Attorney General: Hon. John B. Larson, President Pro Tempore, Senate, 1991-019 Formal Opinion, Attorney General of Connecticut

Attorney General's Opinion

Attorney General, Richard Blumenthal

June 7, 1991

Hon. John B. Larson
President Pro Tempore, Senate
State of Connecticut
State Capitol
Hartford, CT 06106

Hon. Cornelius O'Leary
Senate Majority Leader
State of Connecticut
State Capitol
Hartford, CT 06106

Dear Senator Larson and Senator O'Leary:

You have asked our opinion concerning the State's authority to continue payment for state services if a State budget is not enacted by June 14, 1991. In a May 31, 1991 letter to Senator John B. Larson, the Honorable William E. Curry, Comptroller other State of Connecticut, stated that Conn. Gen. Stat. 4-98 and 4-100 may prohibit budgeted agencies from incurring any obligations for the payment of money which is not included in the current fiscal year's appropriation. Without a budget for fiscal year 1991-92 Mr. Curry specifically suggests that since "the payroll for the last two weeks of this fiscal year would be part of the 1991-92 budget, it will be illegal for the State to incur further payroll expenses against the General Fund" as of June 14, 1991. Certain other expenses in addition to payroll, that may be incurred after June 13th may also be chargeable to the 1991-92 fiscal year.

Summary.

Our opinion, in summary form, is as follows:

  1. Neither Conn.. Gen. Stat. 4-98 or 4-100 properly applies to the facts of this situation. Conn. Gen. Stat. 4-98 applies only to the purchase of goods and services and does not apply to State payroll expenses. Section 4-100 applies only to situations in which the General Assembly already has enacted a budget. More to the point, Section 4-99 requires that an appropriation be available fifteen days prior to the new fiscal year, in order for State funds to be committed in that year.

  2. Whatever interpretation in given Conn. Gen. Stat. 4-98 and 4-100, the legislature's failure to adopt a budget for the next fiscal year would not completely bar the State from incurring expenses and spending funds after June 14, 1991. Neither the State government, nor even a branch of the State government, need shut down entirely because of the prospect of inaction by the legislature. Under the reasoning of State v. Staub, 61 Conn. 553 (1892), even in the absence of appropriations passed by the legislature, certain types of expenses associated with the necessary operation of government must be incurred and paid. Additionally, costs associated with statutory duties imposed on State officials or costs required to be incurred by statute must also be paid.

  3. While the Staub decision requires the continuation of certain government operations in the absence of a budget, Staub has not been applied in modern times in the absence of an entire State budget. Practical problems would inevitably arise in applying the Staub standard. The Staub standard itself suffers fro a significant lack of clarity, rendering the choice among spending options difficult to make and support. The necessity to select expenses actually allowable could cause uncertainty and confusion in the operation and delivery of State services. Doubt and anxiety would be rampant not only among State employees, but also among recipients of services and the public in general. It would prevail even after the initial determination as to which services and programs would continue to be funded in the absence of a budget, since the initial decisions very likely would be reviewed and possibly challenged in the courts.

  4. The most prudent approach - and the one I strongly advise be taken in order to avoid fiscal confusion and uncertainty - is to adopt a continuing resolution prior to June 14, 1991.

Analysis.

The facts relevant to this opinion are not in dispute. The State makes its payroll on a biweekly basis. Employees are paid in arrears for a period of work commencing four weeks earlier. Thus, the paycheck to be issued on June 14, 1991, covers the period May 17 through May 30. Likewise, the paycheck to be issued on June 28, 1991, will cover days worked during the period May 31 through June 13. Although there is an appropriation in the present budget to cover the checks to be issued on June 14 and June 28, no funding is contained in this budget for payment for work performed during the period June 14 through June 28. Services rendered during that period will be paid on July 12 during the new fiscal year commencing July 1.

Absent a new budget, the issue has been raised as to whether the State can pay workers for the last two weeks of June. Conn. Gen. Stat. 4-98 provides:

Except for such emergency purchases as are made by a budgeted agency under regulations promulgated by the commissioner of administrative series, no budgeted agency nor any agent thereof shall incur any obligation, by order, contract or otherwise, except by the issue of a purchase order and of commitment transmitted by the budgeted agency or its agents to the commissioner and the comptroller, provided the amount to be charged against the appropriation for a budgeted agency in any year for a purchase order and commitment for a current expenditure shall be the amount anticipated to be spent in such year.... Upon receipt of any such purchase order and commitment, the comptroller shall immediately charge the same to the specific appropriation of the budgeted agency issuing the same and certify on the face of the purchase order that the purchase is approved and recorded, if the proposed commitment is within the applicable specific appropriation and the budgeted agency has unencumbered funds sufficient to defray such expenditure.

