APPROPRIATIONS ‑- LEGISLATURE ‑- STATE AGENCIES ‑- ADOPTION OF BIENNIAL BUDGET
Legal consequences of a failure by the legislature to adopt a biennial state budget prior to the commencement of the fiscal period to be covered thereby.
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March 17, 1977
Honorable Jim McDermott
State Senator, 43rd District
103 Institutions Building
Olympia, Washington 98504 Cite as: AGLO 1977 No. 11
Dear Senator McDermott:
By recent letter you have requested the opinion of this office on the following question:
"In the event that the Legislature fails to pass a biennial budget by June 30, 1977, what will be the status of obligations incurred by the State between July 1, 1977, and the passage of the budget?"
We respond to that inquiry in the manner set forth in our analysis below.
At the outset, we must make note of a policy consideration regarding the issuance of an attorney general's opinion on the question you have posed. Simply stated, it has long been the policy of this office not to advise any state officer upon an hypothesis which assumes primarily an intent to violate the law. And, in this case, there is a law presently in existence which clearly would be violated by the failure of the legislature to adopt a budget for the 1977-79 biennium prior to June 30, 1977. We have reference, specifically, to RCW 43.88.080, a part of the state budget and accounting act, which reads as follows:
[[Orig. Op. Page 2]]
"Adoption of the omnibus appropriation bill or bills by the legislature shall constitute adoption of the budget and the making of appropriations therefor. A budget for state government shall be finally adopted not later than thirty calendar days prior to the beginning of the ensuing biennium."
Assuming, however, that this existing statute were to be either amended or repealed by the legislature so as to sanction the adoption of a budget for a given fiscal biennium even after the commencement of that biennium, our direct answer to your question would then involve a reference to another provision of the budget and accounting act; namely, RCW 43.88.130 which reads as follows:
"No agency shall expend or contract to expend any money or incur any liability in excess of the amounts appropriated for that purpose: Provided, That nothing in this section shall prevent the making of contracts or the spending of money for capital improvements, nor the making of contracts of lease or for service for a period exceeding the fiscal period in which such contract is made, when such contract is permitted by law. Any contract made in violation of this section shall be null and void."
In addition, mention would also have to be made in such a case to the basic restraint upon expenditures from the state treasury which is contained in the following language of Article VIII, § 4 (Amendment 11) of our state constitution:
"No moneys shall ever be paid out of the treasury of this state, or any of its funds, or any of the funds under its management, except in pursuance of an appropriation by law; nor unless such payment be made within one calendar month after the end of the next ensuing fiscal biennium, and every such law making a new appropriation, or continuing or reviving an appropriation, shall distinctly specify the sum appropriated, and the object to which it is to be applied, and it shall not be sufficient for such law to refer to any other law to fix such sum."
[[Orig. Op. Page 3]]
Under RCW 43.88.130,supra, the answer to your question would be that if no biennial budget is enacted by June 30, 1977, those state agencies which are entirely dependent upon appropriated funds for their operations would simply be precluded thereafter from incurring any further obligations except to the limited extent permitted by the proviso to that statute ‑ and then only if the particular contract for capital improvements or of lease or for service is permitted by some other law. On the other hand, there are some state agencies which are not wholly dependent upon appropriated funds1/ and, to that extent, those agencies would not be inhibited by the provisions of RCW 43.88.130, supra, in incurring obligations after June 30, 1977, even if no biennial budget has by then been adopted.
Much the same analysis would also apply in terms of the significance of Article VIII, § 4 (Amendment 11) of the constitution, supra. Unlike RCW 43.88.130, however, that constitutional provision hones in on expenditures rather than the mere incurrence of obligations. In addition, Article VIII, § 4 (Amendment 11) differs from RCW 43.88.130 to the extent that, being a part of the constitution rather than a mere statute, it could not be amended between now and June 30, 1977, by action of the legislature alone.2/ But on the other hand, like the statute, this section of our constitution only impacts those state agency expenditures which are subject to the appropriation process. Thus, for example, the absence of budgeted appropriations for the 1977-79 biennium would not prevent the continuing payment of benefits to members of the Washington public employees' retirement system because those expenditures have been [[Orig. Op. Page 4]] held by our state supreme court not to be subject to Article VIII, § 4 (Amendment 11),supra.3/ See,State ex rel. Ret. Bd. v. Yelle, 31 Wn.2d 87, 195 P.2d 646, 201 P.2d 172 (1948).
Another example of the kind of agency which, to a limited extent, could continue to incur obligations and make expenditures even in the absence of a legislatively adopted budget for state government as of the commencement of the 1977-79 biennium would be the University of Washington or, for that matter, any of the other state colleges and universities which, like the university, are permitted to utilize so-called "local" funds to cover portions of their operational expenses. See, RCW 43.88.195 which continues to permit the maintenance of funds outside of the state treasury under certain circumstances when approved by the office of program planning and fiscal management.
Also to be noted are two other exceptions to the general requirement of an appropriation which are provided for under the budget and accounting act. First, RCW 43.88.170 authorizes state agencies to make refunds of erroneous or excessive payments to them without an appropriation. And secondly, RCW 43.88.190 permits the creation of revolving funds under certain specified circumstances while the final sentence of RCW 43.88.180 (earlier portions of which are quoted in footnote 1 above), in turn, leaves it up to the legislature in each case to decide whether or not an appropriation will be required in order to expend monies from such a fund.
In conclusion, however, except for these various special situations, the basic consequences of a failure by the legislature to have adopted a biennial budget by June 30, 1977, is quite simple; namely, no expenditures may be made for salaries or anything else, and no obligations to make such payments may be incurred by any state agency ‑ including, we should note, the legislature itself in the absence of some special appropriation for that purpose.
If you are further concerned, in light of the foregoing, with any particular factual situation we would be most happy to consider that situation and provide you with [[Orig. Op. Page 5]] our opinion thereon. Other than that, however, there is really very little more we can say in response to your present inquiry. It is hoped that the foregoing outline of general statutory and constitutional principles will be of some assistance to you at this time.
Very truly yours,
PHILIP H. AUSTIN
Deputy Attorney General
*** FOOTNOTES ***
1/See, RCW 43.88.180 which reads in material part as follows:
"Appropriations shall not be required for refunds, as provided in RCW 43.88.170, nor in the case of payments other than for administrative expenses or capital improvements to be made from trust funds specifically created by law to discharge awards, claims, annuities and other liabilities of the state. Said trust funds shall include, but shall not be limited to, the accident fund, medical aid fund, retirement system fund, Washington state patrol retirement fund and unemployment trust fund. . . ."
2/See, the amendatory process as set forth in Article XXIII, § 1 of the constitution.
3/Nor are they subject to such a requirement under the budget and accounting act because of RCW 43.88.180, supra.