May 14, 2009                                                   HB 645 text w/Gov Line Item Vetoes (.pdf)


The Honorable Linda McCulloch

Secretary of State

State Capitol

Helena, MT 59620


Dear Secretary McCulloch:


In accordance with the power vested in me as Governor by the Constitution and the laws of the State of Montana, I hereby deliver to you House Bill 645, “AN ACT IMPLEMENTING THE AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009 . . . ,” which I have signed into law with items “struck out,” or vetoed.


I cannot fairly discuss House Bill 645, the bill to implement the federal stimulus act in Montana, without also commenting upon House Bill 2, the general appropriations act to fund Montana state government for the coming biennium. Combined, I commend the 61st Legislature for passing a fiscally prudent budget through which Montana will live within its means while investing in important programs, such as the voter-passed children’s health initiative and Montana’s K-12 public schools. Of equal significance, when I submitted my proposed budget to the 61st Legislature for its consideration, I requested an ending fund balance of $250 million. I am pleased that with passage of these two bills, more than $250 million remains in the state’s savings account in the event the State’s actual revenues fall short of current projections.


Turning to House Bill 645, my item vetoes fall into three general categories: the first allows me to exercise my constitutional authority to veto items and actually see a reduction in state expenditures; the second reduces state spending by more than $4.5 million on items which I believe are unnecessary or excessive; and the third relates to provisions in the bill which I believe are constitutionally infirm. What follows is an explanation for each individual item veto.


First, section 83 of House Bill 645 (page 56) is what I refer to as a general “re-appropriation” provision. It states that any specific item of appropriation that is vetoed or voided in the appropriations section (section 85) of the bill will be automatically appropriated to counties, cities, tribes, and schools under the formula contained in section 57. Absent my veto of section 83, my item vetoes of specific appropriations would not reduce spending in House Bill 645, but would lead to their “re-appropriation” to local governments and Montana tribes. My goal in issuing the item vetoes is to reduce state spending, not to redirect the money to enable other governmental entities to spend it.


Second, I have vetoed the following appropriations, and accompanying narrative provisions:

 

•         Welcome Home Loan Program, $2 million state special revenue (page A-3; sections 60 and 61, pages 49 and 50): While the language establishing this new program would lead the undiscerning reader to believe its purpose was to assist first-time home buyers, the program actually is set up to protect financial lenders by shifting the risk of certain home loans exclusively to the State. Under this temporary, new program, lenders, such as banks, could loan money to first-time home buyers for down payments and closing costs to be pledged with federal tax credits. If home buyers failed to repay their loans by June 30, 2010, the State of Montana would be obligated to purchase those loans before August 1, 2010. The effect would be that the State would step into the shoes of the lender holding a defaulted loan obligation – not a particularly desirable position. Furthermore, the State, as a creditor, would be in a subordinate position to the mortgage lender, which would be the first lien holder. To summarize, though billed as a program to assist home buyers, the real effect of the program would be to benefit lending institutions by shifting all risk on these loans to the State. I also note that the State of Montana already has a first-time home buyer program that has been in existence since 1977, and that program is well-run and sufficiently funded.

 

•         Rail Transit Authority, $99,354 state general fund (page C-2): As you know, I have vetoed Senate Bill 291, establishing a Montana Railroad Development Authority. The item vetoed in House Bill 645 would fund the Authority, which I do not support, for the reasons previously stated in my veto message to Senate Bill 291.

 

•         Meth Watch, $500,000 state general fund (pages D-1 and D-2): The Montana Meth Project, a private undertaking, first approached me for state funding as I was preparing my budget to present to the 2007 Legislature for its consideration. Then, I was asked to support “seed money” for the project that was to become self-sustaining. My proposed budget included $1 million for the Meth Project, and the 2007 Legislature appropriated that amount for the program for the biennium. The Meth Project has not become self-sustaining, and I was asked before the 2009 session to again include money for the project in my proposed budget. A representative of the Montana Meth Project informed me that its annual budget is $2.1 million, and I included $500,000 of state funding for the project in my proposal to the Legislature. Additionally, Congress recently appropriated $1 million for the Montana Meth Project, and, consistent with my original proposal, House Bill 2, which will become law, appropriates $500,000 to the project for the coming biennium. Again, given these economically difficult times, I do not believe the additional appropriation to this program of $500,000 in state general funds contained in House Bill 645 is warranted, and for this reason I have vetoed that appropriation. With this item veto, the meth project will need to move toward its own goal of become self-sustaining and raise $600,000 through private fundraising to reach its projected budget, or, like the rest of us, tighten its belt and manage with less.

