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St. John's Well Child and Family Center v. Schwarzenegger

October 4, 2010

ST. JOHN'S WELL CHILD AND FAMILY CENTER ET AL., PETITIONERS,
v.
ARNOLD SCHWARZENEGGER AS GOVERNOR, ETC., ET AL., RESPONDENTS;
DARRELL STEINBERG, INDIVIDUALLY AND AS PRESIDENT PRO TEMPORE, ETC., ET AL., INTERVENERS.



Ct. App. 1/2 No. A125750.

The opinion of the court was delivered by: George, C. J.

Filed 10/04/2010 (this opn. follows companion case, S183411, also filed 10/4/10)

We granted review in this original writ proceeding to address the propriety of the Governor's use of the so-called "line-item veto" under the asserted authority of article IV, section 10, subdivision (e) of the California Constitution, to further reduce funding that already had been reduced by the Legislature in its midyear adjustments to the Budget Act of 2009. The Court of Appeal, First Appellate District, Division Two, denied the requested writ of mandate and upheld the Governor's action. Upon review, we agree with that court's disposition of the matter. Because the Court of Appeal's decision (by Kline, P.J., with Lambden & Richman, JJ., concurring) persuasively sets forth and analyzes the issues presented by this case, we adopt substantial parts of it as our own, as modified below to fully reflect our views and to address the arguments that differ from those advanced in the appellate court.*fn1

I.

Although the current economic downturn affects all Californians, many persons are particularly vulnerable because they receive essential health and welfare assistance from agencies dependent upon state tax revenues. In this setting, government must choose between and among equally needy groups, knowing that many of those groups not fully funded may be devastated.

In the context of the constitutionally prescribed budget process, the power to appropriate public funds belongs exclusively to the Legislature. With respect to a bill containing appropriations, the Governor has three options: (1) to sign the bill, (2) to veto the measure in its entirety (Cal. Const., art. IV, § 10, subd. (a)), or (3) to "reduce or eliminate one or more items of appropriation" (id., subd. (e) (hereafter article IV, section 10(e)), italics added). The question posed by this case is whether the Governor exceeded his limited powers under article IV, section 10(e), by using his line-item authority to further reduce funding levels set forth in midyear reductions that the Legislature had made to the Budget Act of 2009 (Stats. 2009, 3d Ex. Sess. 2009-2010, ch. 1, approved by Governor, Feb. 20, 2009) (hereafter 2009 Budget Act), thereby imposing a reduction of appropriated sums greater than the reduction made by the Legislature.

Petitioners include St. John's Well Child and Family Center, a nonprofit network of five community health centers and six school-based clinics in medically underserved areas of Los Angeles County, and other entities and individuals located throughout the state whose programs and lives will be drastically affected by the further reductions here at issue.*fn2

Respondents are Arnold Schwarzenegger, the Governor of the State of California, and John Chiang, who, as the Controller of the State of California, is responsible for the administration of the state's finances, including disbursement of funds appropriated by law.*fn3 The Controller does not take a position on the merits of this litigation.

Interveners are Darrell Steinberg, in his official capacity as President pro Tempore of the California State Senate, and in his personal capacity as a resident and taxpayer of Sacramento County, and John Pérez, in his official capacity as Speaker of the California Assembly. Several amici curiae have filed briefs supporting the various parties.*fn4

Petitioners and interveners contend that the action taken by the Governor exceeded constitutional limits, because the individual budget cuts he made were not imposed on "items of appropriation" (art. IV, § 10(e)) that could be individually vetoed or reduced. They further contend that, in taking this action, the Governor purported to exercise authority belonging solely to the Legislature, in violation of article III, section 3 of the California Constitution.

Petitioners and interveners sought original relief in the Court of Appeal (pursuant to Cal. Const., art. VI, § 10; Code Civ. Proc., §§ 387, 1085; & Cal. Rules of Court, rule 8.485 et seq.) to enjoin the Controller from enforcing or taking any steps to enforce the Governor's actions concerning certain provisions of Assembly Bill No. 1 (2009-2010 4th Ex. Sess.) (hereafter Assembly Bill 4X 1), as revised by the Governor's line-item reduction of funding with regard to those provisions. (See Assem. Bill 4X 1, as amended by Sen., July 23, 2009, and approved by Governor, July 28, 2009 [with certain deletions, revisions, and reductions (hereafter Governor's July 28 Message)], enacted as Stats. 2009, 4th Ex. Sess. 2009-2010, ch. 1 (hereafter revised 2009 Budget Act).) Because of the importance and urgency of the issues presented, the Court of Appeal exercised its original jurisdiction (Legislature v. Eu (1991) 54 Cal.3d 492, 500; Raven v. Deukmejian (1990) 52 Cal.3d 336, 340; see also Planned Parenthood Affiliates v. Van de Kamp (1986) 181 Cal.App.3d 245, 262-265), issued an order to show cause, and held argument. That court thereafter issued a decision denying the petition for a writ of mandate.*fn5 As noted above, we agree with most of the analysis of the Court of Appeal and with the conclusion it reached, and thus we shall deny the petition for a writ of mandate.

