Wielechowski v. State , 403 P.3d 1141 ( 2017 )

Notice: This opinion is subject to correction before publication in the PACIFIC REPORTER.
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THE SUPREME COURT OF THE STATE OF ALASKA
BILL WIELECHOWSKI, RICK )
HALFORD, and CLEM TILLION, ) Supreme Court No. S-16558
)
Appellants, ) Superior Court No. 3AN-16-08940 CI
)
v. ) OPINION
)
STATE OF ALASKA and ALASKA ) No. 7194 – August 25, 2017
PERMANENT FUND CORPORATION, )
)
Appellees. )
)
Appeal from the Superior Court of the State of Alaska, Third
Judicial District, Anchorage, William F. Morse, Judge.
Appearances: Bill Wielechowski, pro se, Anchorage, and
Sonja N. Kawasaki, Fairbanks, for Appellants. Kathryn R.
Vogel, Margaret Paton-Walsh, and Bill Milks, Assistant
Attorneys General, Anchorage, and Jahna Lindemuth,
Attorney General, Juneau, for Appellees. Jack B. McGee,
Law Office of Jack B. McGee, Juneau, for Amici Curiae
Greg Capito, Jack Gitchell, and Vicki Van Fleet.
Before: Stowers, Chief Justice, Winfree, Maassen, Bolger,
and Carney, Justices.
WINFREE, Justice.
I. INTRODUCTION
This appeal provides another opportunity to remind Alaskans that, of the
three branches of our state government, we are entrusted with the “constitutionally
mandated duty to ensure compliance with the provisions of the Alaska Constitution.”1
This sometimes requires us to answer constitutional questions surrounded by political
disagreement.2 Today we address a constitutional question arising from a political
dispute about the legislatively enacted Alaska Permanent Fund dividend program.
In the course of the 2016 budgetary process, in accordance with a
statutorily prescribed formula in place for over three decades, the legislature appropriated
a sum of money for dividend distributions. But the governor then vetoed about half of
the appropriation, and the legislature did not override the veto. One current and two
former legislators later sued to effectively set aside the governor’s veto. The thrust of
their argument was that the 1976 constitutional amendment creating the Alaska
Permanent Fund gave the legislature constitutional authority to pass laws dedicating use
of Permanent Fund income without need for annual appropriations and, therefore, not
subject to annual gubernatorial veto. The legislators argued that the longstanding
dividend program was a law exempt from the anti-dedication clause.
The superior court ruled against the legislators, concluding that even if the
1976 constitutional amendment gave the legislature dedication powers over Permanent
Fund income, the legislature’s actual use of the income remained subject to normal
appropriation and veto budgetary processes. The legislators appeal, making the same
1
Malone v. Meekins, 650 P.2d 351, 356 (Alaska 1982) (citing State v.
A.L.I.V.E. Voluntary, 606 P.2d 769 (Alaska 1980); Plumley v. Hale, 594 P.2d 497(Alaska 1979); K & L Distribs., Inc. v. Murkowski, 486 P.2d 351, 357 (Alaska 1971)).
2
State v. Planned Parenthood of Alaska, 171 P.3d 577, 579 (Alaska 2007).
We reiterate that “[w]e are not legislators, policy makers, or pundits charged with
making law or assessing the wisdom of legislative enactments.” Id. We are concerned
only with upholding the Alaska Constitution, which “takes precedence over the politics
of the day and our own personal preferences.” Planned Parenthood of the Great Nw v.
State, 375 P.3d 1122, 1133 (Alaska 2016) (citing Alaska Const. art. XII, § 5; Malone,
650 P.2d at 356).
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arguments to us that they made to the superior court and emphasizing what they contend
is the sound public policy behind Alaska’s nearly 40-year-old dividend program.
The narrow question before us is whether the 1976 amendment to the
Alaska Constitution exempted the legislature’s use of Permanent Fund income from the
Constitution’s anti-dedication clause. 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. And, as we explain
below, the answer is no — the 1976 amendment did not exempt the legislature’s use of
Permanent Fund income from the Constitution’s anti-dedication clause. Although the
superior court did not reach this question, the court’s ultimate conclusion nonetheless is
correct: The legislature’s use of Permanent Fund income is subject to normal
appropriation and veto budgetary processes. We affirm the superior court’s decision on
this alternative ground.
II. FACTS AND PROCEEDINGS
A. Facts
In 1976 voters approved an amendment to the Alaska Constitution creating
the Alaska Permanent Fund (Permanent Fund) and dedicating to it certain state
revenues.3 To permit the revenue dedication, article IX, section 7 — an anti-dedication
clause providing that “[t]he proceeds of any state tax or license shall not be dedicated to
any special purpose” — was modified to add an exception “as provided in section 15 of
this article.”4 And article IX, section 15 was added, as follows:
At least twenty-five per cent of all mineral lease rentals,
royalties, royalty sale proceeds, federal mineral revenue
3
See 1976 House Joint Resolution No. 39 (S.C.S. C.S.S.S. H.J.R. Res am S
39); see also Alaska Const. art. IX, §§ 7, 15.
4
Alaska Const. art. IX, § 7.
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sharing payments and bonuses received by the State shall be
placed in a permanent fund, the principal of which shall be
used only for those income-producing investments
specifically designated by law as eligible for permanent fund
investments. All income from the permanent fund shall be
deposited in the general fund unless otherwise provided by
law.[5]
The new section’s last sentence — regarding Permanent Fund income — is the primary
focus of this decision.
