Panitz v. Comptroller of the Treasury & State Treasurer

Hammond, C. J., delivered the opinion of the Court. This Court by per curiam order held on June 14, 1967, that Ch. 142 of the Laws of 1967, sometimes referred to as the Agnew-Hughes-Lee bill (or the amended Cooper-Hughes bill) was invalid and ineffective as a Supplementary Appropriation Bill but was prima facie valid as other legislation. The grounds for holding Ch. 142 to be invalid and ineffective as an appropriation bill were stated in the order to be that the enactment violated : “the requirement of Section 52 (8) of Article III of the Constitution of Maryland that every appropriation not made by the Budget Bill 'shall be embodied in a separate bill limited to some single work, object or purpose therein stated,’ and * * * it does not make 'an appropriation by Law’ as required by Section 32 of Article III of the said Constitution.” Chapter 142 increased the State income tax to an extent estimated by the Fiscal Research Bureau to produce for fiscal 1968 $120,264,100 over and above the amount to be produced by the existing income tax law for the same year and contemplated the appropriation of this sum for State aid for increased local po ⁵⁰⁵ lice protection, for schools and for unrestricted State grants to subdivisions of the State. Chapter 199 of the Laws of 1967, the Budget Bill, appropriated for some of these purposes $21,290,-373 of the expected increase, contingent upon the enactment of Ch. 142.

The difference of $98,973,727 between the estimated additional revenues of $120,264,100 and the $21,290,373 appropriated by the Budget Bill was either effectively appropriated by Ch. 142, as the appellees, the Comptroller of the Treasury and the State Treasurer, claimed or was not appropriated at all, as the appellants claimed and this Court held. 1 The situation in Maryland before the establishment of the executive budget system by amendment of the Constitution was well described by the late Hooper S. Miles, long Treasurer of Maryland, in his essay, The Maryland Executive Budget System. He said (pages 8 and 9) : “It was customary, under the former method, for the Governor to appear in person before a joint meeting of the members of the House of Delegates and the Senate, at the beginning of every regular session of the Legislature, and to address them on ‘the condition of the State’, — in the course of which he was expected to direct their attention to the essential needs of the State, and to specifically recommend to their consideration such measures as he judged necessary. Having thus discharged the responsibility imposed upon him by the Constitution, the Governor must thereafter await the final disposition of his recommendations by the Legislature, whose members were free to adopt, alter or entirely ignore any or all of them, except in so far as the Governor, by virtue of his prestige and his influence with the members of the Legislature, might affect the course of his recommendations through the Legislature. “It is true, the Governor then had the ‘power to dis ⁵⁰⁶ approve of any item or items of Bills making appropriations of money’ and to thus void the items which he disapproved. However, his use of this veto power on individual items had to be exercised with rare discrimination and with an intimate understanding of the temper of the Legislature, to avoid the danger of antagonizing powerful groups in the Legislature, and thereby jeopardize all of his recommended measures. * * * “The power to fix the fiscal policies and determine the course of the fiscal operations of the State was, therefore, exclusively vested in the Legislature, subject only to the mild restraint of the limited veto powers of the Governor, and whatever power of persuasion he might be capable of exercising with individual members of the Legislature. “The old method often witnessed ‘log-rolling’ or ‘you help me and I’ll help you’ tactics among many of the members of the Legislature in their efforts to insure passage of the particular appropriations in which they had some selfish or political interest.

It was not unusual for excessive appropriations to result from such tactics and also from the pressure of political and professional lobbyists; and, almost as frequently, some of the most important activities or needs of the State were either overlooked or sadly neglected in what was commonly termed, the ‘Pork Barrel’ scramble.” Emerson Harrington, who served as Governor from 1916 to 1920, in his monograph called “The First State Executive Budget,” 8 Proceedings of the Academy of Political Science (1920), pp. 18-19, 25, wrote of the situation before the adoption of the budget amendment: “The Finance or Ways and Means Committee did not bring out the [general appropriations] bill until almost the last moment. Then the bill carrying all the expenditures for the state departments and the state government was finally passed in the last hours under a suspension of the rules, generally allowing each senator or delegate practically what he wanted for his own ⁵⁰⁷ county or locality, regardless of the amount appropriated and leaving it to the executive to do the paring. In our state the executive, it is true, could cut down or veto the separate items of an appropriation bill, but I understand that in many states even this cannot be done. The members of the two committees appropriated this money upon no scientific or expert plan and had not before them any synopsis or summary either of the revenues or their contemplated expenditures.

Largely it was a question of logrolling and of senatorial or delegate courtesy. In our state we had also a system of continuing or annual appropriations, which when marked annual would go on forever as appropriations without any further legislative action. Some of these appropriations of ours were of over 100 years’ standing, and most of them were not known to exist by the average member of the legislature.” To correct the fiscal dilemma of the State and to prevent its recurrence the Legislature proposed and the voters approved a constitutional amendment which now is embodied in the Constitution as § 52 of Art. III. The amendment had been prepared by a Commission appointed by the Democratic State Convention held in Baltimore in 1915.

