I’ve been writing about Ernest Dumas’ research into the history and interpretation of the constitutional amendment generally viewed as requiring a 75 percent legislative vote for approval of most appropriation bills, such as the Department of Human Services bill including money to implement the private option expansion of Medicaid. It’s complicated and not quite so clear-cut as presumed.
The first and best solution is to follow custom. That is, both House and Senate would muster 75 percent votes to pass the appropriation and thus leave no doubt about continuing a new program that already has expanded health care coverage to 100,000 Arkansans, with many more in the pipeline. The bill has damaging amendments intended to soften up the program for the Koch-backed Tea Party lobby’s plan to kill it dead in 2015. But it keeps the program alive.
And if there aren’t 75 percent votes — 75 in the House and 27 in the Senate?
Well, read on for some Arkansas legal, judicial and legislative history and a possible alternative from Dumas, who’s been writing about the legislature for more years than most members of the legislature have been alive.
Ultimately, an unpredictable court would be the arbiter on complicated questions of interpretation. But Dumas makes a strong case that a vote up or down on only the wholly federally funded private option — separated from the larger DHS bill that includes expenditure of state money — would require only a simple majority vote.
By Ernest Dumas
If the legislature approved the federal Medicaid appropriation for fiscal 2015 by a simple majority—anything short of 75 percent—it is anybody’s guess whether the Arkansas Supreme Court would say the appropriation was valid or invalid. The baffling constitutional provisions that govern legislative spending will support almost anything that the justices might say, from the position that the Medicaid appropriation requires NO votes from the legislature to requiring a simple majority. It would be extremely hard to hold that the Medicaid appropriation for the private option requires a three-fourths vote, at least if that appropriation stood alone in a bill. Otherwise, five good legal scholars and grammarians can read the convoluted provisions of the Constitution and come up with five interpretations. If they read them again they can come up with five more.
Of course, if the appropriation received a majority but something less than 75 percent in the Senate, the president of the Senate would have to declare the measure passed for it to proceed to the governor for his signature or else the Senate would have to overrule his ruling if he said the bill required a three-fourths vote.
While it obviously is not certain that the Arkansas Supreme Court would validate a Medicaid appropriation that did not get three-fourths, there is a strong legal case for it.
In fact, the strongest case of all may be that it takes no votes of the legislature—that’s right, none—to spend federal money that the state has already authorized by law to be spent in perpetuity. Congress does not appropriate entitlements like Social Security, Medicare, Medicaid and veterans benefits because people are entitled to them by law. In the case of the Medicaid “private option,” the legislature created the program by huge majorities in both houses a year ago. It did not authorize it for one year but in perpetuity. It is true that the 2013 act creating the private option said, in a proviso that was not to be codified, that the private option was not to be implemented until the 89th General Assembly first passed an appropriation for it by a three-fourths vote, but the Assembly did pass an appropriation by a three-fourths vote and the act was implemented. It is also true that the legislature ordinarily appropriates federal monies, although federal monies have been spent on state programs that were not appropriated.
It is important to observe that 100 percent of the money that is to be appropriated for the private option is federal funds authorized by Congress and also by the Arkansas legislature. It will remain so until 2017, when a relatively small sum of state taxes will be applied to the program as matching. That is the point when the handful of objectors to giving health insurance to 200,000 working poor Arkansans can actually stop the program by refusing to appropriate the state money for it. The federal government then would be obliged to turn off the spigot of federal money to Arkansas as well.
Here is the nut of the issue: The Arkansas constitutional provisions that are at the root of the whole controversy over whether funding Medicaid requires a simple majority of both houses or the extraordinary three-fourths of both houses apply to spending Arkansas taxes, not federal taxes. No Arkansas taxes are involved in the expanded Medicaid program. Not one dime of Arkansas taxes will be spent on it until 2017.
So you can argue that the federal money to pay for the private option does not need the votes of the legislature every year since it has already authorized them in perpetuity, or you can argue that if it takes any votes a simple majority will suffice. It is harder to find footing for the case that it takes 75 percent of both houses to authorize spending federal dollars for such a purpose. If the federal Medicaid appropriation is included in the overall appropriation for the Department of Human Services, along with state funds, the bill, of course, must meet a different standard for judging the number of votes required. If the appropriation fails to get three-fourths in each house, the federal Medicaid funds, or even the portion dedicated to the private option, could be stripped out and introduced as a separate bill, where it seems quite clear that a simple majority would prevail if the Supreme Court examines the clear purposes of the Arkansas Constitution, which are to restrict the raising and spending of state taxes.