A constitutional amendment was required to create and dedicate revenues
to the new Permanent Fund because Alaska’s constitutional convention delegates, the
original framers of the Alaska Constitution, believed that “the dedication of revenues”
was “a fiscal evil,”6 largely because it failed “to preserve control of and responsibility for
state spending in the legislature and the governor.”7 The 1976 amendment’s framers and
voters chose to make an exception to this general prohibition by dedicating
constitutionally enumerated revenues to the principal of the new Permanent Fund. The
twin goals behind this exception to the anti-dedication clause were: (1) saving for the
future and (2) preventing wasteful spending of the oil and mineral revenue then expected
to “flood” the state.8
5
Alaska Const. art. IX, § 15.
6
State v. Alex, 646 P.2d 203, 209 (Alaska 1982) (quoting 6 Proceedings of
the Alaska Constitutional Convention (PACC) App. V at 111 (Dec. 16, 1955)).
7
Sonneman v. Hickel, 836 P.2d 936, 938 (Alaska 1992).
8
1976 House Journal 39-40; see Williams v. Zobel, 619 P.2d 448, 453
(Alaska 1980), rev’d on other grounds, Zobel v. Williams, 457 U.S. 55 (1982).
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The Permanent Fund’s principal is a dedicated fund that cannot be accessed
without further amending the Alaska Constitution.9 The principal is devoted to “income­
producing investments” now managed by the Alaska Permanent Fund Corporation
(APFC).10 It appears that before 1982 a percentage of Permanent Fund income was
deposited into the general fund, with some money set aside for a dividend program;11
since 1982 Permanent Fund income has been deposited in what now is known as the
earnings reserve account (earnings reserve), a separate Permanent Fund account
managed by APFC.12
In 1980 the legislature decided to use Permanent Fund income to pay each
eligible Alaskan a dividend based on length of residency.13 But the United States
Supreme Court ruled that this dividend plan violated federal constitutional equal
9
See Alaska Const. art. IX, § 15 (“[T]he principal . . . shall be used only for
. . . income-producing investments . . . .”).
10
Alaska Const. art. IX, § 15; AS 37.13.040 (establishing APFC “to manage
and invest the assets of the [P]ermanent [F]und and other funds designated by law”).
11
Alaska Const. art. IX, § 15 (“All income from the permanent fund shall be
deposited in the general fund unless otherwise provided by law.”); ALASKA DEP’T OF
REVENUE, REVENUE SOURCES FY 1984-1987: QUARTERLY UPDATE SEPTEMBER, 1984,
at 10 (1984).
12
AS 37.13.145(a) (“The earnings reserve account is established as a separate
account in the [Permanent F]und. Income from the [Permanent F]und shall be deposited
by [APFC] into the account as soon as it is received. Money in the account shall be
invested in investments authorized under AS 37.13.120.”). From 1982 to 1986 the
income went into a Permanent Fund “undistributed income account.” Ch. 81, § 9, SLA
1982.
13
Ch. 21, § 2, SLA 1980.
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protection rights,14 and so the first Permanent Fund dividends of $1,000 each were not
distributed until 1982.15
The general structure for Permanent Fund dividends is largely the same
today as it is was 35 years ago; dividends are paid to eligible Alaska residents following
a statutorily structured three-step formula. First, APFC calculates the “[i]ncome
available for distribution,” defined as 21% of the net income of both the Permanent Fund
and the earnings reserve “for the last five fiscal years.”16 Second, 50% of the “income
available for distribution” is transferred by APFC from the earnings reserve to a dividend
fund, a separate state treasury account administered by the Department of Revenue
(DOR).17 Finally, DOR “determine[s] the value of each permanent fund dividend for that
year by” dividing the amount available in the dividend fund by “the number of
individuals eligible to receive a dividend payment.”18
But since the dividend program’s inception there has been uncertainty in
the executive and legislative branches about the limits of the statement in the second
sentence of article IX, section 15 that Permanent Fund income “shall be deposited in the
14
Zobel v. Williams, 457 U.S. 55, 65 (1982) (“We hold that the Alaska
dividend distribution plan violates the guarantees of the Equal Protection Clause of the
Fourteenth Amendment.”).
15
Ch. 102, § 19, SLA 1982.
16
AS 37.13.140. This amount also “may not exceed net income of the fund
for the fiscal year just ended plus the balance in the earnings reserve” to avoid depleting
the earnings reserve. Id.
17
AS 37.13.145(b); see also AS 43.23.045(a) (establishing “[t]he dividend
fund . . . as a separate fund in the state treasury”).
18
AS 43.23.025(a)(1)-(3); see AS 43.23.005 (generally defining as eligible
all Alaskans who have been “a state resident during the entire qualifying year,” with
certain exceptions).
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general fund unless otherwise provided by law.”19 Specifically, the uncertainty has
concerned whether, in conjunction with the 1976 exemption to the article IX, section 7
anti-dedication clause, that phrase permits considering the dividend’s statutory scheme
a constitutionally permissible dedication of revenues not requiring annual legislative
appropriations20 for transfers from the earnings reserve to the dividend fund.21 The
legislature has made an appropriation for the transfer from the APFC earnings reserve
19
Alaska Const. art. IX, § 15 (emphasis added).
