STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 5585

October 17, 1979

APPROPRIATIONS:

Reductions pursuant to Const 1963, art 5, Sec. 20

CONSTITUTION OF MICHIGAN:

Art 5, Sec. 20 (reduction in expenditures)

The Director of the Department of Management and Budget may not direct principal departments to generate a 'General-Fund General-Purpose lapse' of a specified amount unless the Governor, with the approval of the appropriating committees of the Senate and House of Representatives issue an order reducing expenditures in accordance with Const 1963, art 5, Sec. 20.

Honorable Charlie J. Harrison, Jr.

State Representative

The Capitol

Lansing, Michigan 48909

You recently sought my opinion regarding a budget reduction program announced by the Governor and the Director of the Department of Management and Budget. Pursuant to that program, a target budget figure has been given to a number of principal departments.

Included in your opinion request was a letter to the Director of the Department of State Police from the Director of the Department of Management and Budget. In that letter, the Department of State Police was told:

Your letter indicates your belief that by this letter and a meeting of department heads with the Governor, the departments involved are being 'ordered' to make 'cutbacks' thereby 'circumventing the legislative appropriation process . . . [and] nullifying legislative intent.'

You have therefore requested my opinion as to whether departments can be ordered in this matter to reduce expenditures or whether the procedure detailed in the Constitution for reducing expenditures in time of revenue shortfall must be followed.

Const 1963, art 5, Sec. 20 provides:

The first sentence of section 20 enunciates an important public policy and is, as the address to the people states 'intended to cover situations in which unforeseen efficiencies and economies might become possible.' 2 Official Record of Constitutional Convention, p 3381. Thus, department heads have the authority to implement efficiencies and economies.

The second sentence in the above-quoted constitutional section requires, however, that before the Governor can order a reduction in spending, he must obtain the approval of the appropriating committees of the House and Senate before reducing expenditures authorized by appropriations. This can only be done by the Governor and the appropriating committees acting together when, as the Constitution provides, it appears that actual revenues for a fiscal period will fall below the revenue estimates on which the appropriations for that period were based. The convention comment of the Constitutional Convention for Const 1963, art 5, Sec. 20 states:

The above-quoted constitutional provision and convention comments makes it clear that the people in adopting the Constitution of 1963 have provided that before the Governor can issue an enforceable order requiring departments to refrain from spending appropriated funds, the Governor must obtain the approval of the appropriating committees of the House and Senate. Three previous opinions of the Attorney General have dealt with this issue.

OAG, 1967-1968, No 4576, p 17 (February 3, 1967), held that the Governor did not have authority to limit or delay implementation of a medicaid benefits program established by the Legislature for which an appropriation had been made. In holding that the Governor had no power to take such action without the approval of the appropriations committees of the Legislature, the opinion stated:

OAG, 1975-1976, No 4917, p 222 (December 24, 1975), dealt with the determination of whether the Governor could, with the approval of the appropriating committees of the House and Senate, reduce certain appropriations under Const 1963, art 5, Sec. 20, notwithstanding the fact that the Legislature had not enacted a general law prescribing the procedures to be applied and followed in making such reductions. That opinion held that the Governor may not, without approval of the appropriating committees, reduce state school aid appropriations under Const 1963, art 5, Sec. 20.

Finally, OAG, 1975-1976, No 5001, p 381 (April 12, 1976), dealt with a determination of whether a principal department may reduce the amount of money appropriated for a specific program in the absence of the executive order reduction authorized by Const 1963, art 5, Sec. 20. The opinion held that, in the absence of an executive order reduction, a principal department does not have the authority to reduce the amount appropriated for a specific program and is required to administer and disperse funds in the manner prescribed by law. This does not preclude the department from achieving efficiencies and economies in its operation.

In summary, Const 1963, art 5, Sec. 20, sets forth a procedure for the reduction of expenditures authorized by appropriations when it appears that revenues are not meeting expenditures. This procedure requires the Governor to obtain the approval of the appropriating committees of the House and Senate before an executive order reducing expenditures is issued. Where the approval of the appropriating committees of the House and Senate has not been obtained, neither the Governor nor the Director of the Department of Management and Budget may require a principal department to lapse funds appropriated to that department. On the other hand, because an appropriation is not a mandate to spend, a department or agency should, to the extent possible and consistent with legislative intent, reduce its spending by implementating all possible efficiencies and economies.

Thus, it is my opinion that the letters sent by the Director of the Department of Management and Budget directing departments to generate a 'General-Fund General-Purpose lapse' of a specified amount are not legally binding unless the Governor, with the approval of the appropriating committees of the Senate and House of Representatives issue an order reducing expenditures in accordance with Const 1963, art 5, Sec. 20.

Frank J. Kelley