Kentucky Supreme Court justices had plenty of questions for attorneys during oral arguments Thursday over the legality of midyear budget cuts that Gov. Matt Bevin made to universities last spring.
Attorney General Andy Beshear, who filed suit against Bevin, continued to assert that the governor violated the separation of powers by usurping legislative power over the budget, while Bevin’s general counsel, Steve Pitt, said state law allows the governor to alter financial payments to state agencies through the State Budget Office.
The Supreme Court moved quickly to hear the case after Beshear appealed a May 18 decision by Franklin Circuit Court Judge Thomas Wingate. Wingate sided with the Bevin administration, saying the state’s universities and colleges are part of the executive branch of government and that Bevin has the power to reduce budget allotments to units within that branch.
Wingate also ordered the state to put $18 million — the amount of the 2 percent cut — in a separate account until a final decision is reached.
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The justices seemed less sure Thursday about the governor’s role in budget decisions. Most of their questions were reserved for Pitt, and many centered on the difference between an appropriation and an allotment. Pitt argued that after the legislature makes an appropriation to part of state government, it’s within the power of the executive branch through the State Budget Office to reduce that allotment.
Universities are in a slightly different position from other state agencies, Pitt said, because they have been given the ability to pay their own bills.
“Allotments may be revised and they may be revised only downward,” Pitt said, saying that the downward reduction could not be so severe that they affected a university’s core function. Pitt said that an affidavit from an analyst in the State Budget Office concluded that the 2 percent cuts would be “negligible,” and that universities had not intervened in the case to say otherwise.
Judge Michelle Keller asked Pitt about the possibility of the governor cutting more than 2 percent. What would happen “if the allocation was revised down 50 percent?”
That led Justice Lisabeth Hughes to question whether changing the allocation ultimately changed the legislature’s appropriation.
“That appropriation has been reduced and the legislature’s judgment was, for lack of a better word, thwarted,” she said, saying that such a system would put courts in the middle of spending disputes on a frequent basis.
“This is very much a precedent-setting case,” Hughes said.
Justices also questioned how a court would determine how much of a downward allotment is appropriate.
“We judges think pretty highly of ourselves,” Justice Mary Noble said, “but I’m pretty certain we would not want to micromanage universities’ budgets.”
Beshear stuck to his original arguments, citing state law that he said prohibits midyear budget cuts when there isn’t a state budget shortfall. He said the state finished the fiscal year on June 30 with a surplus of $50 million.
Bevin’s action was “an unlawful, unilateral budget reduction when there was no shortfall,” Beshear said. He chose not to use the time allotted for his rebuttal.
Earlier, Pitt echoed a favorite argument of Bevin’s, that because of the state’s $35 billion unfunded pension liability, the state faces a serious shortfall.
Justices also questioned attorney Pierce Whites, who represented three Democratic legislators who intervened in the case, about their legal standing.
After the hearing, Pitt said he wasn’t surprised by the justices’ questions.
“They recognize that the courts have not had an opportunity to make these sorts of decisions before,” he said. “We are plowing new ground here and setting parameters for what occurs in the future.”
Beshear also cited confidence in his case.
“A dozen statutes prohibit the governor from cutting without a shortfall,” Beshear said. “That’s not the way our commonwealth works.”