California Gov. Arnold Schwarzenegger won a round this week in a legal dispute over his line-item veto authority.

A state appeals court ruled that the governor was within his authority when he used the line-item veto power to reduce about $500 million from the budget.

Those vetoes came after lawmakers passed a package of budget actions to close a deficit that emerged after lawmakers approved the fiscal 2009 budget earlier in the year.

The governor issued the vetoes after the Assembly failed to approve part of a budget-balancing deal that had been agreed to in negotiations among the governor and legislative leaders.

The lawsuit — brought by social service providers who lost funding through the line-item vetoes — argued that the governor did not have the right to make line-item vetoes because the items in question were not truly “appropriations,” since they simply reduced spending that had been approved in earlier, separate budget legislation.

Senate president pro tempore Darrell Steinberg, D-Sacramento, filed a similar suit challenging the vetoes; the proceedings were stayed pending an outcome in the case decided this week, St. John’s Well Child and Family Center v. Schwarzenegger.

The parties are reviewing their appeal options, Steinberg said in a statement Tuesday, after the appeals court announced its opinion.

Steinberg’s lawsuit challenges a broader array of line-item vetoes than those addressed by Tuesday’s appellate court ruling, and a decision on when and whether to resume proceedings in the senator’s suit will be made after the St. John’s litigation is conclusively resolved.

“I am deeply concerned about the unprecedented amount of power today’s ruling gives to this and future governors,” Steinberg said in his news release.

The legal battle over the line-item vetoes forced the California State Public Works Board to halt plans to sell more than $500 million in lease-revenue bonds last year.

The bonds were to fund a death row at San Quentin prison. But the sale was halted after local lawmakers who oppose the project noted that it factored in the litigation, because the governor used a line-item veto to cut out legislative language attaching strings to the funding of the new death row complex.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.