There are many legal scenarios. Let’s explore a few of them.
Three sections of the Constitution are at issue. All place limitations on raising taxes and spending them.
Article 5, Section 31, which is part of the original 1874 Constitution, says:
Purposes of taxes and appropriations.
No State tax shall be allowed, or appropriation of money made, except to raise means for the payment of the just debts of the State, for defraying the necessary expenses of government, to sustain common schools, to repel invasion and suppress insurrection, except by a majority of two-thirds of both houses of the General Assembly.
(Note that it refers to levying state taxes and spending them. It places no limitations on levying and spending local taxes or, obviously, federal taxes. Note also that it gives a pass to “just debts of the state” and the “necessary expenses of the government.” They are so important that, like the schools, a simple majority can appropriate the money.)
But voters in 1934 approved an amendment that modified Section 31. Amendment 19, the so-called Futrell Amendment, did not repeal Section 31 but clearly amended it. The Supreme Court concluded many years ago, and unanimously, that it did not replace Section 31 but added requirements for taxing and spending. Exactly how it did so has been a point of contention. The Supreme Court has given conflicting interpretations.
Amendment 19 has been codified into the Constitution in four sections, but only two are relevant to the issue at hand. Section 38 makes the limitations on state taxes in Section 31 more specific but also makes it harder in some cases and easier in other cases to raise state taxes.
Section 38. Taxes—Increase—Approval of electors.
None of the rates for property, excise, privilege or personal taxes, now levied shall be increased by the General Assembly except after the approval of the qualified electors voting thereon at an election, or in case of emergency, by the votes of three-fourths of the members elected to each House of the General Assembly.
Under Section 31 all state taxes required a two-thirds vote, but Amendment 19 raised the requirement to a statewide election or a three-fourths vote of both houses to raise certain taxes but also made it possible to levy new taxes (sales tax, for example) by a simple majority of the legislature.
The next convoluted sentence (73 words) of Amendment 19 directs how the legislature must spend those taxes. It is codified now as Section 39 of Article 5. It is the sentence that the Supreme Court has had so much trouble interpreting and that is the foundation of the present controversy.
Section 39. State Expenses—Limitation—Exceptions.
Excepting monies raised or collected for educational purposes, highway purposes, to pay Confederate pensions and the just debts of the State, the General Assembly is hereby prohibited from appropriating or expending more than the sum of Two and One-Half Million Dollars for all purposes, for any biennial period; provided the limit herein fixed may be exceeded by the votes of three-fourths of the members elected to each House of the General Assembly.
(The codifiers have changed Amendment 19 to say “fiscal year” instead of “biennial period,” which is two years, but the law says biennium, not a year. But $2.5 million is so small that it has no bearing on the issue, and it had no bearing even in 1935, the first legislative session after its passage.)
So what does the pivotal clause “provided the limit herein fixed [$2.5 million over two years] may be exceeded by the votes of three-fourths of the members elected to each House of the General Assembly” mean? There are quite a few possibilities:
• That once the legislature appropriates $2.5 million for two years (or even one year), three-fourths of the members can vote to raise that ceiling to some higher figure and then proceed to pass appropriations by a simple majority? That is actually what the amendment says, but it has not so far been interpreted that way.
• That any appropriation from state taxes that is spent on education, highways, Confederate pensions and the just debts of the state needs a simple majority, but an appropriation for anything else needs three-fourths? That has been the common view in the legislature over the years but a Supreme Court made up of seven private lawyers appointed by the governor in 1989 seemed to hold, 6 to 1, that every appropriation for any purpose requires a three-fourths vote because the first appropriation of every legislative session far exceeds $2.5 million so everything after that needs three-fourths. At least one of the lawyers who served on the special court in 1989 says the special justices actually only held that the general appropriations bill required a three-fourths vote and that the other language in the opinion was merely dicta—that is, not binding—and was the opinion of the special justice who wrote the opinion.