20
See Alaska Const. art. IX, § 13 (“No money shall be withdrawn from the
treasury except in accordance with appropriations made by law.”).
21
See, e.g., STATE OF ALASKA, DEP’T OF LAW, INFORMAL OP. ATT’Y GEN.,
1983 WL 42491 (Mar. 10, 1983) (“The [P]ermanent [F]und[’s] dividend fund established
under AS 43.23.045 would arguably involve an unconstitutional dedication of state
revenue if money were transferred to that fund from income of the permanent fund
without an appropriation.”); 1980 FORMAL OP. ATT’Y GEN. 3, at 8 (“Because of
decisional law applying constitutional provisions which require disclosure of the
principal objects and effects of amendments, the effect of the words, ‘unless otherwise
provided by law’ may be quite limited. Our reading of the decisional law on
constitutional amendments leads us to the conclusion here that the legislature probably
can provide by law for income from the fund to be automatically deposited back into the
fund or distributed as dividends. Both are part of the amendment’s history and both are
closely related to the fund itself. Use of the income without annual appropriations for
other purposes, say for loan programs or guarantees, has no close relationship to the fund
itself and probably would not pass constitutional muster. Indeed, it is possible that the
Alaska Supreme Court could find that an appropriation is required under article IX,
section 13, even for deposits to the fund and distributions of income. We doubt this
would occur, but it is possible.”); Letter from Attorney Gen. Avrum M. Gross to
Governor Jay S. Hammond (June 28, 1976) (“In the second section [of the proposed
1976 constitutional amendment], the legislature also added a proviso allowing itself to
provide by law that income from the fund may be deposited in other than the general
fund. However, since the only exception to the dedicated-fund prohibition in sec. 7 is
the new sec. 15, it would appear that the only other place the income may be deposited
is in the permanent fund.”).
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to the DOR dividend fund every year since 1982, apparently to avoid potential conflicts
with the Alaska Constitution’s anti-dedication clause.
In May 2016 the legislature passed an appropriation bill that included an
estimated $1.362 billion transfer from APFC’s earnings reserve to DOR’s dividend fund,
consistent with prior practice and the statutory formula.22 But in June Governor Bill
Walker exercised his line-item veto power and reduced the estimated $1.362 billion
transfer to $695.65 million.23 The legislature met in July but did not vote to override the
governor’s veto.24 This resulted in 2016 Permanent Fund dividend payments of $1,022
to eligible Alaskans, about half of what had been expected under the legislature’s
appropriation.
B. Proceedings
A current state senator, Bill Wielechowski, and two former state legislators,
Rick Halford and Clem Tillion (collectively Wielechowski), brought suit against the
State of Alaska and APFC (collectively the State). Relying on the second sentence of
the Permanent Fund clause, Wielechowski sought a declaration that the dividend
program statutes contain a constitutionally permissible revenue dedication
“automatically” transferring prescribed revenues from the earnings reserve to the
dividend fund without need for legislative appropriation and not subject to the
governor’s veto. The State opposed, arguing that the 1976 constitutional amendment
created an anti-dedication clause exemption only for revenues going into the Permanent
22
Ch. 3, § 10, 4SSLA 2016; see AS 37.13.145(b).
23
See Alaska Const. art. II, § 15 (providing the governor “may, by veto, strike
or reduce items in appropriation bills”).
24
See Alaska Const. art. II, § 16 (“[A]ppropriation bills . . . , although vetoed,
become law by affirmative vote of three-fourths of the membership of the legislature.”).
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Fund and not for revenues going out of the Permanent Fund. The State alternatively
argued that even if the Alaska Constitution permits legislative dedication of Permanent
Fund income, the statutory transfer from the earnings reserve to the dividend fund still
must meet constitutional appropriation and veto requirements.
After expedited proceedings the superior court ruled that the earnings
reserve revenue transfer to the dividend fund requires an appropriation and must survive
a gubernatorial veto. The court did not decide whether the revenue transfer would be a
“permissible dedication” under the Alaska Constitution. Emphasizing the governor’s
strong veto control over spending provided by the Alaska Constitution, the court stated
“[i]t is unlikely that the proponents of the [P]ermanent [F]und would intend so drastic
a change in the governor’s role over the budget by such a vague vehicle” as the
concluding sentence of the 1976 constitutional amendment creating the Permanent Fund.
The court determined that “[w]hat makes the least sense is that the proponents of the
permanent fund clause would exempt the income of the [P]ermanent [F]und from the
threat of a gubernatorial veto without expressly stating that intention.”
Wielechowski appeals. Three other “long-time Alaska residents who each
filed for a 2016 Permanent Fund [d]ividend” filed an amicus brief supporting
Wielechowski.
III. STANDARD OF REVIEW
“We review summary judgment rulings de novo and may affirm summary
judgment on any basis appearing in the record.”25 “Questions of constitutional and
statutory interpretation, including the constitutionality of a statute, are questions of law
25
Seybert v. Alsworth, 367 P.3d 32, 36 (Alaska 2016) (quoting Angleton v.
Cox, 238 P.3d 610, 614 (Alaska 2010)).
