What Exactly Is An Appropriation?

What is an appropriation?

That is the fundamental issue in the lawsuit filed August 10 by Senate President Pro Tempore Darrell Steinberg seeking to overturn Gov. Arnold Schwarzenegger’s veto of nearly $500 million in spending in the package of bills designed to close a $26 billion hole in the budget for the fiscal year that began July 1.

Schwarzenegger says the principle measure approved by lawmakers, AB 1, contains specific amounts of money earmarked for specific purposes – the chief characteristics of an appropriation.

“The governor’s veto authority to reduce or eliminate appropriations is clear and broad in the constitution. The budget – original or amended – can only contain appropriations, so the governor’s authority to veto these appropriations is unquestioned,” said Schwarzenegger’s legal affairs secretary, Andrea Hoch, in an August 5 statement.

“Any attempt to characterize any of these items of the amended budget as not being an appropriation is simply wrong. Here, the Legislature provided that a certain sum of money – and no more than that sum – may be spent out of a particular fund on a particular activity. This is an appropriation.”

Steinberg argues the opposite.

Appropriations are only contained in the budget, which was signed February 20. AB 1 is not an appropriation, Steinberg argues, it contains a series of reductions in existing appropriations approved with the signing of the February budget.

“Although no one disputes the governor’s authority to reduce a true item of appropriation, that authority does not extend to making further reductions to existing appropriations or to eliminating restrictions the Legislature placed on other appropriations,” Steinberg’s lawsuit reads.  “If the governor wants to veto such reductions, he must veto the entire bill in which they are contained.”

California’s constitution, Article IV, Section 10(e), says, “The governor may reduce or eliminate one or more items of appropriation while approving other portions of a bill.”

The power to eliminate individual appropriations was given to the governor in 1908, the power to reduce appropriations in 1922.

In Section 12(d) of Article IV it says this: “No bill except the budget bill may contain more than one item of appropriation, and that for one certain, expressed purpose. Appropriations from the General Fund of the State, except appropriations for the public schools, are void unless passed in each house by roll-call vote entered in the journal, two-thirds of the membership concurring.”

A 1924 case, Ryan v. Riley defines an appropriation as a “legislative act setting aside a certain sum of money for a specified object in such manner that the executive officers are authorized to use that money and no more for such specified purpose.”

The Legislative history of AB 1 describes it as an “urgency” measure which requires a two-thirds vote in order to take effect immediately. The word “Appropriations,” also is used in the history to describe the bill. 

Steinberg relies primarily on a 1987 California Supreme Court ruling, Harbor v. Deukmejian. The issue in the case was whether then Gov. George Deukmejian’s veto of a section in a budget trailer bill that allowed welfare recipients to receive benefits from the time they submitted their application rather than after their application is processed by the Department of Social Services.

Deukmejian reduced the welfare appropriation in the budget to reflect the savings generated by vetoing the section of the trailer bill, which also amended, added or repealed another 149 sections in 20 different California codes.

The Supreme Court said Deukmejian couldn’t veto the section of the trailer bill without vetoing the whole measure because the section was a “substantive measure,” not an appropriation.

“Were the executive permitted to pick and choose among various provisions of a substantive measure, vetoing some but not all parts of a bill, he would be invading the authority of the legislative branch since the effect of such a power would be to permit him to affirmatively legislate,” the court said.

Schwarzenegger points to a 1923 state supreme court ruling, Wood v. Riley in which the court said the Legislature’s direction to earmark some public school spending for a purpose not contained in the governor’s proposed budget constituted an appropriation and was, therefore, subject to gubernatorial veto.

“To sustain the contention . . . that the proviso in question did not amount to an item of appropriation, and was therefore removed from the effect of the executive veto, would be to hold that the Legislature might, by indirection, defeat the purpose of the constitutional amendment giving the governor power to control the expenditures of the state.”

It’s up to the courts to decide.

The more famous aspect of the Harbor v. Deukmejian ruling was the elimination of the omnibus trailer bill with hundreds of policy changes scatted through California’s legal codes.

Applying the state’s rule that legislation and initiatives must relate to only a single subject, the court found that the cornucopia trailer bill didn’t pass constitutional muster.

That’s why there are so many trailer bills accompanying each budget. Under the Harbor ruling the provisions of a bill must be either “reasonably germaine” or “functionally related.” Also, “numerous provisions, having one general object, if fairly indicated in the title, may be united in one act.”

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