Oral arguments in PFD lawsuit slated for today

By STEPHANIE PROKOP
Morris News Service-Alaska

Oral arguments are scheduled for today in the Superior Court Third Judicial District in Anchorage for the lawsuit filed by Sen. Bill Wielechowski, D-Anchorage, and former state Sens. Rick Halford and Clem Tillion.

The plaintiffs are demanding a full dividend payout for 2016 and have asked the court to order the Alaska Permanent Fund Corp. to transfer funds from the Permanent Fund earnings reserve account to the Dividend Fund. Proceeds would then be disbursed to eligible residents in the form of a supplemental PFD check.

Earlier this year, the Legislature initially passed an appropriation bill that authorized a transfer of $1.3 billion into the Dividend Fund. This amount was based on estimates as calculated according to statutory formulas.

Gov. Bill Walker, citing the “gravest fiscal crisis in state history,” vetoed a portion and cut the authorized amount down to $695 million, reducing the PFD to $1,022 from just more than $2,000 per Alaskan.

The plaintiffs filed the lawsuit against the Permanent Fund Corp. and the State of Alaska on Sept. 16, arguing that Walker’s veto was unconstitutional because the amount to be made available for distribution is not arbitrary but calculated according to statute. The APFC is thus required to transfer this amount, according to their argument, and is not subject to the governor’s line item veto authority.

In addition, the plaintiffs note the governor improperly deleted language in the appropriations bill: “authorized under AS 37.13.145(b)” and “estimated.”

The state, in its motion for summary judgment filed Oct. 28, counters that:

• One, every year, an appropriation bill is passed to authorize the transfer of income from the Permanent Fund to the Dividend Fund. Unappropriated funding is unconstitutional.

• Two, the APFC is not required to transfer the amount calculated according to two separate statues. Instead, the APFC is required to transfer funds that are appropriated in the operating budget.

• Three, the Legislature had the opportunity to override the veto, but did not, despite holding a special session in July.

• Four, the constitutional amendment that established the Permanent Fund in the first place is ambiguous when it comes to specifying a dividend program or how funds are to be used. The Dividend Fund is not dedicated, the defendants claim. Money may be spent for any program, not just distributions or administration of the fund.

• Five, deleted language in the appropriations bill did not alter the purpose of the appropriation, and was neither unconstitutional nor improper.

In their motions to the court, both sides submitted lengthy history lessons, from the origins of the Permanent Fund to public perception and the modern day dividend dilemma.

The bottom line is the plaintiffs want money transferred to the Dividend Fund so proceeds can be disbursed to Alaska residents via the Department of Revenue. The defendants want the governor to retain the right to control state spending through the line item veto.

“If this Court were to uphold the governor’s line-item veto in this case it would subject Alaskans to the ephemeral whims of the governor, who would possess the unilateral power to set the PFD each year, subject only to a legislative override requiring three-fourths of the state’s elected representatives,” the plaintiffs claim.

The state responded that the case is without merit, and myopic, focused narrowly on statutory language and missing the larger picture of the constitutional purpose of the governor’s veto power.

Wielechowski is serving as co-counsel for the plaintiffs, along with Andrew Erickson. Judge William F. Morse is presiding. Both sides agreed to seek summary judgment, which is a case in which the facts are not in dispute but only the question of legal interpretation. As such, only oral arguments and motions to the court will be presented with no testimony from witnesses.

Ultimately the Alaska Supreme Court will have final say on the matter as the losing side in Superior Court is expected to appeal.

Stephanie Prokop is a reporter for the Alaska Journal of Commerce. She can be reached at stephanie.prokop@alaskajournal.com.

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