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to which we apply our independent judgment. We adopt the ‘rule of law that is most
persuasive in light of precedent, reason, and policy.’ ”26
IV. DISCUSSION
A. The Alaska Constitution Does Not Exempt Permanent Fund Income
From The Constraints Of The Anti-Dedication Clause.
1. Framework for interpreting the Alaska Constitution
We provided a framework for interpreting the Alaska Constitution in Hickel
v. Cowper.27 “Our analysis of a constitutional provision begins with, and remains
grounded in, the words of the provision itself. We are not vested with the authority to
add missing terms or hypothesize differently worded provisions . . . to reach a particular
result.”28 We instead “look to the plain meaning and purpose of the provision and the
intent of the framers.”29
“Because of our concern for interpreting the constitution as the people
ratified it, we generally are reluctant to construe abstrusely any constitutional term that
has a plain ordinary meaning.”30 “Constitutional provisions should be given a reasonable
and practical interpretation in accordance with common sense.”31 “[A]bsent some signs
26
State v. Ketchikan Gateway Borough, 366 P.3d 86, 90 (Alaska 2016)
(footnote omitted) (quoting Se. Alaska Conservation Council v. State, 202 P.3d 1162,
1167 (Alaska 2009)) (citing State v. Schmidt, 323 P.3d 647, 655 (Alaska 2014)).
27
874 P.2d 922, 926-28 (Alaska 1994).
28
Id. at 927-28.
29
Id. at 926 (quoting ARCO Alaska, Inc. v. State, 824 P.2d 708, 710 (Alaska
1992)) (citing Kochutin v. State, 739 P.2d 170, 171 (Alaska 1987)).
30
Id.31
Id. (quoting ARCO Alaska, 824 P.2d at 710) (citing Kochutin, 739 P.2d at
(continued...)
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that the term at issue has acquired a peculiar meaning by statutory definition or judicial
construction, we defer to the meaning the people themselves probably placed on the
provision”32 without “add[ing] ‘missing terms’ to the Constitution or . . . interpret[ing]
existing constitutional language more broadly than intended by . . . the voters.”33
“Legislative history and the historical context, including events preceding ratification,
help define the constitution.”34
2. The anti-dedication clause
Prior to the 1976 constitutional amendment the anti-dedication clause
stated: “The proceeds of any state tax or license shall not be dedicated to any special
purpose . . . .”35 Although a plain reading of “state tax or license” might have suggested
otherwise, a contemporaneous attorney general opinion gave the 1976 legislature good
reason to believe that “state tax or license” meant all state revenue.36 And in 1982 we
31
(...continued)
171).
32
Id.
33
Id. at 927.
34
State v. Ketchikan Gateway Borough, 366 P.3d 86, 90 (Alaska 2016) (citing
State v. Alex, 646 P.2d 203, 208 (Alaska 1982); Hootch v. Alaska State-Operated Sch.
Sys., 536 P.2d 793, 800, 804 (Alaska 1975)).
35
Alaska Const. art. IX, § 7 (amended 1976).
36
See 1975 FORMAL OP. ATT’Y GEN. 9, at 24 (“[I]t is our conclusion that the
dedication of any source of public revenue . . . is limited by the state Constitution to
those existing when the Constitution was ratified or required for participation in federal
programs.” (emphasis added)), quoted in Alex, 646 P.2d at 210.
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confirmed in State v. Alex that the anti-dedication clause “prohibits the dedication of any
source of revenue.”37
We first explained in Alex how convention delegates considered “the
dedication of revenues” to be “a fiscal evil.”38 We later expressed in Sonneman v. Hickel
“that the reason for the prohibition [on dedications] is to preserve control of and
responsibility for state spending in the legislature and the governor.”39 “Without
earmarked funds, the constitutional framers believed that the legislature would be
required to decide funding priorities annually on the merits of the various proposals
presented.”40 And we explained more recently in State v. Ketchikan Gateway Borough
that the anti-dedication clause helps “govern the legislature’s and the governor’s ‘joint
responsibility . . . to determine the State’s spending priorities on an annual basis.’ ”41
37
646 P.2d at 210; see also Se. Alaska Conservation Council v. State, 202
P.3d 1162, 1170 (Alaska 2009) (“[T]he prohibition [on dedications] is meant to apply
broadly. If only revenue collected as taxes or license fees were included, there would
have been no need to expressly exempt ‘all mineral lease rentals, royalties, royalty sale
proceeds, federal mineral revenue sharing payments and bonuses received by the State’
to ensure that placing those revenues in the Permanent Fund did not violate the
constitution.” (footnote omitted) (quoting Alaska Const. art. IX, § 15) (citing Alaska
Const. art. IX, § 7)).
38
646 P.2d at 209 (quoting 6 PACC App. V at 111 (Dec. 16, 1955)).
39
836 P.2d 936, 938 (Alaska 1992).
40
Id. at 938-39; see also id. at 939 (“They have to sell their viewpoint along
with everybody else.” (quoting 4 PACC 2367 (Jan. 17, 1956) (comments of Delegate
Barrie White))).
41
366 P.3d 86, 101 (Alaska 2016) (alteration in original) (quoting Simpson
v. Murkowski, 129 P.3d 435, 447 (Alaska 2006)); see also id. (“Through the dedicated
funds clause, the delegates sought to avoid the evils of earmarking, which the delegates
feared would ‘curtail[] the exercise of budgetary controls and simply [would] amount[]
(continued...)
