Home J. PHILIP MITCHELL & others [Note 1] vs. SECRETARY OF ADMINISTRATION & another. [Note 2]

413 Mass. 330

May 6, 1992 - August 10, 1992

Suffolk County

Present: LIACOS, C.J., WILKINS, ABRAMS, LYNCH, & GREANEY, JJ.

Provisions of St. 1991, c. 145, Section 5, directing the comptroller to transfer certain money from the Highway Fund to the General Fund in order to balance the Commonwealth's books for the 1991 fiscal year, did not violate the requirement of art. 78, as amended by art. 104, of the Amendments to the Massachusetts Constitution that certain revenues be expended only for specified transportation purposes since, in the fiscal year in question, the Legislature had appropriated more money for the purposes identified in art. 78 than the Commonwealth had received from art. 78 sources. [333-334]

Provisions of St. 1991, c. 145, Section 5, directing the comptroller to transfer certain money from the Highway Fund to the General Fund in order to balance the Commonwealth's books for the 1991 fiscal year, did not impermissibly delegate legislative power to the comptroller. [334]

Monies in the Infrastructure Fund, created by G. L. c. 29, Section 2O, were subject to appropriation and, accordingly, were "undesignated" for purposes of provisions of St. 1991, c. 145, Section 5, directing the comptroller to transfer certain money to the General Fund in order to balance the Commonwealth's books for the 1991 fiscal year. [334-336]

Provisions of an "outside" section of a supplemental appropriation act for the 1991 fiscal year directing a transfer of money from one fund to another dealt with a matter closely related to the appropriation of funds; thus this court had no occasion to consider a claim that the Legislature, by including the section in question, had unconstitutionally appended "general legislation" to an appropriation act. [336-337]

Page 331

CIVIL ACTION commenced in the Supreme Judicial Court for the county of Suffolk on September 19, 1991.

The case was reported by Wilkins, J.

Steven J. Comen (John W. Bishop, Jr., with him) for the plaintiffs.

Thomas A. Barnico, Assistant Attorney General (Peter Sacks, Assistant Attorney General, with him) for the defendants.


ABRAMS, J. The plaintiffs challenge the legality of the comptroller's transfer of $234,828,463 from the Highway Fund to the General Fund in order to balance the Commonwealth's books for Fiscal Year 1991 (FY91). The plaintiffs seek a declaration that the transfer violates arts. 48, 63, and 78 of the Amendments to the Massachusetts Constitution. [Note 3] A single justice reserved and reported this action to the full court on a statement of agreed facts. We conclude that the transfer was authorized by statute, and is constitutional.

Background. Article 78 mandates that certain revenues, principally automotive registration fees and gasoline taxes, be expended only for specified transportation purposes. [Note 4] In FY91, $776,879,980 in revenues were subject to restrictions on expenditures imposed by art. 78. Nearly all of these art. 78 revenues were credited to the Highway Fund, one of the three principal operating funds of the Commonwealth. During

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the same fiscal year, $371,843,989 from the General Fund, another of the Commonwealth's principal operating funds, were expended for transportation-related purposes.

In December, 1991, the comptroller determined that, as of the end of FY91, the "undesignated component" [Note 5] of the balance of the Highway Fund reflected a surplus of $267,967,701, which included $117,329,963 allocated to a "subfund" known as the Infrastructure Fund. The comptroller also determined that the "undesignated component" of the General Fund reflected a deficit of $234,828,463 at the end of FY91. The comptroller therefore transferred the funds at issue from the Highway Fund to the General Fund to offset the deficit in the latter, pursuant to St. 1991, c. 145, Section 5, the final supplemental appropriation act for FY91. [Note 6]

The monies comprising the General Fund and the Highway Fund are pooled together for banking and investment purposes. Expenditures charged to either fund are made from these pooled accounts without regard to the original source of cash in any particular account. The transfer of $234,828,463 from the Highway Fund to the General Fund was completed

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on the books of the Commonwealth by charging that amount to the Highway Fund and crediting that amount to the General Fund. The transfer was retroactive to June 30, 1991. The transfer was not accompanied by any transfer between any of the bank or investment accounts in which Highway Fund and General Fund revenues are maintained.

