by David Schultz

Feb 5, 2016, 10:30 AM

Otto v. Wright County

Why the Legislature and the counties should lose

On February 4, the attorneys representing Minnesota State Auditor Rebecca Otto filed suit contending that the legislature’s bill allowing counties to secure private audits instead of using her office violated the State Constitution.

In her complaint, she alleges that the law privatizing audit functions violated the state constitution in two ways: Either it was a separation of powers violation stripping her office of its “core state functions,” or the legislation violated the constitutional single-subject rule in that it was tied together in a law that did a host of other unrelated things.

The Auditor’s arguments parallel the claims I made in a June 8, 2015 Minnpost op-ed of mine.  There my focus mostly was on the separation of powers claim.  (I have taught state constitutional law since 1992).

The Auditor’s complaint builds upon my state case law arguments by emphasizing the historical role of the auditor back to the territorial era in performing audit functions.  The argument, while not dispositive, adds a strong reinforcement that when the Minnesota Constitution was drafted its Framers’ original intent was to give the State Auditor core constitutional functions that included the type of auditing at dispute in this case. Though this complaint does not cite them, there is also case law from other states to reinforce this constitutional argument.

The second, “single subject” argument in the complaint is also smart. It builds off of state case law declaring legislation shall embrace a single subject.

In cases such as Associated Builders and Contractors v. the Honorable Jesse Ventura, the Minnesota Supreme Court has taken an increasingly hard line against allowing the legislature to create bills that cobble together an unrelated collection of provisions.  Other states too have “single subject” rules and courts across the country have ruled that the purpose of these constitutional provisions is to prevent the type of legislative shenanigans that was evident with this bill.

[The original conceal and carry law passed by the legislatures several years ago was declared unconstitutional because it was attached to unrelated legislation. Ed.]

While former Minnesota Supreme Court Justices such as Paul Anderson have argued that the single subject rule should require the entire law to be stricken, a majority of the Court has not said that.  Why is this significant?  If the Minnesota Supreme Court wants to avoid a constitutional confrontation between the Auditor and the Legislature, they can use the single subject rule simply to strike down that provision, thereby avoiding the issue of whether the Legislature actually overreached in its privatization.

Resolution of the budget standoff in Minnesota had come down to the status of legislation that guts the state auditor’s office. Whatever the final resolution of this dispute, one thing is clear: The legislation is foolhardy and probably violates the Minnesota Constitution.

The state auditor is an office provided for in the Minnesota Constitution, and its primary responsibility is to audit local governments in the state to make sure that they are spending their money appropriately. It is an important position in the state that promotes accountability to ensure that tax dollars are spent the way they should be. Yet the Legislature voted to privatize the audit functions, giving local governments the option to hire private audit firms. The governor signed this bill, but now seems to want the legislature to undo this.

The governor should never have signed a bill that allowed for this. Nothing against private auditors, but this is a duty for the state auditor. The privatization will cost taxpayers more in the long run – as is typically the case with many privatizations. I pointed this out in a MinnPost op-ed back in 2011.

Conflicts with two articles in the Constitution

But in many ways, it probably does not matter whether the governor wins to get this privatization overturned in the legislature – the provision is probably unconstitutional, conflicting with both Article V, section 1 of the Constitution creating the office of the auditor, and Article III, section 1, the separation of powers clause of the Constitution.

There is a rich jurisprudence in Minnesota that carefully protects and respects separation of powers. One of the best cases on this issue is State ex rel. Mattson v. Kiedrowski, 391 N.W.2d 777 (1986). In that case, at issue was a 1985 law enacted by the Legislature, in special session, which transferred most of the responsibilities of the state treasurer, an executive officer, to the commissioner of finance. The reason for the transfer of responsibility was that the treasurer, then a constitutional officer, essentially abandoned the state and was no longer performing his duties. The Supreme Court rejected this transfer of duties.

The court reasoned that even though the duties of the treasurer were prescribed by the Legislature, that “does not allow a state legislature to transfer inherent or core functions of executive officers to appointed officials.” One branch of government, or even another part of the executive branch, cannot act in such a way either to undermine the core functions of another constitutional part or make it impossible for it to perform its constitutional duties.

Other Minnesota cases have reinforced that point. In In re Marriage of Sandra Lee Holmberg at issue was whether a law regarding child support giving administrative law judges the power to modify district court orders and to assume duties of district court judges violated the state separation of powers clause. The Supreme Court said yes, arguing that the transfer of power violated separation of powers. In supporting its decision, the court referred to precedents and decisions in other states reaching the same conclusion.

More separation of powers rulings

In State v. Baker the Minnesota Supreme Court voided a state-enhanced gross misdemeanor statute as unconstitutional because it allowed for local imprisonment without a 12-person jury trial. Here the court said that the law sought to redefine crimes to avoid the constitutional mandate. In State ex rel. Birkland v. Christianson, the court declared that the Legislature cannot change form of government which would change separation of powers. In In re Temporary Funding of the Judicial Branch, a case involving funding for the judicial branch as a result of a government shutdown in Minnesota, the Supreme Court ruled that it had the authority to require the Legislature and governor to fund the courts, for failure to do so would prevent the judiciary from performing its constitutional duties and therefore it would be a separation of powers violation.

Similar conclusions were reached regarding separation of powers and constitution in clerk of court’s compensation for Lyon County v. Lyon County Commissioners. Other state courts have reached similar conclusions regarding separation of powers and legislative efforts to strip constitutional offices of their powers.

The constitutionality of the legislation to privatize some of the auditor’s functions resides in how far the Legislature may act to prescribe the functions of that office. This issue must be considered in light of the question: To what extent does this law impede the core duties of the auditor? Given past precedent, there is good reason to conclude that this privatization is unconstitutional and in a lawsuit the auditor would likely prevail.

This story originally appeared in Schultz’s Take.

Update by Steve: You can read more about the background of the suit in this David Montgomery/Pioneer Press story. There is also a copy of the complaint embedded in the story, which is interesting reading. It contains a lengthy preamble about the history of the office and the background of the suit.