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We repeat our prior statements, and those from the constitutional
convention, to emphasize the significance of the anti-dedication clause to the state’s
budgetary framework. No party suggests that Permanent Fund income is not state
revenue.42 Our starting point must therefore be that the anti-dedication clause prohibits
the dedication of Permanent Fund income unless the 1976 constitutional amendment
exempted not only the dedication of enumerated revenues into the Permanent Fund, but
also — as Wielechowski argues — the legislature’s potential future, unspecified
dedication of revenues out of the Permanent Fund.
3. Wielechowski’s arguments
Wielechowski contends that the 1976 constitutional amendment creating
and dedicating revenues to the Permanent Fund also created legislative authority to
dedicate Permanent Fund income. He first contends that the entire article IX, section 15
clause, including the second sentence, is explicitly exempt from the anti-dedication
clause of article IX, section 7.43 He then relies on the second sentence’s language that
“income from the [P]ermanent [F]und shall be deposited in the general fund unless
otherwise provided by law.”44 He argues that the legislature is constitutionally permitted
41
(...continued)
to an abdication of legislative responsibility.’ ” (alterations in original) (quoting Alex,
646 P.2d at 209)).
42
See Alaska Const. art. IX, § 15 (“All income from the [P]ermanent [F]und
shall be deposited in the general fund unless otherwise provided by law.”).
43
Alaska Const. art. IX, § 7 (“The proceeds of any state tax or license shall
not be dedicated to any special purpose, except as provided in section 15 of this article
. . . .” (emphasis added)).
44
Alaska Const. art. IX, § 15 (emphasis added).
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to dedicate Permanent Fund income to the dividend fund by statute, because that would
be “provided by law.”
Wielechowski contends that the framers of the 1976 constitutional
amendment intended to provide future legislatures “maximum flexibility” in using the
Permanent Fund’s income, including the dedication of earnings.45 Wielechowski also
contends that the ballot language46 and newspaper articles emphasizing future legislative
flexibility bolster his position.47 The State disagrees, arguing that the plain language of
article IX, section 15 dedicates only specific revenues into the Permanent Fund principal,
and that no history concerning either the purpose of the amendment’s framers or the
45
See 1976 House Journal 685 (“The purpose of the language in the last
sentence of the resolution is to give future legislatures the maximum flexibility in using
the fund’s earnings — ranging from adding to fund principal to paying out a dividend
to resident Alaskans.”); see also Hearing on H.J.R. 39 Before the H. Fin. Comm., 9th
Leg., 2d Sess. 02:53:30-02:54:37 (Feb. 21, 1976) (hereinafter Testimony of Sterling
Gallagher), http://www.akleg.gov/ftr/archives/1976/HFIN/ H76R31-HFIN-760000.mp3
(testimony of Sterling Gallagher, Comm’r of Revenue) (discussing the possibility of
using Permanent Fund income as “a pledge or dedication . . . for securities of the state”);
Hearing on H.J.R. 39 Before the H. Fin. Comm., 9th Leg., 2d Sess. 00:02:41-00:03:56
(Feb. 21, 1976) (hereinafter Testimony of Jim Rhode), http://www.akleg.gov/ftr/
archives/1976/HFIN/ H76R32-HFIN-760000.mp3 (testimony of Jim Rhode) (discussing
how Permanent Fund income “could be pledged in the bond covenants for the security
of state agencies or general obligation bonds”).
46
DIV. OF ELECTIONS, SAMPLE GENERAL ELECTION BALLOT (1976) (“The
income from the fund would be deposited in the State’s General Fund and be available
for appropriation for the State unless law provided otherwise.” (emphasis added)).
47
See Susan Andrews, Lawmakers Would Shape Permanent Fund,
ANCHORAGE TIMES, Oct. 24, 1976, at A3 (“There are a number of possibilities for use
of the earnings — and the legislature will decide those uses.”); Permanent Fund Raises
Use Issue, ANCHORAGE DAILY NEWS, Oct. 22, 1976 (“There have been many proposals
for possible fund uses.”).
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information provided to the voters shows an intent to allow the legislature to dedicate
Permanent Fund income.
We agree with the State. We conclude that the 1976 constitutional
amendment does not allow the dedication of Permanent Fund income. We reach this
conclusion based on the plain language of the anti-dedication and Permanent Fund
clauses of the Alaska Constitution; contrary to Wielechowski’s arguments, our review
of the record concerning the framers’ intent and voters’ understanding only bolsters our
conclusion. We address the latter two issues first solely for historical perspective before
addressing the plain language analysis.
a. Framers’ intent
A permanent fund was proposed by then-Governor Jay Hammond to save
for future generations a percentage of revenue generated from nonrenewable resources;48
he also sought to curb wasteful government spending of expected increased revenues.49
In the letter transmitting his proposal, Governor Hammond explained:
I have introduced this resolution proposing a
constitutional amendment because I believe strongly that the
revenues from our non-renewable resources belong to future
generations of Alaskans as well as ourselves. A permanent
fund as I have proposed will set aside a modest portion of the
proceeds from the exploitation of our non-renewable
resources for investment in our future while leaving sufficient
revenues for our present needs.[50]
48
1976 House Journal 39-40.
49
See Williams v. Zobel, 619 P.2d 448, 453 (Alaska 1980), rev’d on other
grounds, Zobel v. Williams, 457 U.S. 55 (1982).