Discussion. The plaintiffs argue that Section 5 violates art. 78, because it allegedly directs the transfer of money from the Highway Fund to defray expenditures made from the General Fund for purposes not permitted by art. 78. [Note 7] We disagree.

Nothing in art. 78 addresses the transfer of money between statutory "funds," such as the General Fund and the Highway Fund, located within the treasury. Article 78 requires only that art. 78 revenues be expended for certain transportation-related purposes, and contains a broad delegation of power to the Legislature to "direct" the "manner" in

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which this goal shall be attained. As long as, in any given fiscal year, expenditures for art. 78 purposes at least equal revenue received from art. 78 sources, it is of no constitutional significance to and from which funds these amounts were credited and spent. In FY91 the Legislature appropriated more money for art. 78 purposes than it received from art. 78 sources; the transfer, therefore, was consistent with art. 78.

The plaintiffs also argue that Section 5 modified the previously enacted mass transit appropriation "fund splits" in the FY91 General Appropriation Act. [Note 8] This modification, argue the plaintiffs, altered the legislative purpose, and therefore constituted an unconstitutional exercise of legislative authority on the part of the comptroller.

Assuming, without deciding, that Section 5 may be properly construed as an amendment to a prior appropriation act, [Note 9] "[t]here is no constitutional limitation on the general power of the Legislature to amend a prior enactment making appropriations." Answer of the Justices, 406 Mass. 1220 , 1225 (1989). See Opinion of the Justices, 373 Mass. 911 , 913-914 (1977); Opinion of the Justices, 294 Mass. 616 , 621-622 (1936); G. L. c. 29, Section 15 (1990 ed.). Further, "[t]he Legislature may delegate to a[n] . . . officer the working out of the details of a policy adopted by the Legislature." Massachusetts Bay Transp. Auth. v. Boston Safe Deposit & Trust Co., 348 Mass. 538 , 544 (1965). Here, the authority delegated to the comptroller to transfer funds is expressly limited by Section 5, as well as the two statutes cited therein, G. L. c. 29, Sections 1 and 5C.

The plaintiffs alternatively argue that, even if we were to hold that the transfer is proper because General Fund expenditures on transportation-related purposes exceed the

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amount of money transferred from the Highway Fund, the transfer is nevertheless improper -- at least as to the money transferred from the Infrastructure Fund. General Laws c. 29, Section 2O (1990 ed.), which establishes the Infrastructure Fund, provides in part that "[e]expenditures from the Infrastructure Fund shall, subject to appropriation, be made . . . (iii) for direct expenditures [on transportation purposes, excluding the MBTA] . . . and (iv) for capital projects and capital assistance funds for regional transit authorities." The transfer of money from the Infrastructure Fund was improper, argue the plaintiffs, because "virtually all of those [transportation-related] expenditures [from the General Fund] were made on the MBTA, despite the fact that [Section 2O] specifically excludes expenditures on the MBTA from Infrastructure Fund revenues."

Under Section 5, the comptroller was required to calculate the "undesignated component of fund balance" in the operating funds, and to transfer only "undesignated" amounts. The parties' dispute on this issue centers around the meaning of "undesignated" amounts. There is no statutory or regulatory definition of the term "undesignated component of fund balance." The plaintiffs argue that the money in the Infrastructure Fund was not "undesignated" because Section 2O "details the limited and defined purposes on which `special receipts' may be expended." However, the Highway Fund and the Local Aid Fund, too, receive specific revenues, to be used, subject to appropriation, for specific purposes, see G. L. c. 29, Section 2D (1990 ed.); G. L. c. 90, Section 34 (1990 ed.); yet other statutes recognize that the Highway Fund and the Local Aid Fund may contain "undesignated" balances that may be transferred to other funds. See G. L. c. 29, Section 1 (defining "[c]onsolidated net surplus in the operating funds" as "the sum of the undesignated fund balances in the General Fund, the Local Aid Fund, and the Highway Fund"); G. L. c. 29, Section 5C (directing transfers of amounts contributing to the "consolidated net surplus in the operating funds," including amounts "from the Local Aid Fund").

