New York Law Review

Tag: Appropriations

  • County of Oneida v. Berle, 49 N.Y.2d 515 (1980): Executive Power to Impound Funds Appropriated by Legislature

    County of Oneida v. Berle, 49 N.Y.2d 515 (1980)

    The executive branch does not possess the constitutional authority to impound funds that have been duly appropriated by the legislature; such action violates the separation of powers.

    Summary

    This case addresses whether the New York State Director of the Budget, acting on behalf of the Governor, can refuse to spend funds appropriated by the Legislature. The Court of Appeals held that the Governor does not have the constitutional power to impound funds appropriated by law. The specific dispute arose when the Budget Director impounded $7 million of a $26 million appropriation intended to aid municipalities in operating sewage treatment works. The Court found that this impoundment violated the separation of powers doctrine enshrined in the New York Constitution.

    Facts

    The Governor initially recommended a $12 million appropriation for the sewage works reimbursement program in the executive budget for fiscal year 1976-1977. The Legislature increased this amount by $14 million, resulting in a total appropriation of $26 million. The Governor approved the bill, including the legislative addition, without exercising his item veto power. Subsequently, the Director of the Budget decided to reduce the allocations for sewage treatment systems, impounding $7 million of the appropriated funds, citing the need to tighten State spending.

    Procedural History

    Several municipalities and their representatives initiated a legal proceeding challenging the Budget Director’s decision. Special Term ruled that the executive impoundment was an invasion of the legislative domain. The Appellate Division affirmed Special Term’s decision based on the reasoning provided by Special Term. The Budget Director then appealed to the New York Court of Appeals.

    Issue(s)

    Whether the Governor, under the New York State Constitution, has the authority to refuse to expend funds appropriated by the Legislature.

    Holding

    No, because the executive branch’s impoundment of funds appropriated by the legislature violates the separation of powers doctrine.

    Court’s Reasoning

    The Court of Appeals rejected the argument that the Governor has implied constitutional power to reduce appropriations to maintain a balanced budget throughout the fiscal year. The court noted that while the Governor has an obligation to propose a balanced budget, there is no requirement that revenues and expenditures must match at all times during the fiscal year. The court emphasized that the State Constitution establishes a system of co-ordinate and co-equal branches of government, and that the executive branch cannot override enactments that have emerged from the lawmaking process. Quoting People ex rel. Burby v Howland, 155 NY 270, 282, the Court stated, “It is not merely for convenience in the transaction of business that they are kept separate by the Constitution, but for the preservation of liberty itself, which is ended by the union of the three functions in one man, or in one body of men. It is a fundamental principle of the organic law that each department should be free from interference, in the discharge of its peculiar duties, by either of the others.” The court found that the Governor’s action effectively altered a duly enacted statute. The appropriation language, stating that “the moneys hereby appropriated shall be available…and shall be apportioned,” was deemed mandatory, not discretionary. The phrase “as approved by the director of the budget” required only that the regulations apportioning the funds be subject to prior approval, not that the director had ultimate discretion to withhold funds. The court stated, “Once the appropriation was approved, therefore, the Governor and his subordinates were duty bound ‘to take care that [it was] faithfully executed’ (NY Const, art IV, § 3).” The court concluded that the executive branch must implement policy declarations of the Legislature, unless vetoed or judicially invalidated.

  • Saratoga Harness Racing Assn. v. Agriculture & New York State Horse Breeding Development Fund, 22 N.Y.2d 119 (1968): Requiring Legislative Appropriation for State Funds

    22 N.Y.2d 119 (1968)

    State funds, even those managed by public benefit corporations, generally require legislative appropriation for disbursement under Article VII, Section 7 of the New York State Constitution, ensuring legislative control over state finances.

    Summary

    Saratoga Harness Racing Association challenged the constitutionality of a New York law requiring racing associations to contribute a portion of their “breakage” (odd cents from pari-mutuel betting) to the Agriculture and New York State Horse Breeding Development Fund. The Association argued that the fund’s disbursement of these revenues without legislative appropriation violated Article VII, Section 7 of the New York Constitution. The Court of Appeals affirmed the lower court’s ruling, holding that the fund’s structure and limited scope did not violate the constitutional requirement for legislative appropriation, as the fund’s obligations did not become obligations of the state.

    Facts

    The New York legislature created the Agriculture and New York State Horse Breeding Development Fund, a public benefit corporation, to support the harness racing industry. The fund was financed by requiring private racing associations to pay 25% of their “breakage” to the fund. The fund was authorized to use these revenues for programs designed to improve the sport and facilities. Saratoga Harness Racing Association refused to pay $45,222.89 in breakage, arguing the legislative program violated the New York State Constitution.

    Procedural History

    Saratoga Harness Racing Association filed suit to enjoin the fund from collecting the breakage. The Supreme Court, Saratoga County, initially granted the fund’s cross-motion for summary judgment in part. The Appellate Division, Third Department, modified the order to allow the fund full recovery. The New York Court of Appeals granted review.

    Issue(s)

    Whether the legislative program requiring racing associations to pay a portion of their “breakage” to the Agriculture and New York State Horse Breeding Development Fund, which can then disburse those funds without legislative appropriation, violates Article VII, Section 7 of the New York Constitution.

    Holding

    No, because the Agriculture and New York State Horse Breeding Development Fund is not a fund under the management of the state, as the term is employed in the Constitution. The purpose of section 7 of article VII is to ensure legislative control over state expenditures to prevent the state from incurring obligations in excess of its income.

    Court’s Reasoning

    The Court reasoned that Article VII, Section 7 was designed to prevent the state from incurring obligations beyond its income by requiring legislative control over expenditures. The Court acknowledged that not every fund made up of public moneys is subject to this provision. The Court found that the Fund’s obligations did not become the obligations of the State because the legislature created a corporate entity whose obligations do not become the obligation of the State. Further, the court reasoned there was no risk to public visibility of legislative control because the method of raising revenue and proportion of funds allocated to various programs was specifically defined by the legislature. The court stated that “all that is left to the ‘Fund’ is the administration of the expenditures in accordance with the legislative mandate.” The dissenting opinion argued that the breakage moneys were funds under the management of the state, and that disbursement without appropriation violated the constitutional controls upon State finances. The dissent emphasized the importance of legislative control over revenues and disbursements, and the potential for evading constitutional safeguards.