In our opinion this statute deals solely with the purchase of goods and services, not payment of state personnel. The statute speaks in terms of "purchase orders," "commissioner of administrative services" (who has jurisdiction over state purchasing), and "vendors." A statute should be construed so that no word is treated as superfluous or insignificant. Zichichi v. Middlesex Memorial Hospital, 204 Conn. 399, 407 (1987). Words in a statute are construed according to their plain and ordinary meaning. Bratsenis v. Rice, 183 Conn. 7, 10 (1981).

Since the State payroll is not prepared on purchase orders, this provision is inapposite to the payment of payroll expenses in the absence of a budget for the fiscal year 1991-92.

Penalty for exceeding appropriations; exceptions. Whenever any specific appropriation of money has been made by t he general assembly or by any community or corporation as provided in section 7-21, each agent, commissioner or executive officer of the state, except as provided in sections 4-87 and 4-00, or of any town, city borough or school district, who willfully authorizes or contracts for the expenditure of any money or the creation of any debt for any purpose n excess of the amount specifically appropriated for such purpose by the general assembly or the community or corporation of which he is agent, commissioner or executive officer, unless such expenditure is made or debt contracted for the necessary repair of roads or bridges, or the necessary support of schools or paupers in cases arising after the proper appropriation has been exhausted, shall be fined not more than one thousand dollars or imprisoned in a community correctional center not more than one year or both.

(Emphasis added).

Section 4-100 thus specifically applies only to those situations in which "a specific appropriation of money has been made by the General Assembly." The statute "on its face is not applicable to a condition of affairs where no special appropriations whatever are or can be made...". State v. Staub, 61 Conn. 553, 563 (1892). By its express terms the statute contemplates an over-expenditure of a specific appropriation.. There has been no suggestion that the appropriation for salaries for the 1990-1991 fiscal year will be exceeded. Salaries for the pay period after June 14 would be paid during the next fiscal year for which there is no specific appropriation.

While neither Sections 4-98 or 4-100 address or prohibit the payment of payroll expenses after June 13, 1991, Section 4-98 does refer to the purchase of goods and services required by the State. Some goods or services obtained after June 13 may be chargeable to the fiscal year 1991-92 budget. Additionally, Conn. Gen. Stat. 4-99 states that "[a]ny annual appropriation shall be available for commitment fifteen days before the beginning of the fiscal period for which such appropriation was made...". Section 4-99, therefore, appears to have been intended to prohibit an agency from committing funds from the next fiscal year's budget where no appropriation for such expenditures exists.

Based upon a reading together of Sections 4-98 and 4-99, the argument might be made that the failure to enact a budget for the fiscal year 1991-92 prior to June 14, 1991 would preclude all commitments by the State for goods and services during the last fifteen days of June which are chargeable to the new fiscal year. The argument could also be raised that no commitments for payroll expenses after June 14, 1991 may be made by virtue of Section 4-99.

This argument, in our opinion, would be in error. While the failure to enact a budget prior to June 14, 1991 will cause an appropriation to be unavailable for "commitment" as required by Sections 4-98 and 4-99, certain of the expenses of government must continue to be incurred and paid without such an appropriation during the fifteen days prior to the 1991-92 fiscal year.

In State v. Staub, 61 Conn. 553 (1892), the Supreme Court ruled that the non-appropriation of specific funds, together with the existence of statutes requiring the State to continue to operate, does not bar the expenditure of all funds. The Court stated at page 563:

In the absence of a special appropriation the existence of a law requiring an expenditure to be incurred is an appropriation of money for that purpose, and the law imposes on the comptroller the duty of settling and adjusting demands against the state for such expenses.

