Alaska Democrat Sues Over Oil Dividend

ANCHORAGE, Alaska (CN) — Alaska state Sen. Bill Wielechowski followed through Friday on his threat to sue Alaska Gov. Bill Walker for halving state residents' Permanent Fund Dividend allotments in a June budget veto, which will give qualified residents $1,000 rather than $2,100 when checks go out in October.

Wielechowski filed the complaint in Anchorage Superior Court on behalf of himself and two Alaska Republican politicians Clem Tillion and Rick Halford, both past presidents of the Alaska Senate.

Tillion, 91, and Halford, 72, "are long-time public servants who fought to create the current PFD program" and they "bring this legislation in part based on an obligation to defend the intent of the Legislature to create a PFD program linking Alaska residents' dividends to ownership of the Permanent Fund," according to the complaint.

The Permanent Fund is unique to Alaska and tied to the oil boom and construction of the Trans-Alaska Pipeline beginning in the 1970s, when oil companies paid big money to the state for leases to explore and secure drilling rights.

The initial lease sale brought in $900 million, and once the oil pipeline was completed money flowed into Alaska's coffers right along with the oil to market — $50 billion since the crude spigot was turned on.

The Alaska constitution as originally written does not allow for dedicated funds, but in 1976 then-Gov. Jay Hammond proposed amending the constitution to put a percentage of the pipeline money into a dedicated fund that would "maintain the safety of the principal while maximizing the total return" and "as a means of provide a means of conserving a portion of the state's revenue from mineral resources to benefit all generations of Alaskans."

The Alaska Legislature placed a modified version of Hammond's legislation as a proposition on the 1976 general election ballot, which passed by a margin of two to one. In 1980, the Legislature created the Alaska Permanent Fund Corp. to manage the investments, which in 1982 issued the first dividend check of $1,000 to Alaskans residing in the state for at least a full year prior. Since then annual disbursements have ranged between $300 and $2,000 per person.

All was well and good for three decades until the flow of oil through the pipeline began to slow and oil prices dropped, leading to less money coming in from oil and related business taxes to cover the state's ever-increasing budget. Alaska is now an estimated $3.2 billion short, had its credit rating dropped from AAA to AA+ and every government department has been forced to cut spending, travel and hiring.

Walker mandated that the Legislature find a way to close the gap, including tapping the Permanent Fund. Despite being called back to Juneau for two special sessions, lawmakers could not come up with a strategy to cut enough spending and sent a budget to the governor's desk for signature.

Walker then vetoed a little more than half of the money appropriated for the Permanent Fund Dividend, capping individual payments at $1,000.

Walker and the Alaska Law Division say that if the Legislature is legally required to appropriate money to the dividend fund then the governor has the right to veto it.

"I'm disappointed that an incumbent legislator who failed to work toward a solution to our fiscal crisis — a solution that would protect the long-term viability of the PFD — has decided instead to pursue this lawsuit eight weeks prior to his reelection bid," Walker said in a statement. "This suit detracts from the real issue: solving Alaska's fiscal crisis so we can then begin to grow Alaska."

Wielechowski, Tillion and Halford argue that the dividend is not really an appropriation subject to veto, because of how it was created in an amendment to Alaska's constitution that decrees "all income from the permanent fund shall be deposited in the general fund unless otherwise provided by law."

Since the Legislature is the only body that can create a law and chose not to, the governor cannot just rewrite this legislation with his veto pen, according to the lawsuit.

"Hundreds of hours of research leads me to conclude that the governor does not have the authority to cut dividends in the way he proposes," Wielechowski wrote in a letter addressed to the public. "The governor cannot veto existing law. No governor can. His veto power extends only to appropriations and bills."

For his part, Walker said the Legislature is at fault.

"I stand by my difficult but necessary decision — prompted by the Legislature's failure to pass a fiscal plan — to veto part of this year's dividend appropriation to preserve our PFD program and other financial resources for this and all future generations of Alaskans," Walker said.

The 24-page lawsuit asks the court to decide which interpretation is correct. Because disbursement of the dividend will take place in Oct. 6, Wielechowski asked the court to expedite the case — although arguments in the case have not yet been scheduled

A member of the Alaska State Bar, Wielechowski is representing himself along with Andrew Erickson from PEAK 2 LAW, who is donating his time to the effort.

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