II.

On February 20, 2009, the Governor signed into law the 2009 Budget Act, which set forth various appropriations of state funds for the 2009-2010 fiscal year. Thereafter, California's economy worsened; the revenue assumptions upon which the 2009 Budget Act was based proved to be far too optimistic, and the state's overall cash-flow positions continued to deteriorate. The Governor, pursuant to California Constitution, article IV, section 10, subdivision (f) proclaimed a fiscal crisis,*fn6 and the Legislature assembled in special session to address the fiscal emergency. Following months of negotiations, the Legislature passed Assembly Bill 4X 1 on July 23, 2009. The final revised budget package enacted as Assembly Bill 4X 1 consisted of 547 pages, set forth in 583 sections, and represented an effort to address more than $24 billion in budget shortfalls, including $15.6 billion in cuts, nearly $4 billion in additional revenues, more than $2 billion in borrowing, approximately $1.5 billion in fund shifts, and more than $1 billion in deferrals and other adjustments.

On July 28, 2009, the Governor exercised his line-item authority to reduce or eliminate several items contained in Assembly Bill 4X 1, and then signed the measure into law. (Rev. 2009 Budget Act.) The Governor eliminated numerous separate line items contained in various sections of Assembly Bill 4X 1. The effect of these reductions was to further decrease the total amount appropriated in the 2009 Budget Act by more than $488 million. Many of the items reduced by the Governor already had been reduced by the Legislature in Assembly Bill 4X 1 from the amounts appropriated in the 2009 Budget Act. The Governor's signing message explained that his cuts to the spending bill were for the most part designed "to increase the reserve and to reduce the state's structural deficit." (Governor's July 28 Message [concerning Assem. Bill 4X 1, §§ 18.00, 18.10, 18.20, 18.40]; see also id. [same, concerning §§ 17.50, 18.50].)

This original mandamus proceeding by petitioners and interveners followed,*fn7 challenging the Governor's use of line-item reductions with respect to seven sections of Assembly Bill 4X 1 -- specifically, section 568 and sections 570 through 575.*fn8 The Governor's actions affected those seven sections of Assembly Bill 4X 1 in the following manner:

Section 17.50 further reduced the general fund appropriation for the State Department of Aging by $6,160,000;

Section 18.00, subdivision (a) further reduced the general fund appropriation for local assistance of the Medi-Cal program by $60,569,000, and section 18.00, subdivision (e) eliminated funding for community clinic programs;

Section 18.10 further reduced funding for various programs administered by the Office of AIDS by $52,133,000, further reduced funding for the Domestic Violence Program by $16,337,000,*fn9 further reduced funding for the Adolescent Family Life Program by $9,000,000, and further reduced funding for the Black Infant Health Program by $3,003,000;

Section 18.20 further reduced funding for the Healthy Families Program by $50,000,000;

Section 18.30 further reduced funding for the Regional Center Purchase of Services for children up to the age of five years by $50,000,000;

Section 18.40 further reduced funding for the Caregiver Resource Centers by $4,082,000; and

Section 18.50 further reduced funding for the In-Home Supportive Services program by $37,555,000.

III.

The question presented by this case as a matter of first impression is whether, after the Legislature has made midyear reductions to appropriations that originally appeared in the 2009 Budget Act, the Governor's line-item power encompasses the authority to make further reductions. Although this particular issue is novel, we find guidance in our decision in Harbor v. Deukmejian (1987) 43 Cal.3d 1078 (Harbor), in which we extensively described the constitutional framework within which a Governor exercises his or her line-item authority.

"The California Constitution declares that the legislative power of the state is vested in the Legislature (art. IV, § 1) and the executive power [is vested] in the Governor (art. [V], § 1). Unless permitted by the Constitution, the Governor may not exercise legislative powers. (Art. III, § 3.) He may veto a bill 'by returning it with any objections to the house of origin,' and it will become law only if 'each house then passes the bill by rollcall vote . . . two thirds of the membership concurring. . . .' [Art. IV, § 10, subd. (a).] If the Governor fails to act within a certain period of time, the measure becomes law without his signature. (Art. IV, § 10, subd. [(b)].) The Governor's veto power is more extensive with regard to appropriations. He may 'reduce or eliminate one or more items of appropriation ...


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