50
1976 House Journal 40.
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Although Governor Hammond’s permanent fund language was subsequently modified
by the legislature, the overall structure of his proposed amendment to the Alaska
Constitution remained the same: (1) a percentage of revenue from nonrenewable
resources would be placed into a permanent fund; (2) the permanent fund principal could
be used only for income-producing investments; and (3) the legislature would have
access to the permanent fund income.51
The House amended the permanent fund clause’s treatment of income to
include an alternative to mandatory general fund deposits: “All income from the
permanent fund shall be deposited in the general fund unless otherwise provided by
law.”52 Although there was some discussion about how the phrase “unless otherwise
provided by law” might allow income from the fund to be used as security for bonds,53
51
Compare 1976 House Joint Resolution No. 39 (S.S.H.J.R. 39) (substituting
in H.J.R. 39 by request of the governor: “Ten per cent of all mineral lease rentals,
royalties, royalty sale proceeds, revenue sharing payments, bonuses, and mineral
production taxes received by the state shall be placed in a permanent fund, the principal
of which shall be used only for income investments. The legislature may appropriate
additional amounts to the permanent fund which shall become a part of the principal of
the fund. All income from the permanent fund shall be deposited in the general fund.”),
with Alaska Const. art. IX, § 15 (“At least twenty-five per cent of all mineral lease
rentals, royalties, royalty sale proceeds, federal mineral revenue sharing payments and
bonuses received by the State shall be placed in a permanent fund, the principal of which
shall be used only for those income-producing investments specifically designated by
law as eligible for permanent fund investments. All income from the permanent fund
shall be deposited in the general fund unless otherwise provided by law.”).
52
1976 House Joint Resolution No. 39 (C.S.S.S. H.J.R. am 39) (emphasis
added).
53
See, e.g., Testimony of Sterling Gallagher, supra note 45 (discussing how
dedicating income from permanent fund “could be a great enhancement” as security for
“debt service”); Testimony of Jim Rhode, supra note 45 (opining that “the phrase ‘unless
(continued...)
-16- 7194
a joint report from the House Judiciary and Finance Committee chairs stated only that
“[t]he purpose of the language in the last sentence of the resolution is to give future
legislatures the maximumflexibility in using the Fund’s earnings — ranging from adding
to Fund principal to paying out a dividend to resident Alaskans.”54 After that joint
report, language was added in the Senate State Affairs Committee specifically
referencing dedications — to the fund’s principal, but not of the fund’s income55 — but
the language was later removed in the next committee of referral.56
There was virtually no discussion by the 1976 constitutional amendment’s
framers about dedicating Permanent Fund income, and they had reason to know that the
fund’s income would be state revenue subject to the constitution’s anti-dedication
clause.57 The only relevant discussions were by non-legislators — primarily concerning
the possibility of using fund income as security for bonds — and Wielechowski points
53
(...continued)
otherwise directed by the legislature’ . . . would be a sufficient legal peg so that income
from the permanent fund could be pledged in the bond covenants for the security of state
agencies or general obligation bonds”).
54
1976 House Journal 685.
55
1976 House Joint Resolution No. 39 (S.C.S. C.S.S.S.H.J.R. 39) (“The
legislature may dedicate additional proceeds both as to source and percentage which
shall become a part of the principal of the fund. Any additional dedication may be
revoked by the legislature, but revocation may not make the principal amount in the
permanent fund subject to appropriation. Other income from the permanent fund shall
be deposited in the general fund.” (emphasis added)).
56
See 1976 House Joint Resolution No. 39 (S.C.S. C.S.S.S.H.J.R. Res. 39).
57
See 1975 FORMAL OP. ATT’Y GEN. 9, at 24 (“[I]t is our conclusion that the
dedication of any source of public revenue . . . is limited by the state Constitution to
those existing when the Constitution was ratified or required for participation in federal
programs.”).
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to no statement by any legislator during any legislative hearing indicating an intent to
give the legislature broad authority to dedicate Permanent Fund income. There was little
evident recognition, let alone the robust discussion that would be expected, for what
Wielechowski now posits was a sweeping constitutional change and a consequent
sweeping change to the state’s budgetary framework. We conclude there is insufficient
legislative history to suggest that the framers of the 1976 constitutional amendment
intended to allow dedication of Permanent Fund income.
b. Voters’ intent
The voters approving the 1976 constitutional amendment certainly
understood it would restructure the Alaska Constitution to allow the diversion of state
revenues into the Permanent Fund, which then would generate income the legislature
could use in future years. But looking to “any published arguments . . . to determine
what meaning voters may have attached to the [proposed constitutional amendment],”58
we see no evidence that voters would have understood the amendment to also permit
future legislative dedications of Permanent Fund income. The ballot initiative language
did not expressly say the fund’s income could be dedicated.59 A newspaper column by
58
See Alaskans for a Common Language, Inc. v. Kritz, 170 P.3d 183, 193
(Alaska 2007) (citing Falcon v. Alaska Pub. Offices Comm’n, 570 P.2d 469, 472 n.6
(Alaska 1977)); see also id. at 192 (“While we often look to legislative intent to construe
the meaning of ambiguous statutes, we take a slightly different approach when
interpreting initiatives enacted by the voters.” (citing Falcon, 570 P.2d at 472 n.6)).
