Tuesday, January 7, 2014

Thomas A. Schweich v. Jeremiah W. Nixon [1]

Opinion handed down October 1, 2013

Thomas A. Schweich, the Missouri State Auditor, filed a declaratory judgment action to challenge Missouri State Governor Jeremiah W. Nixon’s announcement to withhold funds from the 2012 fiscal year (“FY 2012”) state budget for the Missouri legislature, the Supreme Court of Missouri, and the office of the Auditor.[2] The trial court held that the Governor had complete discretion to withhold or reduce expenditures provided that actual revenues were less than the estimated revenues at any time until the final day of the fiscal year.[3] However, the Governor was not authorized to increase appropriations based on an “estimated” designation on the line item.[4] After review, the Supreme Court of Missouri held that the Auditor did not have standing to seek declaratory judgment and the issue was ripe for review.[5] Accordingly, the action was dismissed without prejudice pursuant to Missouri Supreme Court Rule 84.14.[6]

I.       Facts and Holding

On June 10, 2011, the Governor announced that he would withhold $600,000 from the Missouri Legislature, $300,000 from the Missouri Auditor’s office, and $6 million from the Missouri Judiciary in FY 2012 pursuant to article IV, Section 27 of the Missouri Constitution.[7] The auditor commenced an audit of the Governor’s office on June 27, 2011, which was prior to the start of FY 2012, and filed petition for declaratory judgment challenging the Governor’s announcement on August 26, 2011.[8]

The Auditor argued that (1) the Governor’s FY 2012 actions are unconstitutional because they are arbitrary and capricious and (2) the Governor’s FY 2012 actions are unconstitutional because they were announced before FY 2012 began.[9] He also argued that it was unconstitutional for the Governor to authorize an expenditure in excess of the estimated amount set by the state legislature.[10]

Both the Auditor and Governor filed motions for summary judgment.[11] The trial court granted in part and denied in part both motions and all parties appealed.[12] Because the case involved the validity of appropriations enacted by the General Assembly subject to Governor approval, the Supreme Court of Missouri had exclusive jurisdiction to review the issues.[13]

The Supreme Court of Missouri found that the Auditor did not have standing to seek declaratory judgment and the issue was not ripe for review.[14] The Court turned to the constitutionally prescribed duties and authorities of the Auditor and found that it authorizes the post-audits of “the accounts of all state agencies” and the establishment of “appropriate systems of accounting” for public officials.”[15] Because the Auditor sought declaratory judgment to challenge the Governor’s authority to withhold funds from a budget for a fiscal year that had not yet concluded, the Auditor was effectively conducting a pre-audit which is not within his constitutional authority.[16] Thus the Supreme Court of Missouri held that the Auditor lacked standing to contest the constitutional authority of the Governor’s withholds and handling of estimated appropriations.[17]
However, the Supreme Court of Missouri did find that the Auditor had standing to challenge the announcement that $300,000 would be withheld from the State Auditor’s office because the issue involves a “legally protectable interest in the litigation” and the Auditor would be “directly and adversely affected by its outcome.”[18] Although the Court held that the Auditor had standing to challenge the announcement regarding his own office, the issue was not a controversy ripe for judicial determination.[19] It reasoned that “until FY 2012 ended without payment of the $300,000 at issue, it could not be known whether the Governor merely was exercising his constitutional authority to control the rate of appropriation of these funds or whether they were being withheld to control the rate of appropriation of these funds or whether they were being withheld or spent beyond their appropriation entirely.”[20] Due to the lack of standing and ripeness, the Supreme Court of Missouri did not rule on the merits of the Auditor’s action and dismissed the claim without prejudice under Missouri Supreme Court Rule 84.14.[21]

