Constitutional Law, General Court, Appropriation of money, Federal grants, Money received on account of the Commonwealth.
Federal funds received by State officers or agencies subject to the condition that the funds be used only for objects specified by Federal statutes or regulations are impressed with a trust and are not subject to appropriation by the Legislature. [854-855]
Pending legislative bills requiring that the payment of all Federal grants and funds designated to the Commonwealth or to any of its offices, departments or agencies be paid to the State Treasurer and credited to special Federal grants funds subject to appropriation and regulation by the General Court would be unconstitutional under the Massachusetts Constitution. 
On June 30, 1978, the Justices submitted the following answer to a question propounded to them by the Senate.
To the Honorable the Senate of the Commonwealth of Massachusetts:
The Justices of the Supreme Judicial Court respectfully submit their reply to the question propounded in the order adopted by the Senate on January 25, 1978, and transmitted to us on February 3, 1978.
The order recites that monies from Federal grants received by the Commonwealth, which constitute an appreciable percentage of the budget, are being spent in a manner determined by the Governor or various departments and agencies rather than by appropriation. The order states that only the General Court is constitutionally empowered to appropriate money, no matter what the source. This power is thwarted, the order asserts, by payments of Federal grants being made by Federal agencies directly to their State counterparts, rather than to the State Treasurer.
Transmitted with the order were four bills which are pending in the General Court, Senate No. 321 entitled, "An Act to provide for appropriation by the general court of federal grants," Senate No. 323 entitled, "An Act establishing a federal grants fund and providing for the reimbursement of the Commonwealth for certain state costs related to federal grants and subventions," House No. 394 entitled, "An Act providing for the receipt and expenditure of all monies received on account of the commonwealth from the federal government," and House No. 395 entitled, "An Act providing that federal funds received by the commonwealth shall be expended only after appropriation." Having grave doubts as to the authority of the General Court to enact the bills under its powers of appropriation, under the Constitution of the Commonwealth, the Senate requested our opinions on the following important question of law:
"Is it constitutionally competent for the General Court under Part the First, Article 23; Part the Second, chapter 1, section 1, Article 4, section 3, Article 7, and Article 63 of the Amendments, as well as Article 30 of Part the First of the Constitution to require the payment of all federal grants and funds designated to the commonwealth or to any of its offices, departments or agencies, to be paid to the state treasurer and credited to special federal grants funds subject to appropriation and regulation by the General Court under its general and special appropriation powers granted to the General Court by the Constitution?" [Note 1]
In response to our invitation that interested persons submit briefs, the Governor and the University of Massachusetts
have filed briefs urging us to answer the question in the negative.
The question relates to provisions in the bills requiring that Federal grants and funds be paid to the State Treasurer and be subject to appropriation and regulation by the General Court. Because of the general nature of the question and the absence of any reference to specific provisions in the bills, it is not necessary to summarize each bill.
Fundamental in our system of government is the principle that the power of appropriation lies exclusively in the legislative branch. Opinion of the Justices, ante 827, 833 (1978). Baker v. Commonwealth, 312 Mass. 490 , 493 (1942). Opinion of the Justices, 308 Mass. 601 , 614 (1941). Opinion of the Justices, 302 Mass. 605 , 612 (1939). The Legislature exercises this power by setting apart from public revenues a specific amount of money to be used by officers of the executive branch for particular purposes to implement and maintain programs the Legislature has established. Opinion of the Justices, supra at 832-833. Opinion of the Justices, 373 Mass. 911 , 914 (1977). Opinion of the Justices, 297 Mass. 577 , 580-581 (1937). It may appropriate money only in the manner prescribed by the Constitution. Opinion of the Justices, supra at 833. Opinion of the Justices, 308 Mass. at 614. Opinion of the Justices, 302 Mass. at 612.