59
SAMPLE GENERAL ELECTION BALLOT, supra note 46 (“This proposal would
amend Article IX, Section 7 (Dedicated Funds) and add a new section to Article IX,
Section 15 (Alaska Permanent Fund) of the Alaska Constitution. It would establish a
constitutional permanent fund into which at least 25 percent of all mineral lease rentals,
royalties, royalty sale proceeds, federal mineral revenue sharing payment[s] and bonuses
received by the State would be paid. The principal of the fund would be used only for
income-producing investments permitted by law. The income from the fund would be
(continued...)
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Governor Hammond advocating for the amendment’s passage days before the election
gave no indication the fund’s income could be dedicated.60 The sponsor statement for
the amendment did not say the fund’s income could be dedicated.61 Published news
articles did not say the fund’s income could be dedicated, and often they suggested the
opposite.62 Wielechowski points to nothing explicitly asking voters to pass the 1976
59
(...continued)
deposited in the State’s General Fund and be available for appropriation for the State
unless law provided otherwise.”).
60
Jay Hammond, Opinion, The Governor’s Point of View, ANCHORAGE
TIMES, Oct. 27, 1976, at 6 (“[M]ake no mistake, it is for the people, not the governor, nor
the legislature singly to determine how your savings are invested and the interest used.”);
see id. (“The income from the Permanent Fund will be available for general
appropriation by the legislature, but the principal of the fund may not be touched. It
could only be removed from the fund by another constitutional amendment.”).
61
ALASKA STATE CHAMBER OF COMMERCE, STATEMENT IN FAVOR OF
PROPOSITION NO. 2: ALASKANS SHOULD STRONGLY SUPPORT THE ESTABLISHMENT OF
A “PERMANENT FUND” (1976) (“While it is to be hoped that such a fund may contribute
to cutting cost or, at least, holding the line on state spending, its major value would be
that it would require our elected officials to pause, reflect and research any proposal
before blindly authorizing expenditure of taxpayers’ monies. This would provide needed
time for the press and the public to also be aware of the pending project and its merit,
instead of being out of public view and hidden in the spending pattern of normal day-to­
day operations. Projects invested in with sources from the ‘Permanent Fund’ could help
broaden Alaska’s narrow based economy and bring more stability to our State.”).
62
See 2 Plans, 1 Fund, ANCHORAGE DAILY NEWS, Apr. 21, 1976 (“Exactly
how the permanent fund is set up would be the job of future legislatures. Our elected
representatives, by law, would prescribe how the money is to be invested. That may
demand a different application of the fund from one year to the next, but flexibility to
meet changing demands is guaranteed by current legislation. Likewise, future legislators
would be able to decide what to do with the considerable earnings of the fund. Perhaps
that extra dividend will be needed sometimes for general operating expense; at other
times, perhaps the dividends could be simply reinvested in the fund itself. The freedom
(continued...)
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constitutional amendment because the amendment would permit, even in part, legislative
dedication of the fund’s income.
We are not persuaded that newspaper language Wielechowski points to
shows voters understood the 1976 constitutional amendment would give the legislature
the ability to dedicate Permanent Fund income;63 nothing in that language necessarily
points to dedication of revenues rather than appropriation in the normal course. And as
with his argument about the framers’ intent, Wielechowski’s ballot summary argument
is based on implicit suggestion and inferred intent, gleaned here from the ballot
summary’s statement that Permanent Fund income would be deposited in the general
fund and “available for appropriation . . . unless law provided otherwise.”64 It is a far
leap to conclude voters understood and intended that phrase to give the legislature broad
power to dedicate Permanent Fund income for any purpose and any duration with little
restriction. Surely there would have been some public discourse about a grant of such
62
(...continued)
to choose must be built into the fund.”); Permanent Fund Raises Use Issue, supra note
47 (“A frequent argument against the fund comes from opponents who say dedicated
funds are insensitive to future, unpredictable needs. What if there is some unexpected
need in the future, they ask, and much of the state’s assets are locked up in the fund and
can’t be reached for solutions? To that complaint, proponents answer that the flexibility
of allowing future legislatures to decide on precise uses will prevent the ‘locked up’
circumstance.”).
63
See Andrews, supra note 47, at A3 (“There are a number of possibilities for
use of the earnings — and the legislature will decide those uses.”); Hammond, supra
note 60, at 6 (“[M]ake no mistake, it is for the people, not the governor, nor the
legislature singly to determine how your savings are invested and the interest used.”);
Permanent Fund Raises Use Issue, supra note 47 (“There have been many proposals for
possible fund uses. They range from paying direct dividends to Alaskans to using the
money to underwrite such vast projects as hydroelectric dams.”).
64
SAMPLE GENERAL ELECTION BALLOT, supra note 46.
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sweeping legislative authority; its absence, like the absence of discussion in the 1976
legislature, is telling.
c. Plain meaning
The second sentence of article IX, section 15 states: “All income from the
permanent fund shall be deposited in the general fund unless otherwise provided by
law.”65 The phrase “unless otherwise provided by law” does not plainly allow the
legislature to dedicate Permanent Fund income; the phrase appears to simply provide an
alternative to depositing the income into the general fund. And this is precisely what the
legislature has done by creating the unique earnings reserve: (1) an account existing
outside of the general fund; (2) appropriable by the legislature; (3) managed by APFC;
(4) invested in income-producing assets; and (5) as the State argues, treated differently
than other state revenues because of public expectations.66 The second sentence of the
65
Alaska Const. art. IX, § 15.
