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Downing: Stemming the Tide of Fiscal Crisis

Downing: Stemming the Tide of Fiscal Crisis

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In the summer of 2010, the Massachusetts state legislature included an outside section in the state budget creating a fund to hold enhanced payments under the Medicaid program called Federal Medical Assistance Percentages (“FMAP”), or the federal portion of the Medicaid budget. The FMAP funds accounted for $689 million in projected revenues that were used in budget calculations that year. The funds were then split among several line items within the state budget with a specific percentage of the line item coming from the FMAP account. Governor Deval Patrick vetoed the outside section as well as all of the individual funding splits.
In a difficult economic climate, with revenue collection volatile and federal aid unpredictable, the extent of the Governor’s authority in budgetary matters is a central question. Faced with a structural deficit of nearly $2 billion in fiscal year 2012, the likelihood of budget difficulties and disagreements between the executive and legislative branches continues to increase. These difficult budget cycles serve to expose the tensions underlying the statutory and constitutional scheme for budget-related matters.
This Note argues that in order to adapt to modern fiscal realities courts should liberally construe legislation that delegates authority to a Governor to reduce funds allotted to an agency in the face of a revenue shortfall. Moreover, recent legislative attempts to restrain the Governor’s authority to reduce budget allotments during periods of fiscal crisis (“9C authority”) by designating what funds will pay for a particular appropriation are legally ineffective. The Governor is able to veto language creating funds and then act later in the fiscal year under 9C, a result suggested by the liberal construction that the Massachusetts Supreme Judicial Court (“SJC”) has given to the Governor’s budget-cutting power. The combination of the Governor’s constitutional and statutory authority concerning the budget provides the Governor with more than sufficient power to veto spending restrictions such as the funding splits in the fiscal year 2011 budget.
In the summer of 2010, the Massachusetts state legislature included an outside section in the state budget creating a fund to hold enhanced payments under the Medicaid program called Federal Medical Assistance Percentages (“FMAP”), or the federal portion of the Medicaid budget. The FMAP funds accounted for $689 million in projected revenues that were used in budget calculations that year. The funds were then split among several line items within the state budget with a specific percentage of the line item coming from the FMAP account. Governor Deval Patrick vetoed the outside section as well as all of the individual funding splits.
In a difficult economic climate, with revenue collection volatile and federal aid unpredictable, the extent of the Governor’s authority in budgetary matters is a central question. Faced with a structural deficit of nearly $2 billion in fiscal year 2012, the likelihood of budget difficulties and disagreements between the executive and legislative branches continues to increase. These difficult budget cycles serve to expose the tensions underlying the statutory and constitutional scheme for budget-related matters.
This Note argues that in order to adapt to modern fiscal realities courts should liberally construe legislation that delegates authority to a Governor to reduce funds allotted to an agency in the face of a revenue shortfall. Moreover, recent legislative attempts to restrain the Governor’s authority to reduce budget allotments during periods of fiscal crisis (“9C authority”) by designating what funds will pay for a particular appropriation are legally ineffective. The Governor is able to veto language creating funds and then act later in the fiscal year under 9C, a result suggested by the liberal construction that the Massachusetts Supreme Judicial Court (“SJC”) has given to the Governor’s budget-cutting power. The combination of the Governor’s constitutional and statutory authority concerning the budget provides the Governor with more than sufficient power to veto spending restrictions such as the funding splits in the fiscal year 2011 budget.

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Categories:Types, Business/Law
Published by: New England Law Review on Apr 17, 2013
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N
ATE
C
OVER
P
AGE
ON
 
REMAND
 
(D
O
N
OT
D
ELETE
) 4/17/2013
 
11:12
 
AM
In Tribute: Nathaniel S. Downing
The staff of the
New England Law Review
respectfully dedicates this Issue toNate Downing—an editor; a colleague; a friend.
 