II.    Legal background

A.    Interpretation of the Constitutional Authority Given to State Officers

Article IV, § 27 of the Missouri Constitution 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.”[22]
Article IV, § 13 of the Missouri Constitution provides:
“The state auditor shall have the same qualifications as the governor. He shall establish appropriate systems of accounting for all public officials of the state, post-audit the accounts of all state agencies and audit the treasury at least once annually. He shall make all other audits and investigations required by law, and shall make an annual report to the governor and general assembly. He shall establish appropriate systems of accounting for the political subdivisions of the state, supervise their budgeting systems, and audit their accounts as provided by law. No duty shall be imposed on him by law which is not related to the supervising and auditing of the receipt and expenditure of public funds.”[23]
The Missouri Supreme Court has determined that the responsibilities and authority of State Officers should be strictly limited to what is constitutionally prescribed.[24] In a case involving the interpretation of the constitutional authority given to the state treasurer, the Court held “the constitution enumerates very specific powers that the treasurer may exercise and, then, specifically provides that no duty not related to those specifically enumerated powers may be exercised by [him or] her.”[25]
B.     Standing and Ripeness
In order to ensure there is sufficient controversy between parties so that an issue may be adequately presented, the Missouri Supreme Court has long adhered to prudential principles of justiciability, which includes the requirements of “standing” and “ripeness.”[26] A sufficient showing of “standing” must be presented before adjudication on the merits may occur.[27] In order for a plaintiff to demonstrate standing, they must show “a pecuniary or personal interest directly at issue and subject to immediate or prospective consequential relief.”[28] In addition, they must establish that they possess “some legally protectable interest in the litigation so as to be directly and adversely affected by its outcome.”[29]
Even if it shown that a party has standing, a court may not render declaratory judgment unless the issue in question is ripe for judicial determination.[30] In State ex rel. Sikeston R-VI Sch. Dist. V. Ashcroft, the Supreme Court of Missouri held that a Governor’s order to reduce state expenditures “is ripe for adjudication only where there is a factual showing that actual state revenues have fallen below revenue estimates and the Governor has reduced the expenditures below the amount appropriated.”[31]
III. Comment

The doctrines of ‘standing” and “ripeness” have rich history in Missouri’s judicial system, thus this case does not appear to add anything new to Missouri law. Given the circumstances surrounding the Auditor’s action for declaratory judgment, the findings of the Missouri Supreme Court are of little surprise. The Auditor was acting outside of his constitutionally prescribed authority and brought his action before the completion of FY 2012, thus inhibiting his ability to pursue his claim due to lack of “standing” and “ripeness.”

- Melesa Johnson

[1] Thomas A. Schweich v. Jeremiah W. Nixon, SC92750 (October 1, 2013).
[2] Id. at 1.
[3] Id.
[4] Id. at 2.
[5] Id.
[6] Id. at 3.
[7] Id. at 3.
[8] Id.
[9] Id. at 4.
[10] Id.
[11] Id. at 4-5.
[12] Id. at 5.
[13] Id.
[14] Id. at 8.
[15] Id. at 10.
[16] Id.
[17] Id. at 12.
[18] Id. at 14.
[19] Id. at 15.
[20] Id.
[21] Id. at 17.
[22] Mo. Const. art. IV, § 27.
[23] Mo. Const. art. IV, §13.
[24]Kinder, 89 S.W.3d at 453-54; Petition of Bd. of Pub. Buildings, 363 S.W.2d 598, 608 (Mo. banc 1962)
[25] Kinder, 89 S.W.3d at 453.
[26] Ryder v. St. Charles Cnty., 552 S.W.2d 705, 707 (Mo. banc 1977).
[27] Farmer v. Kinder, 89 S.W.3d 447, 451 (Mo. Banc 2002).
[28] Mo. Soybean Ass’n v. Mo. Clean Water Comm’n, 102, S.W.3d 10, 25 (Mo. banc 2003).
[29] Mo. State Med. Ass’n v. State, 256 S.W.3d 85, 87 (Mo. banc 2008)(citing Ste. Genevieve Sch. Dist. R–II v. Bd. of Aldermen of Ste. Genevieve, 66 S.W.3d 6, 10 (Mo. banc 2002)).
[30] Mo. Soybean Ass'n, 102 S.W.3d at 26.
[31] 828 S.W.2d 372, 375-76 (Mo. Banc 1992).