Staub was decided in an analogous context: the legislature had failed to enact an appropriate appropriations measure. The Court squarely addressed the meaning and effect of the appropriations process regarding the operations of State government. The Court stated:

The omission by the General Assembly to pass any special appropriations has been so long continued that it must be regarded as intentional. The General Assembly is always presumed to know all the existing statutes and the effect that its action or non-action will have upon any one of them. And it is always presumed to have intended that effect which its action or non-action produces. The neglect of the Assembly of 1891 to observe the mandatory provisions of the special appropriation act may be construed in one of two ways. It may be held to be equivalent to an affirmative enactment suspending the prohibitory parts of the act, or it may be construed as a design by the General Assembly to prevent the carrying on of the state government. The latter is something altogether too extravagant to be admitted. We think the former is the proper meaning; and that the omission by the General Assembly to pass any appropriation bills, being intentional, operates, and was intended to operate, as a legislative construction that all the prohibitions contained in the act were suspended.

Id. at 566-67.

Lastly, the Supreme Court recognized in Staub that there may be a conflict between the special appropriations act, which prohibits the payment of funds for expenses of the state unless so appropriated, and the general statute, which commands the Comptroller to settle all demands against the State for the expense of carrying on its government. The Court opined:

Obedience to one law involves a violation of the other. Acting is unlawful. Refusing to act is unlawful. If this is the real condition, if the conflicting law as cannot be reconciled by a reasonable construction, then the paramount law must control.... The command to provide for the essential operations of government must prevail against a rule of procedure in applying the funds raised by taxation for the support of the government.

Id. at 566 (emphasis added).

According to the Court's reasoning in Staub, therefore, essential services of government must continue and must continue to be paid for in the absence of a budget. State v. Staub, 61 Conn. at 562-63. Additionally, the costs associated with statutory duties imposed on State officials or costs required to be incurred by statute will also have to be incurred and paid.

Divers laws impose, by imperative command, on executive, administrative and judicial officers, duties essential to the preservation of order, the administration of justice, and the protection of property. Many of these duties are not imposed by statute, but their performance is demanded by the constitution and is of necessity involved in the existence of a government.

Id. at 565. While Staub has not been applied in the absence of a State budget in recent times, the general principle articulated in Staub - that there exists a constitutional requirement for funding of a certain level of government operations - has recently been affirmed in Pellegrino v. O'Neill, 193 Conn. 670, 675-76 (1984).

Included in the necessary costs of government are at least some personnel expenses. Additionally, Conn. Gen. Stat. 3-119, authorizes the expenditure of funds by the Comptroller for the salaries and wages of state employees "not less than ten calendar days nor more than fifteen calendar days after the close of the payroll period in which the services were rendered." Under Staub, an argument can be made that this statute constitutes an appropriation of money for that purpose.

Therefore, for all these reasons, if a budget for fiscal year 1991-92 is not adopted prior to June 14, 1991, commitments for certain expenditures may continue to be made after that date, in accordance with the reasoning expressed in Staub. And yet, despite this conclusion, our strong recommendation is that a continuing resolution be adopted prior to June 14, 1991.

The Staub decision has not been applied in modern times in the absence of an entire State budget. Practical problems would inevitably arise in applying the Staub standard. The Staub standard itself suffers from a significant lack of clarity, rendering the choice among spending options difficult to make and support. The necessity to select expenses actually allowable could cause uncertainty and confusion in the operation and delivery of State services. Doubt and anxiety would be rampant not only among State employees, but also among recipients of services and the public in general. It would prevail even after the initial determination as to which services and programs would continue to be funded in the absence of a budget, since the initial decision very likely would be reviewed and possibly challenged in the courts.

In order to avoid these problems and others, we strongly advise that a continuing resolution be passed by t he General Assembly and signed by the Governor prior to June 14, 1991.

As you are aware, a continuing resolution is a temporary appropriations act often used by the United States government. It is intended to keep existing programs functioning after previous budgets expire and until regular appropriations acts can be passed. It has been sued when Congress has disagreed on a new budget or the President has vetoed an appropriations law. United States General Accounting Office, Office of General Counsel, Principles of Federal Appropriations Law (1982), p. 7-2. A continuing resolution has been defined as follows:

Legislation enacted by Congress to provide budget authority for Federal agencies and/or specific activities to continue in operation until the regular appropriations are enacted. Continuing resolutions are enacted when action on appropriations is not completed by the beginning of a fiscal year. The continuing resolution usually specifies a maximum rate at which the obligations may be incurred, based on the rate of the prior year, the President's budget request, or an appropriation bill passed by either or both Houses of the Congress.

Id.