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If the plaintiffs were correct that a fund cannot be "undesignated" if it receives specific revenues to be used, subject to appropriation, for specific purposes, then not only Section 5, but also G. L. c. 29, Section 1, and G. L. c. 29, Section 5C, would be rendered partially or wholly ineffective, because the Highway Fund and the Local Aid Fund could never contain any "undesignated" fund balances. "An intention to enact a barren and ineffective provision is not lightly to be imputed to the Legislature." District Attorney for the N. Dist. v. Lowell Div. of the Dist. Court Dep't, 402 Mass. 511 , 514 (1988), quoting Commonwealth v. Neiman, 396 Mass. 754 , 758 (1986). See Ben Elfman & Sons v. Home Indem. Co., 411 Mass. 13 , 18 (1991) ("Construing a statute in a way that nullifies one of its provisions is inappropriate if there is a reasonable alternative").

We agree with the comptroller's classification of money as "designated" only if it is "set aside by legislative mandate and is not subject to further appropriation." Only if public monies have been specifically appropriated, as opposed to being "subject to appropriation," is "the decision how to spend them [removed] from the control of the Legislature," Associated Indus. of Mass. v. Secretary of the Commonwealth, ante 1, 6 (1992). See Opinion of the Justices, 297 Mass. 577 , 580 (1937) (where money has been specifically appropriated Legislature is "powerless to appropriate any revenue from that source to any other public use"). There is nothing in the language of either Section 5 or Section 2O that exempts the Infrastructure Fund from the transfer provisions applicable to the Highway Fund as a whole, and Section 2O expressly states that the money in the Infrastructure Fund is "subject to appropriation"; accordingly, it was undesignated and could be transferred to the General Fund pursuant to Section 5.

Last, the plaintiffs argue that Section 5 is an unconstitutional "outside section" [Note 10] of an appropriation act because it appends

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"general legislation" to a "general appropriation act," in violation of arts. 48 and 63. Appending Section 5 to an appropriation bill improperly insulates it from referendum petition, argue the plaintiffs, because art. 48, The Referendum Part III, Section 2, expressly excludes from referendum any law "that appropriates money for the current or ordinary expenses of the commonwealth or for any of its departments, boards, commissions or institutions," and "a law is not subject to referendum if any significant part relates to an excluded matter." Powell v. Cole-Hersee Co., 26 Mass. App. Ct. 532 , 535 (1988). The plaintiffs further argue that, because Section 5 is a "general provision[ ] of law," appending it to the appropriation bill violates art. 63 because "[t]he plain language, history, and purposes of [art.] 63 compel the conclusion that only appropriations, and conditions and restrictions thereon, may be included in an appropriation bill."

We have declined to decide the constitutional question whether nonappropriation matters may be included in an appropriation bill where the "outside section" is "sufficiently related to the subject of the appropriation of funds." Brookline v. The Governor, 407 Mass. 377 , 382, 384 (1990). So, too, in this case, because Section 5 relates to the appropriation of funds, we do not consider the plaintiffs' constitutional challenges. General Laws c. 29, Section 1, defines an "[a]ppropriation" as an "authorization . . . of the expenditure of state revenues from a specified fund." Sections 2 and 4 of art. 63 require that appropriation bills specify the "means" by which expenditures shall be "defrayed." The transfer of money from one fund to another, in order to ensure that the receiving fund will contain enough money to "defray" appropriations already made from that fund, is closely related to an appropriation or "directly concerns" it. Id. at 383.

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We remand this case to the Supreme Judicial Court for Suffolk County for the entry of a declaration that the transfer was proper and constitutional. [Note 11]

So ordered.


FOOTNOTES

[Note 1] Thirty individuals (including twenty-four taxpayers) and eight membership organizations "whose members would benefit from increased state expenditures on highway, road and bridge construction," according to the parties' statement of agreed facts.

[Note 2] The comptroller.

[Note 3] The plaintiffs also seek permanent injunctive relief ordering the defendants to retransfer all or part of the funds involved to the Highway Fund. Because the parties have agreed that, if we were to hold the transfer invalid, the funds involved would be retransferred to the Highway Fund, we do not reach the issue of the propriety of injunctive relief.

