January, 1992, after the Board of Estimates approved it on January 16. It is important to note that the City was taking action because of the anticipated cuts still pending in the legislature. Gallagher Affidavit at ¶ 8. However, when the Second Budget Reconciliation Act was passed by the Maryland legislature in April, it contained much smaller cuts, $4,676,957, than the bill pending in December and January. The City then halted the furlough plan “because of the drop in magnitude of the final installment of State revenue reductions to the City, and an estimate that the payroll savings accrued during the [time the plan was in effect] may be sufficient, along with the non-labor savings [implemented earlier], to deal with the City’s General Fund problem for Fiscal Year 1992.” Gallagher Supplemental Affidavit of May 11, 1992 at ¶ 8.
The district court’s opinion did not mention the City Charter, and the majority argues that Section 2(g) is not authority for the Board’s action. The majority arrives at this conclusion because it decides Section 2(g) does not confer upon the Board the power to modify contracts. As did the district court, the majority has viewed this case from the beginning as a case of impairment of a contract under the contracts clause, and has not recognized that the City’s Charter provisions confer upon the Board the authority to reduce appropriations in whatever manner necessary, even if the obligation exists by virtue of a contract. The grant of power is broad and is not held by any other body of city government. The only restrictions upon the Board are that it must pay the city debt and it must pay those amounts fixed by law. The Board does not even have to reduce appropriations pro rata. City of Baltimore, Md. Charter Art. VI, § 2(g). The amounts reduced here are not fixed by law, but by contract; they are not a part of the City’s debt. Although not explicit in the majority’s opinion, it apparently has decided that the Board’s initial adoption of appropriations in the amounts set forth in the Memoranda of Understanding somehow confers on these appropriations a special status. See op. at 1015-16. However, if that were true, every amount contained in the Ordinance of Estimates would be sacred, and the provision in the Charter would be meaningless.
The majority further argues that Section 2(g) does not apply to the fact situation here.2 On that point, it states:
*1024[Section 2(g) ] authorizes reductions in appropriations only in the event of a “deficiency.” At the time the furlough plan was adopted in January, however, the Maryland General Assembly had yet to authorize the Governor to effect the anticipated cuts in funding to the City, an event which did not occur for several months — and even then in amounts different from those originally contemplated.
Op. at 1016 n. 4. That reasoning overlooks that there already was a deficiency from the first cuts and that, in the end, there was a second cut. It is irrelevant what the size of the deficiency was; all that was necessary for the Board to act was a deficiency. The City could have cut the labor costs at issue here much earlier, but instead chose to wait and try other methods. The City also knew that it would have to take much more drastic' action than the furlough plan if it did not act on the anticipated $13.3 million cut as soon as possible, because the cuts were for the current fiscal year. Gallagher Affidavit at ¶ 8. The City’s actions thus were not only authorized, they also were most sensitive to the employees’ needs. The majority seems to argue, however, that the Board should have waited and laid off employees in April rather than attempting to address the issue in a less harsh manner as early as it could. I simply do not agree with that suggestion. I think the- Board acted reasonably, lawfully, and with as little harshness as possible in quite difficult circumstances.
II
As to the police union Memoranda, I also believe the majority was mistaken in limiting its discussion, of whether the City or the Board of Estimates had the power to modify contracts, to those powers conferred by the City Charter. The power of the Board of Estimates to modify the appropriations in this case did not come only from the Charter, but also was conferred by the legislation authorizing the City to take appropriate action to deal with the budget shortfalls that were anticipated because of the decrease in state aid. See Budget Reconciliation Act for Fiscal Year 1992 § 9(a) which provides:
Subject to the provisions of subsection (b) of this section [not applicable here], the governing body of a county or Baltimore City, or other legal entity or authority within the county or Baltimore City, may take any action necessary, including any action to reduce a previously approved appropriation, to prudently manage its fiscal affairs and to meet its obligations under this Act. This subsection may not be interpreted to authorize additional taxation authority.
The facts in this case reveal that the Mem-oranda of Understanding between the police unions and the City were entered into after the passage of the Budget Reconciliation Act for fiscal 1992 which authorized the City’s furlough plan. The record is that the Budget Reconciliation Act was approved by the Governor on October 18, 1991. The Memoranda of Understanding for the police unions were signed on November 19, 1991.3 Therefore, when the parties signed the Memoranda for the police, they were aware of a shortfall in state aid and that the City had been authorized to “take any action necessary, including any action to reduce a previously approved appropriation,” under Budget Reconciliation Act § 9(a), to deal with the shortfall. Still, the City prudently waited. It was only in December, when the Second Budget Reconciliation Act was pending in the legislature, which contained even more cuts in state aid, that the City took steps to develop and implement the furlough plan.
The case before us, then, is that the City was granted authority to deal with reductions in the state aid appropriations in the Budget Reconciliation Act, and used that authority when it learned of the massive cuts anticipated in the Second Budget Reconciliation Act. When those massive cuts did not turn out to be as large as feared and threatened, the *1025City stopped the furlough plan. And, the police unions now complaining of the furlough plan knew that the Governor had signed into law the City’s authority to deaí with the reductions before they signed the Memoranda of Understanding with the City.
It is axiomatic that the Constitution grants no entitlements to government benefits. See, e.g., Harris v. McRae, 448 U.S. 297, 316-318, 100 S.Ct. 2671, 2687-88, 65 L.Ed.2d 784 (1980) (Congress may choose to provide Medicare funds for medically necessary abortions, but not elective abortions). The ability of the State of Maryland to change the appropriation to the City was known as a matter of law by all of the parties, and the grant to the City of authority to reduce funds already appropriated also had been made. This was part of the law that necessarily was incorporated into the Memoranda of Understanding signed by each of the appellee police unions. The City and the police unions took the risk of negotiating agreements and fixing budgets that relied on State aid without knowing whether that aid would materialize in the necessary amount and, in fact, had been warned that it likely would not. When it was threatened that even further deep cuts would be made by the Second Budget Reconciliation Act, adjustments had to be made. For the police unions now to argue that the City cannot adjust its appropriations downward when the budget and those appropriations were calculated on the basis of funds that the City did not receive defies logic as well as law in light of the legislative grant which was known to all parties before the Memoranda were signed.
The district court based its analysis on finding a contract and an impairment. When it finally reached the constitutional argument as to the validity of § 9(a) of the statute, the district court considered it under the federal constitution and did not reach that issue until after it had found an unconstitutional impairment. It seems to me, however, that the appropriate analysis should start with the source of the City’s power to implement the policy at issue.4
Ill
In sum, I believe that the actions of the City with respect to the shortfall in funds were authorized by the plain words of section 9(a) of the Budget Reconciliation Act of 1992 as to the police union. As to both the police union and the teachers’ union, I believe the plain words of the City Charter apply and give the City the authority to do just what it did. I see no reason to depart from the language of Section 9(a) of the statute and the Charter, each of which is quite clear, I think.
I do not think there is any impairment of a contract in the constitutional sense because the actions taken by the City were authorized by the statutory and charter provisions I have quoted above. Whether there is any cause of action under state law is a question on which I express no opinion.
*1026AMENDED ORDER