• That any appropriation from state taxes that is spent on education, highways, justifiable state debts, “the necessary expenses of government,” or to quell insurrections or invasions requires only a simple majority but anything else needs three-fourths or two-thirds? That is what the one dissenting special justice—a country lawyer from Ozark—said in the 1989 suit. He relied on extensive precedents that Amendment 19 only added to Section 31 and did not repeal it, so “necessary expenses of government” must still be appropriated only by a simple majority. Amendment 19 simply added highways, Confederate pensions and a broader definition of education to the simple-majority spending bills in Section 31 and raised the threshold for passing other spending to three-fourths. The court has said many times that a constitutional amendment must be construed to give meaning to other parts of the Constitution if they are not explicitly or obviously repealed. The court also said several times that the legislature, not the courts, could determine what were necessary expenses unless it was truly outrageous. The Supreme Court once said that new seats and furnishings in the legislative chambers were clearly a necessary expense and needed only a majority. In 1951, the Supreme Court unanimously held that the legislature was correct in deciding that pharmacy classes at a private religious college were a necessary expense of government, but it went on to say that the appropriation failed because the money was to be spent by the state pharmacy board and was not being spent from a school fund or directly from a tax levied for education and nothing else.
• That if a tax is raised and collected for education, highways or to pay state debts then any appropriation for any purpose that spends those taxes needs only a simple majority? That actually is the literal meaning of Amendment 19—your English teacher will vouch for that—but the Supreme Court in the muddled 1951 ruling about the pharmacy class at College of the Ozarks took an entirely different tack. The court seemed to say that if a tax or the state’s general fund is not specifically and solely dedicated to education—education and only education—any appropriation for any purpose that spends money from the fund requires a three-fourths vote. The justices tried but could not make sense of the complete overhaul of the state’s fiscal system that had occurred six years earlier, in 1945, when the legislature abolished some 100 separate funds where taxes were channeled and replaced them with only five—the chief one being the general fund, where sales and income taxes and most other taxes were channeled and then distributed among the schools, colleges, prisons, medical services and many other programs on a percentage basis. It is the state’s revered revenue stabilization system. The sales tax was levied in 1935 for education and a few other purposes but, in the great fiscal reform of 1945, sales, income taxes and most excise taxes were just flushed into the general fund. The whole premise of Amendment 19 and its restrictions on spending—that each state tax was levied and collected for a specific purpose—vanished in 1945. The court tried to sort through all the changes to see how they affected Amendment 19’s restrictions but then gave up. It seemed to say that if the fund into which taxes emptied was not just for education and nothing else then appropriations from it needed the extraordinary three-fourths vote. The court volunteered that Amendment 19 seemed to be bad law but it could do nothing about it except enforce it. Although most of the general fund and the taxes that support it are spent on education (public schools and colleges), the court said appropriations from the general fund are nevertheless subject to the restrictions of Amendment 19. But it went no further than that. It concluded by saying that its ruling applied only to the pharmacy appropriation bill and nothing else, a sort of confession that it really did not know what to make of Amendment 19 in the modern fiscal world since the system upon which it was premised was gone.
There are other interpretations of Amendment 19, each firmly based in its language, but all of these arguments have nothing to do with the Medicaid appropriation for the private option because not a penny of it is state taxes or state funds, which is all that Amendment 19 regulates.
Remember, Governor Futrell, who wrote Amendment 19, had only one thing in mind, as he explained when he described it in his inaugural address: to curtail rising Arkansas taxes. That was his purpose, even though he immediately turned around and raised state taxes sharply. He said he had devised Amendment 19 as a way to make it exceedingly hard for the legislature to raise and spend taxes for anything except the necessary expenses of government, which he described as those that protected people’s rights. He gave a few examples of those expenses: education, prisons, law enforcement.
As long as the appropriation of federal monies is in the same bill as the state funds for various other medical services programs, of course, it is subject to the same vote requirement. There is only one roll call. But if the appropriation for the private option—all of it federal money—stood alone it would be a stretch to apply Amendment 19’s supermajority requirement. Amendment 19 did not apply to federal funds even in 1935, when direct federal aid was supplying most of the money spent on the schools as well as for relief. The state made no attempt to regulate the spending of federal aid. Governor Futrell said the state should just be grateful that the feds were willing to do it.