[Note 4] Article 78, as amended by art. 104 of the Amendments, provides in relevant part: "No revenue from fees, duties, excises or license taxes relating to registration, operation or use of vehicles on public highways, or to fuels used for propelling such vehicles, shall be expended for other than cost of administration of laws providing for such revenue . . . payment of highway obligations, or cost of construction, reconstruction, maintenance and repair of public highways and bridges, and mass transportation lines and of the enforcement of state traffic laws, and for other mass transportation purposes; and such revenue shall be expended by the commonwealth . . . for said highway and mass transportation purposes only and in such manner as the general court may direct . . . ."

[Note 5] See note 6, infra.

[Note 6] Statute 1991, c. 145, Section 5, provides: "Notwithstanding the provisions of any general or special law to the contrary, the state comptroller is directed to conduct the following transfers for the fiscal year nineteen hundred and ninety-one: pursuant to [G. L. c. 29, Section 5C], from the funds contributing to the consolidated net surplus in the operating funds, as defined in [G. L. c. 29, Section 1], to the Commonwealth's Stabilization Fund; and insofar as the undesignated component of fund balance in one or more of said funds is a negative number after the transfers required by the preceding clause, and insofar as the undesignated component of fund balance in one or more of said funds is a positive number after the transfers required by the preceding clause, additional transfers shall be conducted between the funds contributing to the consolidated net surplus in the operating funds to eliminate, insofar as possible, any negative undesignated component of fund balance in any of said funds; provided that such transfers as directed in the immediately preceding clause shall be sequenced so as first to reduce as necessary, but not in an amount which would cause a negative number, the undesignated component of fund balance in whichever of said funds has the largest such balance, and second to reduce as necessary, but not in an amount which would cause a negative number, the undesignated component of fund "balance in whichever of said funds has the smaller such balance."

[Note 7] The defendants argue that we should dismiss this action because the plaintiffs have not properly invoked any of the jurisdictional statutes cited in their complaint. We conclude that there is an actual controversy and that the plaintiffs have legal standing; therefore, they have properly sought declaratory relief pursuant to G. L. c. 231A. "The `actual controversy' requirement of G. L. c. 231A, Section 1, is to be liberally construed." Boston v. Keene Corp., 406 Mass. 301 , 304 (1989). "[A] dispute over an official interpretation of a statute constitutes a justiciable controversy for purposes of declaratory relief." Santana v. Registrars of Voters of Worcester, 384 Mass. 487 , 493 (1981), citing Massachusetts Ass'n of Independent Ins. Agents & Brokers, Inc. v. Commissioner of Ins., 373 Mass. 290 , 293 (1977).

"The question whether an actual controversy exists is closely related to the issue of standing." Id. at 292. "A party has standing when it can allege an injury within the area of concern of the statute or regulatory scheme under which the injurious action has occurred." Id. at 293. The plaintiffs, individuals and organizations who stand to benefit from increased expenditures on road and bridge construction, argue that they have been injured because the balance in the Highway Fund was significantly decreased as a result of the transfer, and, were the money to remain in the Highway Fund, it could only lawfully be spent on road, bridge or Massachusetts Bay Transportation Authority (MBTA) items. At oral argument the assistant attorney general conceded that, if the retransfer were effected, it would "give a leg up" to the plaintiffs in their efforts to obtain increased expenditures on road and bridge construction.

[Note 8] The FY91 General Appropriation Act, St. 1990, c. 150, directed that eighty per cent of expenditures to subsidize the MBTA and regional transportation authorities be made from the General Fund, and the remaining twenty per cent, from the Highway Fund.

[Note 9] The defendants characterize the transfer as a reimbursement "for payments made in accordance with existing fund splits. The fund splits themselves remain on the statute books as valid law."

[Note 10] In each general appropriation bill since 1919, the first section of the act has set forth its purpose and the second section has contained the line items of appropriation. Additional sections are known as "outside sections."

[Note 11] We note that Section 109 of the Fiscal Year 1993 budget, St. 1992, c. 133, states that "[n]otwithstanding the provisions of any general or special law to the contrary, revenue credited to the Highway Fund shall not be transferred to any other fund of the commonwealth for any purpose."