Governor Wins Legal Victory on Line Item Vetoes, Loses One on Worker Wage Lawsuit

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By Marty Omoto
California Disability Community Action Network

The Schwarzenegger Administration won a clear legal victory today with the State Court of Appeals in San Francisco ruling 3 to 0 that his line item vetoes made to the revised 2009-2010 State Budget last July were constitutional.  The case, St. John’s Well Child and Family Center et al v. Schwarzenegger et al, is one of three different lawsuits seeking to overturn some or all of the Governor’s line item vetoes made last July. 

The providers and advocacy organizations who filed the lawsuit expressed disappointment at the court’s decision and said they are considering a possible appeal to the State Supreme Court. A copy of the 35 page opinion by Justice Anthony Kline can be downloaded from the CDCAN website at www.cdcan.us

Governor Made $489 Million In Additional Cuts In July Using Line Item Veto

The Governor last July made additional reductions of over $489 million using his line item veto power (which allows a governor to reduce the amount of money appropriated by the Legislature for a specific line item in the state budget) to the revised 2009-2010 State Budget bill approved by the Legislature.  Those reductions made using his line item veto power were on top of spending cuts agreed to and approved by the Legislature as part of the 2009-2010 revised State Budget bill.  

About $394 million of that amount were reductions made in health and human service related programs, including over $37 million in funding to In-Home Supportive Services Public Authorities, an additional $50 million for services and supports for children up to age 5 funded through the 21 non-profit regional centers and an additional $50 million reduction in funding to Healthy Families.  

The St. John’s lawsuit claimed that the Governor overstepped his authority in the State Constitution by making those vetoes. 

•         The lawsuit claimed that the State Constitution only allows a governor to veto "items of appropriation” and that the line item veto power does not apply to a revised budget where funding was previously approved and enacted – in this case in February when the 2009-2010 State Budget was passed by the Legislature and approved by the Governor four months early (before July 1, the start of the state budget year) and that the Governor overstepped his constitutional authority. 
•         The State Court of Appeals today firmly rejected that argument saying that the “…California Constitution grants the Governor the limited legislative power to exercise the line-item veto to eliminate or reduce “items of appropriation.” For the reasons set forth in this opinion, we conclude that the particular Assembly Bill 4X 1 budget reductions at issue here were “items of appropriation” within the meaning of article IV, section 10, subdivision (e), and that the Governor’s line-item vetoes reducing them, while approving other portions of Assembly Bill 4X 1, was therefore constitutionally authorized.”
•         The Court noted that the Legislature had within its power to reverse the Governor’s line item vetoes with 2/3rds vote in both houses but failed to take that action.

Lawsuit Was Filed By Several Public Interest Law Groups

The lawsuit, “St. John’s Well Child and Family Center, et al v. Arnold Schwarzenegger, et al.” (case number A125750)  was filed August 12, 2009 by 4 public interest law groups: Disability Rights Advocates (DRA), Western Center on Law and Poverty, Neighborhood Legal Services and Kirkland&Ellis LLP.   [see CDCAN website for copy of the original lawsuit at www.cdcan.us  ]

The public interest law groups represented 8 advocacy organizations and individuals (listed in the order in the lawsuit): St. John’s Well Child and Family Center (a community health center); Rosa Navarro; Lionso Guzman; California Foundation for Independent Living Centers; Nevada-Sierra Regional In-Home Supportive Services Public Authority; Californians for Disability Rights;  Liane Yasumoto; and Judith Smith).  

The lawsuit was filed against Governor Schwarzenegger, as the chief executive officer of the State and State Controller John Chiang, in his capacity as the independently state elected official responsible for paying the state’s bills.  

Several other groups not actually part of the lawsuit filed legal documents (“amicus curiae” or “friend of the court” briefs ) in support of the case including Children Now, Valley Community Clinic, Eisner Pediatric and Family Medical Center, the Saban Free Clinic, YWCA Monterey County, Westside Family Health Center, Community Clinic Association of Los Angeles County, the Legal Aid Association of California, SEIU California State Council, United Domestic Workers, the California United Homecare Workers, the Los Angeles County Democratic Central Committee, the County of Santa Clara.

Governor’s Legal Team Predicted that the Appeals Court Would Reject the Lawsuit
The Governor’s legal team predicted earlier that the Appeals Court would reject any challenge to the governor's vetoes because the revised state budget contained appropriations.  That claim was supported by court documents (“amicus curiae” or “friend of the court” briefs) submitted by 3 former governors supporting Schwarzenegger’s position  (Republicans George Deukmejian and Pete Wilson and Democrat Gray Davis).  

The California Chamber of Commerce, the California Taxpayer’s Association and the California Business Roundtable also filed court documents in support of the Governor’s position. 