D
OWNING
F
INAL
(D
O
N
OT
D
ELETE
) 4/20/2013
 
2:13
 
PM
265
Stemming the Tide of Fiscal Crisis: TheCase for Gubernatorial BudgetReductions
N
ATE
D
OWNING
*
 
A
BSTRACT
 
In the summer of 2010, the Massachusetts state legislature included anoutside section in the state budget creating a fund to hold enhancedpayments under the Medicaid program called Federal Medical AssistancePercentages (“FMAP”), or the federal portion of the Medicaid budget. TheFMAP funds accounted for $689 million in projected revenues that wereused in budget calculations that year. The funds were then split amongseveral line items within the state budget with a specific percentage of theline item coming from the FMAP account. Governor Deval Patrick vetoedthe outside section as well as all of the individual funding splits.In a difficult economic climate, with revenue collection volatile andfederal aid unpredictable, the extent of the Governor’s authority in budgetary matters is a central question. Faced with a structural deficit ofnearly $2 billion in fiscal year 2012, the likelihood of budget difficulties anddisagreements between the executive and legislative branches continues toincrease. These difficult budget cycles serve to expose the tensionsunderlying the statutory and constitutional scheme for budget-relatedmatters.This Note argues that in order to adapt to modern fiscal realities courtsshould liberally construe legislation that delegates authority to a Governorto reduce funds allotted to an agency in the face of a revenue shortfall.
*
Nathaniel "Nate" Downing was an Executive Articles Editor on Volume 46 of the
NewEngland Law Review
. Nate passed away unexpectedly in the spring of 2012, leaving behind aworld that would forever miss his incisive legal mind and biting sense of humor. As a tributeto Nate's contributions to the
Law Review
and to celebrate the impact his life had on thosearound him, the editorial boards of Volume 46 and Volume 47 elected to publish Nate's
LawReview
Note. May his memory live on through the words of his article. R.I.P. Nathaniel S.Downing—September 15, 1985 to April 13, 2012.
 
D
OWNING
F
INAL
(D
O
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D
ELETE
) 4/20/2013
 
2:13
 
PM
266
New England Law Review
v. 47 | 265
Moreover, recent legislative attempts to restrain the Governor’s authorityto reduce budget allotments during periods of fiscal crisis (“9C authority”) by designating what funds will pay for a particular appropriation arelegally ineffective. The Governor is able to veto language creating fundsand then act later in the fiscal year under 9C, a result suggested by theliberal construction that the Massachusetts Supreme Judicial Court (“SJC”)has given to the Governor’s budget-cutting power. The combination of theGovernor’s constitutional and statutory authority concerning the budgetprovides the Governor with more than sufficient power to veto spendingrestrictions such as the funding splits in the fiscal year 2011 budget.
I
NTRODUCTION
 
he General Appropriations Act is the state budget for theCommonwealth of Massachusetts.
1
While the line items that makeappropriations
2
for various agencies are of considerable importance,the hundreds of so-called outside sections are just as significant.
3
Inaddition to presenting an important opportunity for legislative log-rolling,they often embody legislative attempts to restrain, direct, and influenceexecutive power.
4
Indeed, buried in the arcane language of the fiscal year2011 budget, a battle between the executive and legislative branches ofstate government smoldered.
5
 In the summer of 2010, the Massachusetts State Legislature included anoutside section in the General Appropriations Act providing a repositoryfor anticipated federal revenues.
6
The federal money was in the form of
1
Budget Glossary
 ,
 
B
UDGET
S
UMMARY
FY2012,
 
http://www.mass.gov/bb/gaa/fy2012/dnld_12/hglossary.htm (last updated July 11, 2011)
 
[hereinafter
 
Budget Glossary
].
2
An appropriation is “[a] specified sum of money authorized by the Legislature for aspecific period of time to accomplish a specific purpose.”
Id.
 
3
Outside sections, as defined by the Massachusetts budget website, are “[s]ections in a budget act following section 3, which contain specific provisions of law which govern theparticular appropriations contained in the budget, make other special laws that usually applyfor only one fiscal year, and amend the General Laws to implement permanent changesincluded in the budget.”
Id.
 
4
 
See infra
Parts I-II.
5
 
See infra
Part A.
6
 
See
Audrey Dutton,
 MEDICAID: FMAP Extension Means States Could Revisit Budgets
 , T
HE
B
OND
B
UYER
(Wash.),
 
Aug. 16, 2010, at 5,
available at
2010 WLNR 16179225. The fund, createdas a repository for the FMAP payments, was formally titled the “FMAP Budget Relief Fund.”O
UTSIDE
S
ECTION
190:
 
FMAP
 
B
UDGET
R
ELIEF
F
UND
 , B
UDGET
S
UMMARY
 ,
 
F
ISCAL
Y
EAR
2011
 
(2010),
 
http://www.mass.gov/bb/gaa/fy2011/os_11/h190.htm [hereinafter O
UTSIDE
S
ECTION
190].
 
The budget that went to the Governor for his approval or veto was the product of a
T

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