Could Kentucky’s governor line-item veto a tax section of a bill that also contained one appropriation?

Plain-English summary

Governor Paul Patton attempted to veto Section 15 of HB 390 after the 2003 General Assembly adjourned. That section changed a corporate-tax deduction. A separate section of the bill appropriated $175,000 to the Revenue Cabinet for duties linked to the tobacco settlement. The Attorney General concluded that the governor’s partial veto was a nullity: Section 15 did not appropriate money, and a single incidental spending provision did not turn this general legislation into an appropriation bill for purposes of Kentucky’s line-item veto power.

The opinion predicted that a Kentucky court would apply the prevailing reading of Section 88 of the state Constitution, limiting the partial veto to appropriation bills with distinct spending items. It said Section 15 remained law after the ineffective veto. It did not decide how the veto power would operate if a general-law bill contained multiple appropriation provisions.

Currency note

This opinion was issued in 2003. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Could the governor veto only the corporate-tax section of HB 390?
A: The Attorney General said no. That section contained no appropriation, and the opinion treated HB 390 as general legislation rather than an appropriation bill covered by Section 88’s partial-veto power.

Q: Why did the separate $175,000 appropriation not change the result?
A: The opinion described the spending provision as incidental to the bill’s other duties. It said adding one appropriation to general legislation did not make the whole bill an appropriation bill.

Q: What did the opinion say happened to Section 15?
A: It concluded that the attempted veto was ineffective and that the section became law.

Q: Did the opinion decide the rule for a bill with several incidental appropriations? A: No. A footnote expressly left that question open.

Background and constitutional framework

Section 88 of the Kentucky Constitution gave the governor power to disapprove distinct parts of appropriation bills. The opinion compared that language with the general veto and with Kentucky’s distinction between a general appropriation bill and an appropriation provision. It characterized HB 390’s main subject as tobacco-settlement enforcement, its Section 17 appropriation as incidental, and Section 15 as a separate tax provision. On that reasoning, Section 88 did not authorize the attempted veto.

Citations and references

Constitution: Section 88 of the Kentucky Constitution.

Statutes: KRS 131.600; KRS 48.010(3)(a)(b) & (c).

Bill: HB 390 (2003).

Source

• Landing page: https://kdla.access.preservica.com/uncategorized/IO_9a7e59df-1e2e-4e94-a215-375a06322b03/
• Original PDF: https://kdla.access.preservica.com/download/file/IO_9a7e59df-1e2e-4e94-a215-375a06322b03

Original opinion text

OAG 03-003
April 21, 2003

Subject:

Validity of Governor’s veto of Section 15 of HB 390

Requested by:

State Representative James E. Bruce

Written by:

Scott White, Assistant Deputy Attorney General

Syllabus:

The veto by the Governor of a non-appropriation portion of
HB 390 exceeds the powers granted by Section 88 of the
Constitution, thereby rendering the veto a nullity.

Statutes construed:

15.050(2), 48.010(3)(a)(b) & (c), and 131.600.

Constitutional
sections construed:

Section 88.

Opinion of the Attorney General
Introduction
State Representative James E. Bruce has requested the opinion of this
Office as to whether Governor Paul Patton’s partial veto of HB 390 is lawful
under Section 88 of our Constitution. This opinion is provided pursuant to
KRS 15.025(2). It is our opinion that the veto of Section 15 of HB 390 was beyond the scope of the veto power of the Governor, and is a nullity.

