A federal judge ruled Friday that it is unconstitutional for the President to defer spending appropriated funds, and he ordered the release of more than $5 billion in housing funds.
The decision by U.S. District Judge Thomas P. Jackson strips President Reagan of his authority to defer approved spending from one fiscal year to the next, a major tool he has used to reduce the budget deficit.
Jackson said presidential use of the deferral tool has been tantamount to a "line-item veto."
Although $5 billion in housing funds was the direct issue involved in the suit, a total of $22.8 billion involving 41 programs is now deferred by the Reagan Administration and could be affected if the judge's ruling is upheld.
Jackson stayed the decision pending appeal.
A spokesman for the Justice Department said lawyers there will have to study the decision before deciding whether to appeal.
"We think it is an important decision because it restores balance in the appropriations process," said David Vladeck, an attorney with the Public Citizen Litigation Group, which filed suit on behalf of the National League of Cities, four Democratic members of the House and city officials.
"It was my view from the beginning that this was where the Constitution leads," said Rep. Bruce A. Morrison (D-Conn.), one of the congressmen who brought the suit.
Jackson struck down the deferral section of the 1974 Impoundment Control Act on the grounds that it would not have been passed without its provision that allowed a one-house veto of such deferrals. The Supreme Court ruled in 1983 that one-house vetoes are unconstitutional.
"If the deferrals had been upheld," Morrison said, "it would mean that Congress would have to appropriate anything twice that a President deferred. That's an absurd view, and I think the court finds it's absurd," Morrison said.
The President will now be able to defer spending for policy reasons only with the prior approval of both houses of Congress, Vladeck said.