A continuing resolution which was signed into law by the President has been held to have "the same force and effect as an Appropriations Act." State of Oklahoma v. Weinberger, 360 F. Supp. 724, 726 (W.D. Okl. 1973). Its provisions are mandatory. Funds it authorizes cannot be impounded or withheld. Id. at 726, 728.

While there is no specific statute authorizing the General Assembly to pass a continuing resolution, no such specific authorization is needed. The legislature has plenary constitutional authority to appropriate State funds.

The fact that our constitution contains no provision expressly conferring upon the general assembly the power to make appropriations is of no moment. Such legislative power is readily inferable from article fourth, 22, concerning the duties of the state treasurer, who 'shall receive all monies belonging to the state, and disburse the same only as he may be directed by law.' Cases in other jurisdictions construing similar directives have consistently found such directives to require "an authority from the legislature, given at the proper time, and in legal form, to the proper officers to apply sums of money out of that which may be in the treasury in a given year, to specified objects or demands against the state." Shattuck v. Kincaid, 31 Ore. 379, 386, 49 P. 758 (1897); State ex rel. Noonon v. King , 108 Tenn. 271, 276, 67 S.W. 812 (1902); State ex rel. Post-Intelligencer Publishing Co. v. Lindsley, 3 Wash. 125, 126, 27 P. 1019 (1891). It has been generally recognized for two hundred years that legislative power necessarily encompasses fiscal power.

Eielson v. Parker, 179 Conn. 552, 561 (1980). A continuing resolution may take the form of a Special Act is so desired.

In the adoption of a continuing resolution, the following matters should be considered:

  1. Although passed in the form of a resolution, it should be presented tot he Governor for his approval pursuant to the State Constitution, Article Fourth, 15, to avoid any question as to its binding effect.

  2. The resolution may appropriate amounts needed to continue activities at a certain "rate of operations." Principles of Appropriations Law, supra, p. 7-3. This rate may be one of a prior appropriations act, or a bill which passed one or both of the Houses, or the rate in a budget proposal, or simply the current rate. Id., pp. 7-3, 7-4.

  3. If the current rate is used, it is the rate equal to the total funds (not simply the program size) available during the last fiscal year before the one covered by the resolution. Id., p. 7-6. When there has been a one-year appropriation, this amount would be the total funds appropriated for a program the prior fiscal year. Id., p. 7-7.

  4. Consideration should also be given to the rate of spending, so that a yearly amount of funds authorized in a continuing resolution is not spent in an abnormally snort time. The normal rat of spending is determined by the agency's usual pattern of spending in prior years. Id., p. 7-9, 7-10.

  5. We advise that the continuing resolution specify that all payments are subject to a continuation of legislative funding, and if funds are later reduced, the payments will be as well and necessary set offs will be made to overpayments. This provision would apply especially in the case of grants. Such language should be incorporated in contracts and other appropriate documents whenever possible.

  6. Consideration should also be given to maintaining sub-items in the same amount as in the prior year. Otherwise, an agency might readjust individual line items, provided that the total agency amount does not exceed the current rate. Id., p. 7-12.

  7. The resolution should also provide, if so desired by the legislature, that no project or activity not conducted during the prior fiscal year shall be initiated or otherwise undertaken with funds under the resolution. Id., p. 7-13.

  8. The continuing resolution may last until a regular appropriation act is passed for the particular activity, a comprehensive appropriations act is passed, or a fixed cutoff date, whichever occurs first. Id., p. 7-18. It is within the legislature's discretion to determine duration.

  9. Care must be taken lest programs are inadvertently terminated or commenced.

  10. The resolution should also make it clear that no other budgetary or appropriations laws (e.g. Conn.. Gen. Stat. 4-85, allowing the Governor to control quarterly allotments, Sections 4-87, 4-94, 4-95b, concerning transfer of appropriations, Section 4-84, concerning expenditures and emergency contingency appropriations) are repealed.

  11. The legislature should ensure that any termination dates on revenue legislation are removed so that all revenue laws are extended, consistent with the continuing resolution.

In summary, while we do not believe that the lack of a budget bars all state spending or precludes all state payroll payments, we recommend that a continuing resolution be adopted to avoid the serious difficulties of determining and selecting the specific services to be funded pursuant to Staub. Only approval of a continuing resolution can avoid the uncertainty, confusion and possible chaos that would prevail before, during and after this determination. It is, therefore, the most prudent action to take.

Very truly yours,

RICHARD BLUMENTHAL
ATTORNEY GENERAL

RB:jb


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