Article 63 of the Amendments to the Constitution sets out the appropriation process. Section 1 directs that "All money received on account of the commonwealth from any source whatsoever shall be paid into the treasury thereof." Section 2 requires the Governor to submit to the Legislature a budget for the fiscal year setting forth proposed expenditures and the means by which the expenditures will be defrayed (taxes, revenues, loans, and other sources). Section 3 provides, in part, that "All appropriations based upon the budget to be paid from taxes or revenues shall be incorporated in a single bill which shall be called the general appropriation bill." Section 4 authorizes the Legislature to enact special appropriation bills, which must specify the means for defraying the appropriations. Section 5 empowers
the Governor to "disapprove or reduce items or parts of items in any bill appropriating money." The main functions of art. 63 are to centralize control of the Commonwealth's funds and to ensure careful consideration of expenditure of them. Opinion of the Justices, 349 Mass. 804 , 807 (1965). Baker v. Commonwealth, supra. Opinion of the Justices, 297 Mass. at 580.
However, not all funds received by public officers or agencies of the Commonwealth are subject to the appropriation power of the Legislature. See Opinion of the Justices, 349 Mass. at 807, 810. Funds held in trust to be disbursed according to legislatively prescribed conditions are not subject to appropriation. Horton v. Attorney Gen., 269 Mass. 503 (1929). See Opinion of the Justices, 369 Mass. 990 , 995 (1976). Cf. Opinion of the Justices, 334 Mass. 716 , 720 (1956). Article 63 does not apply to such funds even though they are received "on account of the commonwealth," and the State Treasurer is designated custodian of the fund. See Opinion of the Justices, 309 Mass. 571 , 583, 585 (1941); Howes Bros. v. Unemployment Compensation Comm'n, 296 Mass. 275 , 278-279, 289-290 (1936), cert. denied, 300 U.S. 657 (1937); Horton v. Attorney Gen., supra at 512. Cf. Opinion of the Justices, 300 Mass. 630 , 637 (1938).
The fact that the funds received in trust from the Federal government does not affect the result. If Federal funds are received by State officers or agencies subject to the condition that they be used only for objects specified by Federal statutes or regulations, the money is impressed with a trust and is not subject to appropriation by the Legislature. 8 Op. Att'y Gen. 191 (1926). The recipient of such funds has no choice but to comply with the requirements imposed by Federal law. See Opinion of the Justices, 368 Mass. 831 , 838, 841-842 (1975).
Moreover, legislation requiring that Federal funds, including those received in trust by officers and agencies of the executive branch, be paid into the State treasury and be expended only on appropriation by the legislative branch,
would result in the Legislature's interfering with the right and obligation of the executive branch to decide the extent and manner of expending funds in performing its constitutional duty faithfully to execute and administer the laws. See Navajo Tribe v. Arizona Dept. of Administration, 111 Ariz. 279 (1974); MacManus v. Love, 179 Colo. 218 (1972); State ex rel. Sego v. Kirkpatrick, 86 N.M. 359 (1974). Cf. Opinion of the Justices, ante 827 (1978); Opinion of the Justices, 302 Mass. 605 (1939).
To be sure, not all Federal money is received in trust. Federal reimbursements may be made to a State without conditions imposed as to expenditure. This money would be subject to the legislative power of appropriation. Opinion of the Justices, 334 Mass. at 718, 720. See Opinion of the Justices, 369 Mass. at 995. There may be other examples of disbursements of Federal money to the Commonwealth subject to the appropriation power of the Legislature. However, because the bills that gave rise to the question propounded would make all Federal grants and funds subject to appropriation and regulation by the Legislature, they would be constitutionally defective.
We answer the question, "No."
The foregoing answer and opinion are submitted by the Chief Justice and the Associate Justices, subscribing hereto on the thirtieth day of June, 1978.
EDWARD F. HENNESSEY
FRANCIS J. QUIRICO
HERBERT P. WILKINS
PAUL J. LIACOS
RUTH I. ABRAMS
[Note 1] In late 1977, the Senate asked the same question. However, the legislative session terminated before the Justices had an opportunity to respond. Because the bills, which were the subject of the inquiry, were no longer pending, no solemn occasion existed authorizing the Justices to answer the question. Answer of the Justices, 374 Mass. 861 (1978).