The Commission, designated “The Commission on Efficiency and Economy,” was chaired by Dr. Frank J. Goodnow, president of Johns Hopkins University. Dr. Goodnow, a noted political scientist, had been a member of the national Commission on Efficiency and Economy appointed by President Taft, which in 1912 issued a report on the need for a national budget, which served as a stimulus for the reforms in Maryland. Members of the Maryland Commission, in addition to Dr. Goodnow, were Alfred Pearce, a former Judge of the Court of Appeals, Joseph D. Baker, B. Howell Griswold, Jr., Philip D. Laird, William Miles Maloy, and Neal Parke, later a Judge of this Court. This Commission declared that the purpose of its proposed amendment, § 52 (8), was to prevent the General Assembly from appropriating any money except by way of an appropriation bill which must be either a Budget Bill or a Supplementary Appropriation Bill as defined and limited by the Constitution. ⁵⁰⁸ Section 52 may be summarized generally as follows: The Governor must prepare and submit to the Legislature a budget containing a complete plan of estimated income and proposed expenditures for the ensuing fiscal year, including specified mandatory appropriations such as those for the General Assembly, the judiciary and the servicing of the State debt.

The Legislature cannot increase any of the appropriation items set out in the budget (other than those for the judiciary and the General Assembly) but it can strike out or reduce items therein other than those for the State debt, the judiciary, the provisions made by law for the establishment and maintenance of the public schools, and the payment of salaries required to be paid by the Constitution. After the Budget Bill has finally been acted upon by both houses, additional appropriations may be made by a majority of the Legislature provided: (a) “Every such appropriation shall be embodied in a separate bill limited to some single work, object or purpose íjí í}c >}í 99 (b) Each such appropriation bill “shall provide the revenue necessary to pay the appropriation thereby made [by] a tax, direct or indirect, to be levied and collected as shall be directed in said bill.” (c) Each such bill is, however, subject to the right of the Governor to veto it, in accordance with the provisions of Section 17 of Article 2 of the Constitution. The purpose and aims of the Commission in recommending the executive budget plan and the requirements of controlled and restricted supplemental appropriations by the Legislature were explained in its report — printed in the Journal of Proceedings of the Senate of Maryland for the Legislative Session of 1916, pp. 129-134 — and in a series of articles by its members which were printed in The Baltimore Sun in the fall of 1916 and may be found in the pamphlet published in the winter of 1917, called The Maryland Budget Amendment, prepared by Dr. Horace Flack of the Department of Legislative Reference. 2 In summarizing the provisions for supplementary appropriation bills, Dr. Flack said (p. 53) : ⁵⁰⁹ “In order to meet the objection, however, that the Governor might misuse his power, either by starving objects which the Legislature deems worthy or by trade with individuals or localities, the Committee thought that the power of initiation of financial legislation should be left with the Legislature, subject to but two restrictions: first, such power not to be exercised until after the budget is finally disposed of by both branches of the Legislature; second, that such appropriations must be made by a separate bill for each single work or object. The Committee were of the opinion that this would adequately protect the budget system and yet keep it free from executive abuse.” A mere reading of Ch. 142 in the light of the purpose and intent of § 52 of Art. Ill of the Maryland Constitution, explained by the report of the framers of that section (which was adopted in 1916 by the voters of Maryland), can leave no doubt that the 1967 enactment is a textbook example of a clear and conspicuous violation of the proscriptions and limitations of the 1916 amendment.

This Court had no choice, no alternative, but to declare this obvious fact. Section 52 (8) spells out that no appropriation other than that effected by the Budget Bill shall be valid unless it is “embodied in a separate bill limited to some single work, object or purpose therein stated and called herein a Supplementary Appropriation Bill” which shall provide the revenue necessary to pay the appropriation thereby made [by] a tax, direct or indirect, to be levied and collected as shall be directed in said bill.” (Emphasis supplied.) Chapter 142 does not state “therein” any limited “single work, object or purpose.” It is an omnibus bill. In § 1 it establishes a “State Aid for Police Protection Fund” to be paid from the general funds of the State to provide more adequate police protection in the political subdivisions. The amounts given the towns and counties varied markedly.

For example, Baltimore ⁵¹⁰ City was given for one year a special grant of $5,000,000 over and above its share under the formula generally used, or more than 60% of the total funds granted for that year, although the City has only some 40% of the population of the State. Queen Anne’s County has some 20,000 citizens, or about 2% of the population of Baltimore City. Its grant for police protection was to be less than one-tenth of 1% of the allocation to Baltimore City. Chapter 142 also changed the laws relating to public education, especially as to teachers’ salaries and pensions and the source and distribution of funds.

It also created a school building construction aid program in which the State contributes up to eighty per cent of the cost. Under the formula of the bill Baltimore City was to receive about 12% of the total State allocation and Queen Anne’s County 2%. Calvert County, with a population less than that of Queen Anne’s, was to receive about two times the distribution for Queen Anne’s. Chapter 142 also made general unrestricted grants to political subdivisions.

Clearly, Ch. 142 combines in one bill at least three separate works, objects or purposes and the variances in the grants suggest that typical opportunities for “logrolling” and “back scratching” were present and significant in its passage. The Attorney General’s answer is to say that the single object and purpose of Ch. 142 is “financial aid to subdivisions.” First, no attempt was made to state such a single purpose, either in the title or the body of House Bill 378 which became Ch. 142. Second, if “financial aid to subdivisions” could be held to be a single purpose, the proscriptions, restrictions and limitations of § 52 (8) on the matter would become meaningless and empty, especially in light of the evils that section was designed to prevent. The “single purpose” requirements were written into a number of State Constitutions after Maryland adopted them in 1916.

The courts in several of these States have taken the same view of the meaning of