April 18, 2007
CLOUT can sue after all

Back in June, the Edd Hendee group CLOUT filed a lawsuit that claimed that the constitutional spending cap was illegally exceeded by the Legislative Budget Board (LBB) during the 2006 special session on school finance. That suit was thrown out in August on the grounds that CLOUT did not have standing to sue Lt. Gov. Dewhurst, House Speaker Craddick, the LBB, et al over this issue. Today the Third Court of Appeals has overturned that ruling, which will allow the suit to proceed.

The Third Court of Appeals in Austin said Citizens Lowering Our Unfair Taxes should be allowed to develop evidence to support its claims that legislative leaders exceeded a constitutional spending cap.


CLOUT wants to have future expenditures under the school finance bill declared unconstitutional.

A visiting state district judge last August dismissed the lawsuit. But the appeals court said the judge erred in dismissing claims based on the limited record before him.

The opinion of the Court is here. Here's the conclusion:

[W]e affirm the district court's dismissal of Plaintiffs' claim alleging unconstitutional delegation of legislative powers for want of jurisdiction. However, to the extent that Plaintiffs' remaining two claims seek declarations that future expenditures under H.B.1's appropriation are unconstitutional or illegal, the district court erred or abused its discretion in dismissing those claims based on the record before it, and we reverse those portions of the district court's judgment. Additionally, we hold that, while Plaintiffs failed to sufficiently plead the associational standing of C.L.O.U.T., Plaintiffs are entitled to leave to amend to address that defect.

The part of the dismissal that was upheld was a claim by CLOUT that the Legislature did not have the right to delegate the task of estimating state revenue to the LBB. The rest of the ruling means simply that CLOUT has the standing to sue - it did not address their factual claims, as the District Court had not addressed them, which they can now pursue in the district court.

I had a brief conversation with David Rogers of the Texas Legal Foundation, who is one of the attorneys for the plaintiffs, and whose press release I've included beneath the fold. He says that CLOUT will indeed pursue this suit, and that it had some discovery actions pending at the time of the dismissal, which he says they now consider to be live and for which they expect a response within the statutory 30 day time limit. One more thing to spice up the 80th Lege session, as if it needed it. We'll see what happens from here.

UPDATE: Dallas Blog has more.

The Third Court of Appeals Tuesday released an opinion vindicating the rights of taxpayers to sue the government over spending in violation of the Texas Constitution.

The ruling, written by Justice Robert Pemberton, in Hendee v. Dewhurst, was released this morning. Edd Hendee, executive director of Citizens Lowering Our Unfair Taxes (CLOUT), filed the suit in June of 2006. Hendee is also a talk-radio host on the KSEV radio station that hosts Senator Dan Patrick of Houston.

"We agree with the Plaintiffs that the Texas Supreme Court's jurisprudence under Article VII, Section 1 compels us to hold that Article VIII, Section 22 is self-executing to the extent of prohibiting legislative action inconsistent with its provisions, and that Plaintiffs claims of violations do not present non-justiciable political questions" Justice Pemberton wrote. Pemberton additionally upheld a century of Texas precedent despite the arguments of the Attorney General, writing "a taxpayer has standing to sue in equity to enjoin the illegal expenditure of public funds, even without showing a distinct injury." He added: "We reject the State Defendants' narrow view of the taxpayer standing exception."

The plaintiffs are represented by former Harris County Republican Chairman Gary Polland and by David Rogers, assistant general counsel of The Texas Legal Foundation ("TLF"). The defendants are the Lieutenant Governor, the Speaker of the House, the Comptroller, the State and the Legislative Budget Board.

David Rogers, TLF's assistant general counsel, said: "The purpose of the lawsuit is to enforce the accountability to taxpayers that is enshrined in the Texas Constitution."

Rogers said: "This lawsuit is exactly what the Texas Legal Foundation was chartered to do. A large majority of Texans voted to limit the growth of state government to the rate of growth of the overall economy, but those desires have been ignored by state officials."

In the suit, Edd Hendee and CLOUT, the plaintiffs, makes the following legal allegations: (1) The legislature in the last budget cycle spent more money than the Texas Constitution allows; (2) Legislators must obey the provision of the Texas Constitution limiting how much they can increase spending in every budget cycle; and (3) Texas law allows taxpayers to enforce the Constitutional spending limits.

The plaintiff has not requested injunctive relief at this time, but may amend the filing because of the State's successful effort to delay trial on the merits through an argument against taxpayer standing and in favor of complete state immunity that the Third Court has rejected.

The Texas Legal Foundation is a nonprofit corporation chartered to advocate "conservative public policy positions that are held by a majority of Texas citizens but that have not been implemented by the government."

The Third Court opinion is available online here: http://www.3rdcoa.courts.state.tx.us/opinions/htmlopinion.asp?OpinionId=15783

The Concurrence of Justice Patterson is available online here:

Posted by Charles Kuffner on April 18, 2007 to Budget ballyhoo