Going to the Mat Over Money


In the final days of Minnesota's legislative session last year, the governor invoked a rarely used authority granted more than 70 years ago that allowed him to rescind $5.3 million of already allocated program funds. He did so to help balance the state budget.

But six low-income people whose state supplemental diet plan went away with that cut sued the state. The case has now found its way to the state Supreme Court, which will decide the constitutionality of the governor's use of his so-called "unallotment" power.

As states continue to find ways to plug an estimated $460 billion hole that opened up in their budgets between 2009 and 2012, "trimming the fat" and "cutting to the bone" are ancient history. But deeper cuts have gotten trickier. "Everything that hasn't been nailed down has been cut," Anthony Wright, executive director of Health Access California, told The Sacramento Bee . "What's left is the legally questionable stuff."

And that's just the point for targets of some of those cuts who are, in increasing numbers, taking their appeals to the courts. A number of states are dealing with budget-related lawsuits stemming from their various cost-cutting decisions.

The complaints challenge a wide variety of issues from a governor's authority to cut the budget to spending money that voters designated for other uses to laying off union workers and cutting school money. California, Illinois, Arizona, Kansas, Indiana, New York and Minnesota have all recently faced lawsuits or are in court now.

The collateral damage of these complaints and related court rulings is they can cost a state a lot of money in lean times, although they often provide a successful last resort for those affected by budget cuts. The suits also open the door for a reluctant judiciary to become a sort of third party in crafting a state budget and could further complicate the already wrenching budget-making process in many state capitols.

"It would be safe to say that's not really where the courts like to go," Alabama Supreme Court Chief Justice Sue Bell Cobb says, in a state that has seen budget-related lawsuits. "The courts would like for the lawmakers to make policy, and we'd like to leave it like that." But she admits that they sometimes have no choice.

"You definitely feel like you have to be very careful that you're not violating the separation of powers," she says. "In certain circumstances where the failure to fund…leads to a constitutional issue, the courts have to step in."

A constitutional issue is at the heart of the case in Minnesota that the state Supreme Court will hear March 15. It centers on the lawsuit brought by the residents whose state supplemental diet plan was cut and could have implications for the state's current budget and for executive authority in Minnesota.

After reaching an impasse with the Democratic-Farm-Labor-controlled Legislature, Republican Governor Tim Pawlenty turned to his "unallotment" authority to prevent the Legislature from spending more money than it had in state coffers when efforts failed to approve a balanced budget as required by law.

Pawlenty cut $2.7 billion from the budget, including $300 million from local aid to cities and counties, $100 million from higher education and $236 million in human services spending. Among those cuts was the supplemental diet plan now at the heart of Minnesota's ongoing case.

A district court in Minnesota has already ruled against Pawlenty's use of unallotment. "It is not meant to be used as a weapon by the executive branch to break a stalemate in budget negotiations with the legislature," Chief District Judge Kathleen Gearin ruled in December. "The Governor crossed the line between legitimate exercise of his authority to unallot and interference with the legislative power to make laws," the ruling said.

Pawlenty and the state have appealed that decision, and the governor said in a statement after the ruling he was "disappointed" in it. "More than 70 years ago, the legislature granted Minnesota governors the authority to unallot and the district court's decision misinterpreted that law in key respects," a Pawlenty spokesman said in a statement after the ruling. "We hope the Minnesota Supreme Court will more clearly and directly address this issue."

The Supreme Court has said it will review both the constitutionality of Pawlenty's use of the unallotment authority and whether it violated separation of powers, meaning the case could have wide implications for the state. The Minnesota House of Representatives has filed a brief, along with at least one candidate for governor and various cities and advocacy groups.

Galen Robinson, an attorney with Mid-Minnesota Legal Assistance, which brought the case, says his interest remains with affected clients and "the funds they need to purchase their food." But he recognizes it also has broad political implications. "We're well aware that our case could have ripple effects," he says. "It's unfortunate that it's taking place in such a political climate."

While Minnesota's case centers on gubernatorial authority, others involve the will of the voters. In Arizona, where the state is facing its own monstrous deficits, a number of lawsuits have been brought against the state after lawmakers tapped money from accounts approved by voters for other purposes. The state's legal costs quickly reached $500,000, The Arizona Republic reported Dec. 30.

"It seems like every week we get a new one," Dean Martin, state treasurer, says. And while it's not a new phenomenon in his state, Martin says, "This cycle has been, I think, the biggest."

Labor unions have brought other lawsuits after state workers found themselves in the crosshairs of budget-cutting lawmakers. Illinois's Democratic Governor Pat Quinn's cost-saving plan to layoff a few thousand unionized state employees led to a lawsuit. In January, both sides reached a deal, averting drawn-out litigation.

But what has historically been the root of a number of lawsuits against states has been school funding. In a situation that involves constitutional funding issues, labor unions and children, there's no shortage of legal fodder.

Late last month, three Indiana school districts challenged the state's per-pupil funding formula, drawing criticism from Attorney General Greg Zoeller. "The costs for the schools' lawyers to bring this suit and for the state's lawyers to defend it and for the court to preside over it ultimately are paid through the same source: taxpayers' wallets," he said in a statement after the lawsuits were filed.

In Kansas, a lawsuit over school funding that was resolved five years ago seems poised to open up again, since school budgets have been squeezed during the recession. The case could determine the fate of hundreds of millions of dollars of state education dollars, and Republican State Senator Jay Emler, vice chair of the Ways and Means Committee, says a court ruling could affect the budget-making process.

But business at the Capitol must go on, he says. "I'm trying to do what I believe is the morally appropriate thing to do," he says. "We have to have a budget every year, and we're not going to let the budget process be held hostage."

Emler expects the court to see reason when it comes to scarce state funds. "When the economy is down," he says, "you don't go out and sue somebody."


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