Alaskans’ Oil Checks Cut in Half This Year

Julie St. Louis

alaska-oil-gasANCHORAGE (CN) — Alaska residents will not get the second half of their annual oil fund check this year, after a Superior Court judge denied a state senator’s legal challenge of Gov. Bill Walker’s use of the veto to cut the dividend.

Alaskans have become accustomed to yearly checks from the state’s Permanent Fund Dividend, derived from the state’s vast oil wealth. The dividend this year was expected to be about $2,100 a head, but in June Walker vetoed $1.3 billion in state spending, which, among other things, capped this year’s Permanent Fund Dividend at $1,000.

State Sen. Bill Wielechowski, D-Anchorage, sued Walker after the veto, with two past presidents of the Alaska Senate, both Republicans, as co-plaintiffs.

In issuing his vetoes, Walker, an independent, cited crashing oil prices, dwindling oil reserves, and the need to preserve reserve funding. He also slashed education funding and killed $250 million in transportation projects.

Walker, the state’s second Alaska-born governor, ran in the 2010 gubernatorial primary as a Republican and lost, then ran as an Independent in 2014 with Democrat Byron Mallett as his running mate, and won.

Wielechowski and Walker both sought summary judgment.

Superior Court Judge ruled for Walker on Thursday, immediately after hearing oral arguments. He agreed that the Alaska Constitution gives the governor broad veto powers and dismissed Wielechowski’s technical arguments.

“The framers really wanted the governor to have a check on spending during crunch time. And we’re in crunch time,” Morse said.

Walker vetoed $600 million of spending — half the amount to be transferred to the Permanent Fund Dividend, as one of many moves to reduce a $3 billion budget deficit.

Walker said after the ruling that the state remains in a “fiscal crisis.”

“Using part of the Permanent Fund earnings is the cornerstone of the plan to fix Alaska’s fiscal crisis,” the governor said in a statement. “I am pleased with the timeliness of the Superior Court ruling, as it allows us to continue focusing on resolving our budget deficit and creating a sustainable future for all Alaskans.”

Wielechowski argued that the dividend is not an appropriation subject to veto, because it was created as an amendment to the Alaska Constitution, stating that “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, the governor cannot rewrite the legislation with his veto pen, Wielechowski said in his September lawsuit in Anchorage Superior Court.

“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,” Wielechowski argued at the hearing.

Judge Morse disagreed, saying the Legislature had transferred money to the Permanent Fund Dividend during the budget process for years, and that while the constitutional amendment created the fund it does not address the governor’s power to veto it.

Chief Assistant Attorney General Margaret Paton-Walsh told the judge that the constitutional amendment and the dividend transfer law worked in tandem. The amendment dedicates money to the dividend account, but the money cannot be transferred out of the account to residents without a separate legislative appropriation that is subject to the governor’s veto.

Paton-Walsh side she does not believe that “there’s any basis” for allowing lawmakers “to do an end run around the basic constitutional rules for spending.”

Morse agreed that Wielechowski’s lawsuit “isn’t really a dedication case; it’s an appropriation case,” and that there is a difference between annual appropriations and dedicated funds that exist beyond a budget year.

Morse said he did not expect that he would be the “final arbiter,” and that the fight would be taken to the Alaska Supreme Court.

Wielechowski said he would appeal to the state Supreme Court, and hoped to resolve the issue within a few months.

Alaska residents received a dividend of $1,100 in October. If Wielechowski wins, he said, he would ask the state to issue a supplemental round of checks.

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