In 1996, the Legislature granted State employees a pay raise. Section 5 of the legislation also exempted certain employees hired after December 31, 2006, from the State merit system. The Governor vetoed Section 5, explaining that the item “would have created an additional expense to the State” because exempt employees accrue leave differently than merit system employees. In response, the Legislature authorized an action to challenge the constitutional validity of the Governor’s item veto of Section 5. The Court determined the case presented legal, not political, issues, that the Legislature had standing to bring the action, and that it would exercise its discretion to consider the dispute.
Turning to the merits, the Court noted that Arizona’s Constitution limits the Governor’s veto power to “items of appropriation.” An appropriation is “the setting aside from public revenue of a certain sum of money for a specified object . . . .” Section 5, the Court explained, does not, on its face, set aside any sum, and moreover did not indirectly appropriate monies by specifying any other fund from which payment for accrued leave or payment to exempt employees could be made. Thus, although the employment statutes may obligate the State to make certain payments, they do not set aside any sum of money from the public revenue, and thus cannot be regarded as making an appropriation. Because Section 5 is not an appropriation, the Governor’s item veto of that provision exceeded her constitutional authority. Section 5 should be given full force and effect.