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Factual Background

On February 7, 2003, State Representative Rob Wilkey introduced HB

390. This bill, consisting of several sections, sought to enhance enforcement
     of the so called “model act” of the 1998 Tobacco Master Settlement Agreement (“MSA”) which provides millions of dollars annually to the Commonwealth. See, KRS 131.600 et seq. HB 390 was a direct result of complex negotiations between the 46 participating states in the MSA (including Kentucky), four major cigarette companies, and a number of smaller companies. Though not denominated as an appropriations bill, nor made a part of the 2003 budget bill, HB 390 did make an appropriation. Section 17 of the bill provided $175,000 to the Revenue Cabinet for carrying out new duties. This appropriation was specifically made from the “tobacco settlement agreement fund,” which is a separate statutory fund created to hold the monies received by the Commonwealth under the MSA - - specific appropriations are made out of this fund relating to agricultural development, early childhood care, and anti-smoking programs. On March 24, 2003, on the first day of the two day veto session, Section 15 was added by the Senate to HB 390 via a Senate Committee Substitute. The new version of HB 390, while retaining all of the sections related to the MSA, sought to reverse a Kentucky circuit court decision, known as the Illinois Tool Works case, which struck down a provision of the corporate tax code. The struck down statute reduced the license taxes of in-state companies with subsidiaries but not the tax liability of out-of-state companies. Sec-

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tion 15 restored the deduction, and extended it to both in and out of state
corporations. HB 390, with the new section 15, passed the Senate 34-0. The
next day, March 25, the last of the Session, the House concurred 91-4, after
which it was sent to the Governor. Of course, any veto of the bill by the Governor could not be reversed by the General Assembly since it had adjourned sine die on the 25th. On April 3, 2003, Governor Patton delivered his veto message, as required by law, to the Secretary of State. The veto was only partial. All of the sections relating to the MSA remained intact; the veto was limited to Section 15, which contained no appropriation. Though the veto message sets out the policy bases for the veto, it relies upon the Governor’s “line item veto” power found in Section 88 of the Constitution. In this context, Representative Bruce asks a question of first impression in Kentucky:

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May a Governor use the line item veto power found
in Section 88 to veto a non-appropriating provision
that is contained in a bill that makes an unrelated appropriation elsewhere?

4

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As noted at the outset, we believe that the great weight of authority answers
this question, “no.”
Analysis
Kentucky, like the majority of states, has enshrined the line item veto
of spending provisions in its Constitution. Section 88 provides that “The Governor shall have the power to disapprove any part or parts of appropriation bills embracing distinct items, and the part or parts disapproved shall not become a law unless reconsidered and passed, as in case of a bill.” §88 Ky. Const. (emphasis added). The line item veto, unlike much of our Constitution, was not modeled after the Federal Constitution, but, instead, was a reaction to one of its perceived shortcomings. Prior to 1891, the governor’s veto power was practically identical to that of the president in the federal system. The governor had to either veto the bill in toto, or accept it in toto. See, 1st (Art. I, § 28) 2nd (Art. III, § 25), and 3rd (Art III, §22) Constitutions of Kentucky. The problem with the lack of the line item veto was that legislatures passed omnibus budget bills which combined valid spending items together with boondoggle spending measures for special interests. As one court said, “If the only weapon available to the governor to fight such legislation was the general veto power, the governor might often be required to destroy much good legislation in order to defeat one item of a bill that was bad, or, on the other hand, be compelled to approve a piece of legislation vicious in part, in order to obtain the benefits of the salutary provision of the same [spending] act.” Cenarrusa v. Andrus, 582 P.2d 1082, 1091 (ID 1978).

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In light of this abuse of the spending power, states, as they amended
or adopted new constitutions, began to provide for a line item veto power.
The United States Supreme Court, in commenting on these state provisions,
articulated the underlying public policy: “[p]rovisions granting power to the
executive to veto an item or items of an appropriation bill are to be found, in various forms of expression, in many of the state constitutions. Their object is to safeguard the public treasury against the pernicious effect of what is called ‘log-rolling’ - - by which, in order to secure the requisite majority to carry necessary and proper items of appropriation, unnecessary or even indefensible items are sometimes included.” Bengzon v. Secretary of Justice of Philippine Islands, 299 U.S. 410, 415 (1937). So, the people, in their state constitutions, empowered the governor to separate the wheat from the chaff of legislative spending plans. This is the reason the line item veto was tied to appropriation bills. As noted by the Supreme Court, many states have adopted line item veto provisions. The language of these provisions differ somewhat from state to state, yet the policy thrust is the same. As can be expected, issues have arisen concerning the scope of the line item veto power. Difficulties arise, for instance, when governors seek to veto a substantive portion of a bill when that portion does not contain an appropriation, but is part of a larger bill that does have a spending feature, e.g. HB 390. As noted in the Introduction, no Kentucky court has ever dealt with the issue of the extent of the scope of the line item veto. Kentucky cases have dealt with the more technical aspects of the general veto power (typically

