Alaska Supreme Court upholds PFD veto

Justices on the Alaska Supreme Court have upheld the constitutionality of Gov. Bill Walker’s veto, which reduced dividends from the Alaska Permanent Fund from $2,052 to $1,022 a year ago and this year from $2,300 to $1,100.

“The Legislature’s use of Permanent Fund income is subject to normal appropriation and veto budgetary processes,” the court ruled, in a decision on Aug. 18.

The Alaska Superior Court earlier had upheld the reduction of the PFD on different grounds. The lower court found that regardless of whether the Permanent Fund’s earnings were subject to the constitutional prohibition against dedicated funds that the constitutional appropriations clause required that the Legislature appropriate the money, which meant that the governor could also veto that appropriation.

Attorney General Johna Lindemuth said that “this is not a decision Governor Walker took lightly, but I’m glad we have more clarity around use of permanent fund earnings as we continue to try and resolve the state’s fiscal crisis.”

The court cited Article 9, section 7 of the Alaska Constitution, known as the anti-dedicated funds clause. That clause reads, “The proceeds of any state tax or license shall not be dedicated to any special purpose …” with certain exceptions.

The Court’s opinion, Lindemuth said, “clarifies that none of the exceptions apply to the earnings of the Permanent Funds. Any money to be spent from the permanent fund earnings reserve account must go through the normal budgeting process whereby the Legislature annually appropriates specific sums of money for certain purposes, and the governor can then strike or reduce those sums under the veto power in Article 2, section 15 of the constitution.”

The opinion came in litigation filed by Sen. Bill Wielehowski, D-Anchorage, and former state Senators Clem Tillion and Rick Halford, who contended that the constitutional amendment that allowed for the Permanent Fund allowed for legislators to dedicate use of earnings from the fund.