Alaska High Court Upholds Governor’s Cut to Residents’ Oil-Royalty Checks

FILE – This Jan. 7, 2013, file photo, shows the Shell floating drill rig Kulluk in Kodiak Island, Alaska’s Kiliuda Bay as salvage teams conduct an in-depth assessment of its seaworthiness after it ran aground off an island near Kodiak as it was being towed across the Gulf of Alaska in stormy weather following the 2012 drilling season. Less than a week after President Donald Trump took steps to put U.S. Arctic and Atlantic waters back in play for offshore drilling, 10 environmental and Alaska Native groups sued Wednesday, May 3, 2017, to maintain the ban on oil and gas exploration. (James Brooks/Kodiak Daily Mirror via AP, File)

ANCHORAGE (CN) – The Alaska Supreme Court on Friday unanimously rejected claims that Gov. Bill Walker exceeded his authority last year when he halved the annual Alaska Permanent Fund oil dividend payment to qualifying state residents.

Friday’s ruling was state Sen. Bill Wielechowski’s final attempt to return about $1,000 of Alaska’s oil wealth to qualifying residents’ pocketbooks after his November 2016 state court loss on the issue. Longtime former Republican state legislators Rick Halford and Clem Tillion joined Wielechowski, a Democrat, in filing the suit last fall.

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. Then-Gov. Jay Hammond proposed amending the state Constitution to put a percentage of the pipeline money into a dedicated fund to conserve a portion of the state’s revenue from mineral resources to benefit future generations of Alaskans.

Walker, a Republican-turned-independent, used his veto power to cut the amount available for 2016 dividend checks after state lawmakers failed to agree on a plan to address the state’s multibillion-dollar deficit.

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

Wielechowski argued the dividend is not really an appropriation subject to veto since it’s an amendment of the Alaska Constitution mandating “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, Wielechowski said in his lawsuit.

In upholding the state court ruling in favor of Walker’s veto, Alaska Supreme Court Chief Justice Daniel Winfree wrote that “the answer cannot be found by weighing the merits of the dividend program or by examining the statutory dividend formula. The answer is found only in the language of the Alaska Constitution.”

According to Winfree, although the statute seems mandatory, the way in which Walker altered the language of the appropriation bill – by striking only that which related to the amount of funds to be transferred and leaving alone the language about the transfer’s purpose – meant that he properly exercised his veto authority.

Alaskans must meet residency requirements to be eligible for dividends. The 2016 dividend was $1,022 for each eligible resident – but would have been around $2,100 without Walker’s veto. Since disbursements began in 1982, checks have ranged between $300 and $2,000 per person.

This year’s dividend, issued in October, is estimated to be $1,100.


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