Case Is One of Three Lawsuits On the Governor’s Line Item Vetoes

The St. John’s lawsuit was one of three lawsuits filed against the Governor to overturn some or all of his line item vetoes. Two were filed in state court, including the St. John’s case, and a third was filed in federal district court in San Francisco 
•         Senate President Pro Tem Darrell Steinberg (Democrat – Los Angeles), filed a separate but similar lawsuit also in state court in August.  The Darrell Steinberg v. Arnold Schwarzenegger, et al  lawsuit (case number CPF-09-509721) was filed in San Francisco Superior Court by Sen. Steinberg,  but covers an additional 14 line item vetoes that the St. John’s Well Child&Family Center v. Schwarzenegger lawsuit does not address.  (The other respondent in the case besides the Governor is State Controller John Chiang)
•         The Steinberg lawsuit  is currently pending in Superior Court with no action or hearings scheduled, but the prospects do not look favorable for the Steinberg lawsuit however, given it covered nearly identical legal ground rejected by the State Court of Appeals today,
•         Steinberg and then Assembly Speaker Karen Bass (Democrat – Los Angeles) also in August filed court documents in support of the St. John’s Well Child and Family Center v. Schwarzenegger et al lawsuit.  The State Court of Appeals  in September granted both legislative leaders their request to be a part of the St. John lawsuit as “intervenors” – meaning that they are now parties to the lawsuit with a strong or compelling interest in the case. 
•         A third lawsuit Evelyn Putz et al v. Arnold Schwarzenegger et al, filed in federal court on January 25, 2010 on behalf of the California Association of Public Authorities (CAPA) and the California In-Home Supportive Services Consumer Alliance and four persons who receive In-Home Supportive Services, was much narrower in scope and used a different argument, and asked the court to consider overturning the Governor’s line item veto dealing with In-Home Supportive Services only, arguing it was a violation of federal Medicaid laws. The case was referred to federal district court judge Claudia Wilken. The case is still pending.  

Governor’s Line Item Veto Power Not Normally Questioned

Normally a governor’s line item veto power would not be questioned, but this year the state budget for 2009-2010 was passed four months early – in mid February - by the Legislature (the state budget year begins July 1 and ends June 30).  

Despite the massive spending cuts and temporary tax increases made in February 2009, another budget gap opened up by May 2009, and by June grew to over $23 billion.  The Legislature, after a month long impasse in both houses – finally passed a revised 2009-2010 State Budget in late July, which the Governor signed – along with making additional reductions using his line item vetoes.  

Those filing the lawsuits say the Governor had a right to use his line item veto power in February 2009 when the original budget for 2009-2010 was passed four months early  – which he did do – but that he had no authority to use that same power in late July because the budget bill submitted to him (ABx4 1), were simply revisions to funding already approved and appropriated by the Legislature in February 2009.  The State Appeals Court today however disagreed, saying that ABx4 1 was clearly a budget bill.  

Governor Said In Late July He Was Forced To Make Additional Cuts

The Governor defended his line item vetoes, saying in late July that he was forced to make additional cuts to programs using his line item veto power because the Assembly did not follow through in approving the budget deal in late July agreed to by the “Big Five” (the Governor, the Democratic and Republican Senate legislative leaders and the Democratic and Republican Assembly leaders).  

The Assembly in late July ended up approving the main revised budget bill (ABx4 1), but rejected two key budget related measures that included $1.1 billion in proposals included transfer of local gas tax funds and  authorizing offshore oil drilling that was approved by the State Senate.  The Governor said then that the Assembly’s action to approve those measures forced the line item vetoes - an argument that legislative Democratic leaders strongly disputed.   

Line Item Veto Lawsuit Has No Impact On Other Cuts

The two state lawsuits and a separate federal lawsuit seeking to overturn the additional reductions caused by the Governor’s line item vetoes made to the revised 2009-2010 State Budget bill passed and enacted in late July, have no impact on the massive spending reductions that were actually approved by the Legislature and Governor and included that revised state budget (or the earlier 2009-2010 State Budget passed in February).  The three lawsuits only deal with the Governor’s reductions made in late July using his line item veto.

US 9TH Circuit Court of Appeals Ruled against Schwarzenegger Administration on IHSS Worker Wage Lawsuit

The US 9th Circuit Court of Appeals today issued a decision that ruled against the Schwarzenegger Adminstration and upheld Federal District Court Judge Claudia Wilken’s injunction that has blocked – since June 2009 – the reduction in the State’s participation toward In-Home Supportive Services worker wages.  The 9th Circuit Court decision means the injunction – the court order that has blocked the cut from being implemented – remains in place.  

The court’s concluded in its 21 page opinion that:

“The district court properly determined that Section 30(A) of the [federal] Medicaid Act applies to the State’s enactment of California Welfare&Institutions Code Section 12306.1(d)(6). The district court correctly held that Plaintiffs demonstrated a likelihood of success on the merits of their Supremacy Clause claim, and did not abuse its discretion in holding that the balance of hardships tips sharply in Plaintiffs’ favor. Accordingly, we affirm the district court’s order granting the motion for a preliminary injunction.”

A copy of the 21 page opinion, in the case Dominguez, et al  v. Schwarzenegger, et al (formerly Martinez v. Schwarzenegger, et al),  case number 09-16359 (original lawsuit in federal district court case number CV-02306-CW), written by 9th Circuit Court Judge Milan D. Smith, Jr., is attached to this CDCAN Report and also can be viewed or downloaded from the CDCAN website at www.cdcan.us  The 21 page pdf file attachment – which can be “read” using reader devices – is titled “CDCAN-9thCircuitCourtDecisionMarch03201.pdf”

The decision is a setback to the Schwarzenegger Administration, which on Monday won a ruling from the California State Court of Appeals on the issue of the Governor’s line item vetoes, which that court declared was constitutional.  The State could decide to appeal the 9th Circuit Court’s ruling to the US Supreme Court – the final court that the Schwarzenegger Administration has left to appeal.  

Other appeals relating to In-Home Supportive Services and other reductions to health and human services filed in federal court – including narrowing of eligibility using “functional index score” assessment tools, are still pending appeal. 

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Marty Omoto is Executive Director of the California Disability Community Action Network, a non-partisan link to thousands of Californians with developmental and other disabilities, people with traumatic brain injuries, the blind, the deaf, their families, community organizations and providers, direct care, homecare and other workers, and other advocates to provide information on state and local public policy issues.