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following majority views). Although there is no Kentucky authority on the
question posed by Representative Bruce, the law is well developed in other
jurisdictions. Three views of this issue have developed.1
The majority rule was adopted by the United States Supreme Court in
the context of analyzing the constitution of the pre-war provisional government of the Philippines. This rule provides that the line item veto power can only be used to veto a specific provision of an appropriations bill. 2 Thus, the operative question: Is the bill in question an appropriations bill? The Supreme Court in Bengzon articulated the definition of an appropriation bill well: The term ‘appropriation act’ obviously would not include an act of general legislation; and a bill proposing such an act is not converted into an appropriation bill simply because it has had engrafted upon it a section making an appropriation. An appropriation bill is one the primary and specific aim of which is to make 1

Richard Briffault, “The Item Veto in State Courts,” 66 Temp. L.Rev. 1171, 1175-1185 (1993);

Comment, “The Item Veto Power in Washington,” 64 Wash. L.Rev. 891, 901-905 (October, 1989). 2

There are two alternatives to the majority rule, neither of which do we believe a Kentucky

court would follow. The first, and more prevalent minority rule, under which the veto here would fail, holds that the governor may only veto items or parts of bills that themselves are related to the vetoed appropriation, the appropriation itself is vetoed with the ‘surplus’ provision, and the vetoed piece is so distinct that its removal leaves the balance of the bill intact. See, State of North Dakota v. Olson, 286 N.W.2d 262, 270-271 (ND 1979). Here, since the veto of section 15 of HB 390 did not veto the appropriation contained in the bill, then the veto would fail under this view. The other, which is only followed in Wisconsin, and arguably Wyoming, applies a very liberal construction of the line item veto power in its Constitution. This rule allows the governor to veto any provision contained in any bill making any appropriation. See, Sundby v. Adamany, 237 N.W.2d 910 (WI 1976) and Management Council of the Legislature v. Geringer, 953 P.2d 839 (WY 1998). This approach flies in the face of Kentucky law that requires a strict construction of the veto power. Arnett v. Meredith, 275 Ky. 223, 121 S.W.2d 36, 39-40 (1938).

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appropriations of money from the public treasury. To say otherwise would be to confuse an appropriation bill proposing sundry appropriations of money with a bill proposing sundry provisions of general law and carrying an appropriation as an incident. 299 U.S. at 413. Based on our research, the majority of states addressing this issue have adopted the Supreme Court’s analysis - sometimes even further refining the majority rule to allow the use of the line item veto to bills which provide more than one appropriation (HB 390 made only one). As noted, most states considering the issue restrict the line item veto’s use to appropriation bills as defined by Bengzan. Patterson v. Dempsey, 207 A.2d 739, 746 (CT 1965) (“ . . . the fundamental reason why a partial . . . veto is not generally authorized, at least in the case of general legislation, is because of the separation of powers . . . . All affirmative legislative powers
[versus the negative power of veto] are given exclusively to the General Assembly.”); Perry v. Decker, 457 A.2d 357, 359 (DE 1983) (“Only bills containing more than one ‘distinct’ item of appropriation of money meet the language of [the line item veto provision] providing for the Governor’s authority to disapprove of one part of a bill while approving another part.”); Cenarrusa v. Andrus,582 P.2d 1082, 1088-1089 (ID 1978) ( . . . acts of general legislation containing one item of appropriation for the purpose of

implementing

the provisions of the act, such as SB 1494, . . . are not appropriation bills
within the meaning of [Idaho Constitutional provision on line item veto]”);
Stephan v. Carlin, 631 P.2d 668 (KS 1981); State v. Holder, 76 Miss. 158, 23