 

•         Agriculture Experiment Station - Equipment and Infrastructure, $2 million state general fund (page E-4): House Bill 2 appropriates over $24 million to Montana’s Agriculture Experiment Stations. Particularly in these difficult economic times, I do not believe the additional $2 million of general fund appropriations to the Agriculture Experiment Stations in House Bill 645 are necessary. I have asked parents, students, the disabled, and others across the state to tighten their belts and live within their means. I am Montana’s first, and the nation’s only, agricultural researcher and scientist to serve as governor and, naturally, agricultural research is close to my heart. Despite that fact, I am directing that these state-funded agriculture programs limit their expenditures and live within their means, just as the rest of Montana must do.


Third, I have issued one item veto in order to simplify the accounting and tracking of House Bill 13, the state pay plan bill, for the state’s budget analysts. Both House Bill 645 and House Bill 13 contain certain identical appropriations to implement House Bill 13, although only one set of these appropriations will become law. I vetoed the duplicate provisions found in House Bill 645 (section 75, pages 54 and 55, and page A-1), and, as a result, all the appropriations to implement the pay plan bill will be contained in the pay plan bill, itself, House Bill 13.


My final item vetoes are found scattered throughout House Bill 645, and strike language that I believe is constitutionally defective. In six instances, House Bill 645 contains narrative that would have either voided or reduced appropriations to programs located in all three branches of government had Senate Bill 100, an unrelated bill, not become law.


Senate Bill 100, increasing distribution of coal severance tax revenue to counties, became law without my signature. Had Senate Bill 100 not passed the legislature, or had I successfully vetoed Senate Bill 100, under the objectionable language found in House Bill 645, the demise of Senate Bill 100 would have reduced or eliminated appropriations to the legislative branch for committee work, the judicial branch for its self-help law program, and three executive branch departments for areas as diverse as worker training, historic preservation, public health standards, and information technology. Thus, funding for these six programs, which are unrelated to the coal tax distribution to counties found in Senate Bill 100, was held “hostage” to the passage of Senate Bill 100.


The Montana Constitution’s “single subject” requirement prohibits the legislature from placing a “rider” in one bill in order to hold it hostage dependent upon the outcome of a separate, unrelated bill. My item veto authority, which I have exercised with regard to these objectionable provisions, extends to the veto of “riders.” Cobb v. Schweitzer, Cause No. CDV-2005-320, Memorandum and Order of December 21, 2006, Montana First Judicial District Court, Lewis and Clark County. I believe the provisions linking the funding of the six unrelated programs to passage or failure of Senate Bill 100 are constitutionally impermissible riders.


I have taken the step of exercising this item veto authority as a notice to the Legislature of my constitutional objections to these provisions. I note that in 2007, I also observed similar provisions in bills winding their way through the Legislature, however those constitutionally problematic “contingent voidness” provisions did not reach my desk. While I recognize that there is a proper use of “contingent voidness” provisions in legislation, when those provisions are contained in wholly unrelated pieces of legislation, are outside the “single subject” rule, and are for purposes solely of political leveraging, I do not believe they meet the constitutional standard. To the extent these objectionable provisions were inserted into House Bill 645 to effect my decision on whether to sign, veto, or let become law Senate Bill 100, I also believe they encroached upon my veto authority. So that you also know, my decision to let Senate Bill 100 become law was in no way based upon these troubling provisions in House Bill 645.


In closing, I thank the Legislature for doing its job. Now it is time for me to continue with the business of running the executive branch of government within the policy and budget framework the Legislature established for the State of Montana for the next two years.


Sincerely,




BRIAN SCHWEITZER

GOVERNOR


cc: Legislative Services Division