Missouri's top judges quizzed attorneys for two of the state's top executives Wednesday in a legal showdown over the governor's power to cut spending and the auditor's authority to demand a financial justification for those cuts.
The arguments before the state Supreme Court focused on $172 million of spending cuts to education and other services announced in June 2011 by Gov. Jay Nixon. He based the cuts partly on the expectation that Missouri would incur millions of dollars of unbudgeted costs from a deadly tornado that hit Joplin a month earlier.
State Auditor Tom Schweich challenged the cuts in court, claiming that Nixon exceeded his constitutional authority to make spending cuts by failing to show revenues were falling short of projections upon which the budget was based. Nixon countered that Schweich exceeded his own constitutional authority by challenging the governor's policy decisions in court.
Because nearly two years have passed during the legal wrangling, the budget at issue has now expired and it's too late for the agencies that took spending cuts to receive the money. But the case could set an important legal precedent for how governors manage the state finances for years to come.
"The governor has great discretion in deciding where to allow, and where not to allow, money to be spent," State Solicitor Jim Layton argued Wednesday on behalf of Nixon.
But under that analysis, "he can reduce appropriations whenever he wants and there's no accountability. That's a dangerous standard," countered Darrell Moore, an attorney in the auditor's office. "The question becomes, does the governor ever have to justify to anybody why he cut an appropriation that was approved by the Legislature?"
The arguments centered on a section of the Missouri Constitution that states: "The governor may control the rate at which any appropriation is expended during the period of the appropriation by allotment or other means, and may reduce the expenditures of the state or any of its agencies below their appropriations whenever the actual revenues are less than the revenue estimates upon which the appropriations were based."
The auditor contends the first half of the sentence gives the governor authority to prorate payments to agencies, so long as the total equals the full amount appropriated by the end of the fiscal year. The auditor contends the second part of the sentence requires the governor to prove that revenues are short of projections when making cuts. Nixon did not do that in June 2011, when he announced spending reductions for the 2012 budget that began a few weeks later.
The governor's administration has said the "expenditure restrictions" were made under the first half of the constitutional provision, which it asserts does not require a revenue shortfall.
Supreme Court Judge Laura Denvir Stith questioned attorneys for both offices about whether the governor can "control the rate" of spending by reducing it to zero, under the powers of the first half of the constitutional provision.
Layton said yes.
Moore said no, adding that the phrase "implicitly means that there's money parceled out over four quarters."
Although Nixon originally blocked $172 million of spending in the 2012 budget, the final cut ended up at $159 million because he later released money for school busing and several other programs.
Rather than the governor exceeding his powers, Layton argued that Schweich exceeded his legal authority by seeking documentation and then suing the governor over spending decisions.
"The governor is under no obligation to disclose to the auditor the thinking process of the governor's office as they pick and choose among the places where they are going to impose restrictions" on spending, Layton said.
The Supreme Court is hearing an appeal of a 2012 decision by Cole County Circuit Judge Jon Beetem, who allowed Scheich to sue but upheld Nixon's authority to make budget cuts. Beetem also ruled that it was unconstitutional for legislators to make estimated appropriations, which allow the executive branch to exceed the specific dollar amount listed in the budget.
Nixon had cited an estimated appropriation for disaster response as a reason why he was able to redirect money from other programs to spend millions of additional dollars on the state's response to the Joplin tornado.
The Supreme Court spent a comparably small amount of time questioning attorneys about those appropriations.
The seven-member court heard the case without Judge Paul Wilson, a recent Nixon appointee who previously worked in the governor's office.