. Neither the majority nor I express an opinion on whether the district court has jurisdiction to hear the remaining claims. If such jurisdiction is claimed and is discretionary, neither expresses an opinion on whether the district court should exercise it.

. The majority also argues that it is not clear whether the furlough plan constituted a reduction in appropriations, which is the only action that Section 2(g) grants to the Board. Op. at *10241016, n. 4. Had the majority considered the actions of the Board to be a reduction in appropriations, of course, that issue would not have remained in the case upon which to rest a finding of impairment.

. The agreement for the teachers' unions were apparently entered into in 1989, before the passage of the Act. Thus the teachers’ contracts are not subject to the Act.

. The majority’s discussion of Section 9(a) in footnote 5 of its opinion overlooks two very important facts: The Neall Amendment had been passed before the police unions ever signed their Memoranda with the City, and all contracts are understood to incorporate pre-existing law. The majority admits as much in its opinion, but then argues in footnote 5 that pre-existing law incorporated into a contract can violate the Contracts Clause of the Constitution. This would achieve the result of a contract which is formed after the passage of a statute rendering the statute void as against the Contracts clause. Surely this cannot be the case.
In addition, if there were a doubt about whether the contract really should be subject to a preexisting law, one need only to look to the Supreme Court for the answer:
But into all contracts, whether made between states and individuals, or between individuals only, there enter conditions which arise, not only out of the literal terms of the contract itself; they are superinduced by the pre-exist-ing and higher authority of the laws of nature, or nations, or of the community to which the parties belong; they are always presumed, to be known and recognized by all, are binding upon all, and need never therefore be carried into express stipulation, for this could add nothing to their force. Every contract is made in subordination to them, and must yield to their control, as conditions inherent and paramount, wherever a necessity for their execution shall occur.
Long Island Water Supply Co. v. City of Brooklyn, 166 U.S. 685, 692, 17 S.Ct. 718, 721, 41 L.Ed. 1165 (1897). The above-quoted passage is also quoted in Home Building & Loan Association v. Blaisdell, 290 U.S. 398, 435-36, 54 S.Ct. 231, 239, 78 L.Ed. 413 (1934), on which the majority relies.