June 26, 2009 2009-R-0255
HISTORY OF STATE ACTION IN ABSENCE OF A BUDGET BEFORE THE BEGINNING OF A NEW FISCAL YEAR
By: Soncia Coleman, Associate Legislative Analyst
As a result of the recent financial crisis, states are facing unprecedented budgeting challenges. According to the National Conference of State Legislatures (NCSL), 46 states begin their new fiscal year on July 1, 2009. Of these, six are currently awaiting executive action on their budgets and at least seven, including Connecticut, have had to extend their legislative sessions or enter into special session for the purpose of adopting FY 2010 budgets. NCSL's research indicates that in almost half of the states in the country, the government could shut down if a budget is not passed by the beginning of the fiscal year. Approaches vary in the remaining states, including temporary budgets adopted by the legislature and full or partial continuing payments based on statutory or constitutional authority. Some states have never had to deal with this situation. This report explores the procedures that might be applicable in Connecticut in the absence of a budget based on the two most recent examples.
In the absence of an approved budget there is no express legal authority for state expenditures. Neither the state constitution nor state statutes expressly provide this authority. Additionally, they do not dictate a required course of action in the absence of an approved state budget. However, the Connecticut attorney general has opined on the legality of two options available to state officials in the absence of a budget based on implied constitutional and statutory authority. First, the attorney general has concluded that the governor has the authority to issue an executive order to ensure continued essential and necessary government operations. Second, he has found the General Assembly has constitutional authority to adopt continuing resolutions for that same purpose. However, as with any such legislative measure, the governor has the authority to veto the resolution. In the absence of an override, the bill would have no legal effect.
Different approaches were used in the two most recent instances when the state was without a budget for the new fiscal year. During the 1991 budget crisis, the legislature enacted a series of continuing resolutions to keep the government running. During the same time period, then-Governor Weicker issued a series of executive orders. In 2003, then-Governor Rowland vetoed the legislature's attempt to enact a continuing resolution. In the alternative, he issued a series of executive orders.
1991 CONTINUING RESOLUTIONS AND EXECUTIVE ORDERS
In 1991, the State went without a permanent appropriations law for over 50 days (from July 1 to August 22). In early June, legislative leaders sought an opinion from the attorney general on the state's ability to continue payment for state services if a budget was not adopted by June 13 (based on the fact the payroll for the last two weeks of June was included in the next fiscal year.) In pertinent part, the attorney general concluded, based on the state Supreme Court's decision in State v. Staub, 61 Conn, 553 (1892), that “even in the absence of appropriations passed by the legislature, certain types of expenses associated with the necessary operation of government must be incurred and paid. Additionally, costs associated with statutory duties imposed on State officials or costs required to be incurred by statute must also be paid.”
In Staub, the state sought to have the comptroller issue funds for school age children to each district in accordance with statute. However, as the legislature had not adopted a budget, the comptroller refused based on statutes (1) requiring specific appropriations for all state expenditures and (2) forbidding any disbursing officer of the state to allow or pay any account or claim until a special appropriation was made. The Court found that the legislature's failure to adopt an appropriations bill acted to suspend these statutory requirements (Id. at 566-67). The Court noted that “the command to provide for the essential operations of the government must prevail against a rule of procedure in applying the funds raised by taxation for the support of the government” (Id. at 566).
The attorney general opined that the Staub standard would be hard to apply because it does not provide any insight into making choices on spending options. Thus, he suggested the adoption of a continuing resolution in order to avoid “fiscal confusion and uncertainty.” The opinion pointed out that while there is no specific statute authorizing the General Assembly to pass a continuing resolution, no such specific authorization is needed. The legislature has plenary constitutional authority to appropriate state funds. The opinion (No. 91-019) can be found at http://www.ct.gov/ag/cwp/view.asp?A=1770&Q=281260.
Subsequently, the legislature enacted several temporary appropriations measures to keep the state in business for several weeks after the fiscal year began (SA 91-1 through SA 91-5 of the June Special Session). Additionally, then-Governor Weicker signed several executive orders (1) permitting operation of state government while minimizing discretionary spending and (2) specifically authorizing that funds be expended in situations where there was a gap between the expiration and effective dates of continuing resolutions. A legislator inquired as to whether the governor had the authority to do the latter. In opinion No. 91-033, the attorney general concluded that he did based on the same reasoning as the earlier opinion and the fact that the Connecticut Constitution vests the supreme executive power of the state in the governor. This opinion can be found at http://www.ct.gov/ag/cwp/view.asp?A=1770&Q=281288
2003 EXECUTIVE ORDERS
In 2003, the legislature passed a two-week continuing resolution on June 30, given the lack of a budget for the fiscal year beginning July 1. Then-Governor Rowland vetoed the bill noting that there was no authority for such a document. He then issued a series of executive orders in order to continue government operations and directed that the sums necessary to carry out the orders be expended from the treasury. In Opinion No. 03-012, the attorney general concluded, for the reasons stated in the above-referenced 1991 opinions, that the legislature did have the authority to adopt the continuing resolution. However, the governor also had the constitutional authority to veto it. Additionally, in accordance with those same opinions, the governor had the authority to issue an executive order to ensure continued operations.
In discussing the best approach, the opinion notes the attorney general's preference for an agreement among the legislative and executive branches on a temporary spending measure approved by the General Assembly and signed by the governor, as occurred in 1991, because it would provide stability and certainty. However, the opinion specifically concludes that an executive order or a continuing resolution approved over the governor's veto are both legally acceptable. The opinion cautions that “care must be taken with both measures to avoid expending or withholding state money in a manner that is arbitrary or capricious, or otherwise fails to follow specific statutory or constitutional requirements.” The opinion can be found at http://www.ct.gov/ag/cwp/view.asp?A=1770&Q=281974.