New York Law Review

Tag: Cayuga Lake National Bank

  • Cayuga Lake National Bank v. Commissioner of Taxation and Finance, 77 N.Y.2d 95 (1990): Legislative Power to Alter Appropriation Bills

    Cayuga Lake National Bank v. Commissioner of Taxation and Finance, 77 N.Y.2d 95 (1990)

    The Legislature’s power to alter appropriation bills submitted by the Governor is limited by Article VII, § 4 of the New York Constitution, which only allows the Legislature to strike out or reduce items, or add separately stated items of appropriation.

    Summary

    Cayuga Lake National Bank challenged the validity of an “Audit Fee Provision” added by the New York Legislature to the State Operations Budget Bill. This provision authorized the Commissioner of Taxation and Finance to assess fees against banking corporations for the cost of tax audits. The Court of Appeals held that the Audit Fee Provision was unconstitutional because it violated Article VII, § 4 of the New York Constitution, which restricts the Legislature’s ability to alter appropriation bills submitted by the Governor. The Court rejected the Commissioner’s arguments that the challenge was non-justiciable and that the provision substantially complied with the Constitution.

    Facts

    The Governor submitted a proposed State Operations Budget Bill to the Legislature. The bill included an appropriation for expenses related to tax audits of banking corporations. The Legislature amended the bill to include the Audit Fee Provision, which allowed the Commissioner to assess fees against the banks being audited to cover the audit costs. The Governor signed the amended bill into law. Cayuga Lake National Bank, and the New York State Bankers Association, challenged the Audit Fee Provision, arguing it violated Article VII, § 4 of the New York Constitution.

    Procedural History

    The Supreme Court granted summary judgment to the plaintiffs, declaring the Audit Fee Provision null and void and enjoining its enforcement. The Appellate Division affirmed, rejecting the Commissioner’s argument that the challenge did not present a justiciable controversy. The Commissioner appealed to the New York Court of Appeals.

    Issue(s)

    1. Whether the plaintiffs’ challenge to the Audit Fee Provision presents a non-justiciable controversy, amounting to an impermissible judicial invasion of the budgetary process?

    2. Whether the Audit Fee Provision is valid, notwithstanding its contravention of Article VII, § 4 of the New York Constitution, because it substantially complies with the constitutional requirements or because the Governor and Legislature were in agreement on the provision?

    Holding

    1. No, because the plaintiffs’ challenge concerns the scope of the Legislature’s authority under the Constitution, which is a justiciable issue.

    2. No, because there was a conceded violation of the constitutional provision and total noncompliance cannot amount to substantial compliance.

    Court’s Reasoning

    The Court of Appeals reasoned that the challenge was justiciable because it concerned the scope of the Legislature’s delegated authority under the Constitution, not the merits of the budgetary decision itself. The Court distinguished this case from Saxton v. Carey, where the challenge involved the degree of budget itemization, a matter within the discretion of the executive and legislative branches.

    On the merits, the Court held that the Audit Fee Provision violated Article VII, § 4 of the New York Constitution, which states that “The Legislature may not alter an appropriation bill submitted by the governor except to strike out or reduce items therein, but it may add thereto items of appropriation provided that such additions are stated separately and distinctly from the original items of the bill and refer each to a single object or purpose.” The Court rejected the argument that the provision substantially complied with the Constitution, noting that there was a conceded violation and no basis for a claim of partial compliance. The Court also rejected the argument that the violation should be ignored because the Governor and Legislature both approved the provision, emphasizing that the constitutional limitations on legislative power are essential to preserving the separation of powers and protecting against abuse of power by the State. The Court stated, “To approve it would be to disparage the very foundation of the People’s protection against abuse of power by the State — the tripartite form of government established in the Constitution.”

    The Court emphasized the importance of adhering to the Constitution’s separation of powers, quoting People ex rel. Burby v. Howland, “The object of a written Constitution is to regulate, define and limit the powers of government by assigning to the executive, legislative and judicial branches distinct and independent powers. The safety of free government rests upon the independence of each branch and the even balance of power between the three. * * * 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.”