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So. 643, 644 (1898) (provision allowing for veto of ‘any appropriation bill’ relates only to “ . . . general appropriation bills, or those containing several items of distinct appropriations; that is to say, special appropriation bills with distinct items of appropriation. It applies to such as are made up of parts, and consist of portions separable from each other as appropriations. ”); Regents of State University v. Trapp, 28 Okl. 83, 113 P. 910 (1911); Jessen Associates v. Bullock, 531 S.W.2d 593, 599 (TX 1976); and, Fulmore v. Lane, 104 Tex. 499, 140 S.W. 405, 412 (1911) (“Nowhere in the [Texas] Constitution is the authority given the Governor to approve in part and disapprove in part a bill. The only additional authority to disapproving a bill in whole is that given to object to an item or items, where a bill contains several items of appropriation. It follows conclusively that where the veto power is attempted to be exercised to object to a paragraph or portion of a bill other than an item or items . . . he exceeds the constitutional authority vested in him

. . . . “).

Applying the majority rule to the Governor’s line item veto of section
15 of HB 390, it is plain that it is invalid. Under this case law, HB 390 is simply not an “appropriations bill.” Unlike, for instance, the three branch budget bills whose introduction, analysis, and enactment is governed by KRS Chapter 48 “The Budget,” the only appropriation in HB 390, found in section 17, is “incidental” to the Revenue Cabinet fulfilling its new duties. In fact, section 15, the vetoed piece, does not even contain an appropriation. We believe a Kentucky court would not hesitate to strike down this veto.

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Moreover, there can be little doubt “an appropriation bill” in Kentucky
means a bill whose primary purpose is to appropriate money. An example of
this type of bill is the omnibus biennial budget branch bills for either the executive, legislative, or judicial branches. KRS 48.

In one of the landmark

cases on legislative powers, the Kentucky Supreme Court plainly understood
that the budget bill was an appropriation bill. The Court, in holding that a
budget bill could not be enacted via a joint resolution, said:

While the Governor’s veto power applies to all bills, it is only in
the case of ‘appropriation bills’ that a line-by-line veto may be
exercised. The appropriation bill is the main ingredient of the
budget document, and is specially singled out in § 88, which
deals with bills and bills only. Appropriations, therefore, must be
in the form of a bill.

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LRC v. Brown, 664 S.W.2d 907, 927 (KY 1984) (emphasis in original). In fact,
the Legislature itself only recognizes a budget bill as an “appropriation bill,” and anything else is something entirely different. KRS 48.010(3)(a)(b) & (c) draws a clear distinction between a “general appropriation bill,” which a branch budget bill is, and an “appropriation provision,” which is a spending enactment not contained in the budget bill under Chapter 48. We believe that, as envisioned by Chapter 48, HB 390 contains an “appropriation provision,” rather than being an appropriation bill. And, therefore, HB 390 is not subject to a line item veto, but only a general veto.3 When we apply the legal and policy reasons underlying the line item veto power, the conclusion that Governor Patton’s veto of section 15 of HB 390 is void is inescapable. As such, it is our opinion that section 15 was not vetoed, and is the law of the Commonwealth. See, Weldon v. Ray, 229 N.W.2d 706 (IA 1975); State ex rel. Sego v. Kirkpatrick, 524 P.2d 975, 987 (NM 1974); Commonwealth v. Dobson, 11 S.E.2D 120, 134 (1940). Conclusion The result reached in this opinion is plain. Under both the majority and prevalent minority rules, the conclusion is the same: the veto is a nullity. HB 390 is not an appropriation bill. HB 390 is general legislation that contains an 3

Of course, HB 390 only has a single appropriation provision (Section 17). The issue of the

effect on the validity of the line item veto power in the context of multiple appropriation provisions in a single bill outside of Chapter 48 is not addressed by this Opinion.

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“appropriation provision” that is incidental to one of its purposes. There is
only one appropriation made in the bill, and the appropriation itself is not vetoed. The only item vetoed is a provision of a general legislation bill that is a part of the whole. Based upon the weight of law extant on this issue, it is our opinion that a Kentucky court presented with this issue would rule that the veto of section 15 of HB 390 as set out in the Veto Message of April 3, 2003, is unconstitutional, violates the separation of powers, and is a nullity. Albert B. Chandler III Attorney General Scott White Assistant Deputy Attorney General