New Approach to Budget Appropriations Necessary After Supreme Court Ruling

The Joint Committee on Finance (JFC) will have to take a very different approach to writing the next state budget, after the Supreme Court stripped the legislature of key oversight authority last year in a lawsuit filed by Gov. Evers.

Since 1981, the legislature made all appropriations in the budget but required additional review for certain programs before the funds could be dispersed. This passive review impacts dozens of these “statutory programs.” In 2023, Gov. Evers sued the legislature over one of them: the Knowles-Nelson Stewardship Program.

The Knowles-Nelson Stewardship Program’s purpose is to buy private land to conserve it. The last state budget appropriated $33.25 million to make those purchases. The program has historically struggled from fiscal mismanagement and local land disputes. Because of those controversies, in 2007 Gov. Doyle and the Democrat-led legislature gave JFC the authority to review all stewardship projects worth more than $750,000 with the ability to deny the disbursement.

At the time, no one questioned the constitutionality of that law. Afterall the state constitution gives the legislature the power of the purse. However, in 2019, JFC denied funding for 27 projects, which led to Evers’ lawsuit. He said that it was unconstitutional for the legislature to “block” funds that it had already appropriated.

“The state Legislature has given legislative committees a veto over a wide range of executive branch activity, concentrating executive power in small subsets of the Legislature,” added Wisconsin Attorney General Josh Kaul.

Ultimate, the State Supreme Court agreed with Evers and Kaul in a 6-1 decision. Justice Rebecca Bradley wrote the majority opinion.

“We hold that Wis. Stat. §§ 23.0917(6m) and 23.0917(8)(g)3. (2021-22)3 unconstitutionally authorize the legislative branch to arrogate and impede the executive's core power to execute the law, violating the separation of powers structurally enshrined in our constitution,” Bradley wrote.

So far, that ruling has only impacted stewardship funds, but Evers knows that the ruling can be applied to other statutory programs as well, such as PFAS disposal and emergency hospital funds. JFC also has passive review authority over DATCP’s agricultural conservation easement purchases, though that never came to a head this session.

It’s difficult, if not impossible, to calculate the total impact of the Supreme Court’s ruling. Most passive reviews concern internal payment schedules, fund transfers, or unanticipated federal aid. JFC also conducted passive reviews of how state agencies calculate fees they charge local governments, which happens after the budget is passed. Losing control of that process is especially troubling.

However, there is another way that JFC maintains oversight of state spending after the budget is passed. It can appropriate funds to itself for specific purposes to be transferred to agencies later upon request. Some of these programs in the current state budget include:

• $50 million DPI reading program
• $31.9 million UW performance-based workforce development funding
• $20 million Tech College oral healthcare workforce grants
• $1 million DPI recovery high schools

However, Evers believes the Supreme Court ruling applies to those programs as well. So far, he’s only submitted 13.10 requests and issued press releases, but it will be a point of contention going forward. Lawmakers cannot be assured that they would win the argument in court.

The fact is inescapable that JFC has lost its authority to provide oversight of funds after they have been appropriated in the state budget. Lawmakers have four options when they write the next state budget to acknowledge this new reality. First, they can either choose to appropriate funds to those affected programs, nonetheless. Second, they can appropriate funds to specific projects rather than to broad programs. Third, they can appropriate funds to JFC and hope that doesn’t get challenged in the courts. Finally, they can choose to appropriate nothing to those programs upfront, forcing agencies to submit supplemental funding requests on a case-by-case basis. Obviously, that last option would be the most prudent.