Lawsuits challenge Calif. governor's budget vetoes

Legal challenges have become the latest obstacle to a budget solution in California. Two lawsuits question Gov. Arnold Schwarzenegger's authority to cut more funding -- much of it from health care programs -- from a budget revision package the Legislature sent him in late July.

The governor's $489 million in line-item vetoes to the latest budget bill did not affect physician pay, which is protected by a recent court order. But the vetoes sliced an additional $300 million from various health and social service programs, including Medicaid and the Children's Health Insurance Program, all of which already faced steep reductions under the original budget revision.

California Senate President Pro Tempore Darrell Steinberg, a Democrat, said the governor "overstepped his constitutional authority" in making the line-item vetoes after lawmakers already had approved the budget reductions, forcing "punishing cuts on children, the disabled and patients."

In a lawsuit filed Aug. 10, Steinberg is asking the San Francisco County Superior Court to block some of the line-item vetoes and restore the Legislature's original budget revisions. A lawsuit filed three days later by a coalition of health clinics and disability support centers also is challenging the cuts on similar grounds.

Schwarzenegger maintains that the cuts were legal, calling them difficult but necessary after the Legislature for months failed to reach a balanced budget to close the state's $24 billion deficit. The July budget bill was the second attempt to address the state's fiscal problems, after lawmakers in February adopted a bill that closed only a portion of the state's $42 billion deficit for fiscal years 2009-10.

Access threatened

The California Medical Assn., while not directly involved in the lawsuits, is generally supportive of the efforts, said David Ford, the organization's associate director of medical and regulatory policy. The CMA decried the overall budget cuts over concerns they will put more pressure on health care costs and drive patients to already crowded emergency departments. The governor's vetoes will only add to that pressure, Ford said.

The governor cut another $50 million from Healthy Families, the state's CHIP program, after lawmakers already had reduced funding by $125 million.

"We're looking at half a million kids who will be disenrolled from the program, not to mention thousands more who are going to be wait-listed," Ford said. "It's doubly frustrating for us, because the federal government just reauthorized [CHIP] and opened up all of these new opportunities for states to expand programs ... but we are whacking our program in half."

Schwarzenegger also cut another $60 million from the state's Medicaid program after the Legislature approved $1.3 billion in earlier cuts -- including lost federal matching dollars -- that affected a number of services. Adult services considered optional, such as podiatry and optometry, were eliminated, and maternal, child and adolescent health programs were scaled back, Ford said.

Healthy Families officials on Aug. 13 announced plans to begin disenrollments. The move is occurring despite an $80 million contribution from the proceeds of a voter-approved tobacco tax.

Veto authority at issue

Steinberg said the temporary CHIP fix would not temper his resolve to fight what he considers to be an unconstitutional move by the governor.

The lawsuits contend that some of Schwarzenegger's line-item vetoes were illegal because he cut funding from previously approved budget reductions. It would be permissible, however, to cut from new spending appropriations. The cases mirror a legal opinion requested by Democratic Assemblyman John A. Perez and released July 29.

"The governor had an opportunity to line-item veto those items in February when the money was first appropriated and did not do so then, so he does not get a second bite at the apple," said Los Angeles attorney Stephen J. Kaufman. His firm authored the opinion for Perez but is not directly involved in the recent lawsuits.

"There's a concern about the separation of powers, and by undertaking these vetoes, the governor is asserting himself in the legislative process and substituting his judgment for that of the Legislature," Kaufman said.

But state officials say the governor's veto powers are broad and that he was well within his constitutional authority. Both sides point to court precedents supporting their positions.

"What constitutes an 'appropriation' has been long established in California law. All that is required is a fund source, an amount and a purpose. That's it," said Jennifer Rockwell, Dept. of Finance chief counsel.

Schwarzenegger spokesman Aaron McLear said the tough economic times and the Legislature's failure to balance the budget forced the governor to make difficult decisions.

But Kaufman said the Legislature already made tough choices with the latest budget bill. "Now the governor is using his judgment to further cut these programs -- after they've already been sliced and diced twice before -- and placing the burden on those who can least afford it."