66
See AS 37.13.145(a); Hickel v. Cowper, 874 P.2d 922, 934 (Alaska 1994)
(explaining how earnings reserve works).
In Hickel we considered, on an expedited basis, what funds were “available
for appropriation” within the meaning of article IX, section 17(b) of the Alaska
Constitution, concerning the Constitutional Budget Reserve. Hickel, 874 P.2d at 925-26.
By defining and identifying appropriable state funds we helped determine when the
legislature could “withdraw from the budget reserve fund by a simple majority vote.”
Id. at 923. And we held that the balance of the earnings reserve contains appropriable
funds within the meaning of article IX, section 17 “because appropriations may be made
from it and it is not subject to expenditure without legislative action.” Id. at 935.
In deciding that the balance of the earnings reserve was “available for
appropriation” we also looked at the dividend transfer provisions. See id. at 934
(discussing AS 37.13.145(b)). Apparently looking solely to the transfer statute and not
appreciating that the legislature had been appropriating transfers throughout the years,
we stated that the transfers from the earnings reserve to the dividend fund occurred
(continued...)
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Permanent Fund clause permits the creation and use of the earnings reserve for deposit
of the fund’s income pending appropriation; it does not give the legislature the authority
to dedicate that income.
Nor can the plain meaning of the exception added to the anti-dedication
clause be understood to grant the legislature such broad authority. It exempts dedications
“as provided in section 15,” not as permitted by that section.67 “Provided” here is
synonymous with “supply, furnish.”68 A dedication is quite explicitly supplied in the
first sentence of article IX, section 15: “At least twenty-five per cent of all [specific
mineral revenues] . . . shall be placed in a [P]ermanent [F]und.”69 Even the most
expansive reading of the clause’s second sentence — “unless otherwise provided by law”
— could be understood only to permit further dedications, not to provide them.
Interpreting the 1976 constitutional amendment to allow dedications of
Permanent Fund income would create an anti-dedication clause exception that would
swallow the rule. We remain “unwilling to add ‘missing terms’ to the Constitution or
to interpret existing constitutional language more broadly than intended by . . . the
66
(...continued)
“automatically.” Id. (“A percentage of the money in the [earnings] reserve . . . is
automatically transferred to the dividend fund at the end of each fiscal year.” (citing
AS 37.13.145(b))). But we were not asked to decide whether the transfer was a
constitutionally permissible dedication of Permanent Fund income, and our previous
characterization of the action as “automatic[]” does not control here. Our decision today
reinforces our holding in Hickel that the earnings reserve “is available for appropriation.”
Id.; see also id. at 935.
67
Alaska Const. art. IX, § 7 (emphasis added).
68
WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY 1827 (1966).
69
Alaska Const. art. IX, § 15 (emphasis added).
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voters.”70 Without an explicit exception to the anti-dedication clause, we will not
“abstrusely” interpret the Permanent Fund clause to permit the dedication of its income.71
Whether any prior legislature or administration treated the dividend program as if it were
a dedication has no bearing on our analysis; what matters is what the Alaska Constitution
says.72
The plain language of the 1976 constitutional amendment creating the
Permanent Fund does not exempt Permanent Fund income from the constraints of the
anti-dedication clause. We affirm the superior court on this alternative ground,73
although the conclusion that a revenue transfer from the earnings reserve to the dividend
fund requires an appropriation and must survive a gubernatorial veto flows naturally
from our decision. Absent another constitutional amendment, the Permanent Fund
dividend program must compete for annual legislative funding just as other state
programs.74
70
Hickel, 874 P.2d at 927.
71
Id. at 926.
72
See id. at 925 & n.7.
73
See Seybert v. Alsworth, 367 P.3d 32, 36 (Alaska 2016) (“We review
summary judgment rulings de novo and may affirm summary judgment on any basis
appearing in the record.” (quoting Angleton v. Cox, 238 P.3d 610, 614 (Alaska 2010))).
We therefore do not decide and express no opinion on the specific ground ruled upon by
the superior court.
74
See Sonneman v. Hickel, 836 P.2d 936, 938-39 (Alaska 1992) (“[T]he
constitutional framers believed that the legislature would be required to decide funding
priorities annually on the merits of the various proposals presented.”).
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B. The Governor Validly Exercised Veto Authority When Reducing The
Amount Of Funds For Transfer.
Wielechowski also challenges the manner in which Governor Walker
exercised his veto power, arguing that he improperly “struck descriptive language,
resulting in an [unconstitutional] infringement on legislative power.” The State contends
that because Governor Walker did not alter the appropriation’s purpose, he properly
exercised his veto authority.
We conclude that Governor Walker validly exercised his constitutional veto
authority when reducing the transfer amount from the earnings reserve to the dividend
fund. After the governor’s veto struck existing language and inserted a new
appropriation amount, the legislature’s transfer authorization stated:
The amount authorized under AS 37.13.145(b) for transfer by
the Alaska Permanent Fund Corporation on June 30, 2016,
estimated to be $1,362,000,000, 695,650,000 is appropriated
from the earnings reserve account (AS 37.13.145) to the
dividend fund (AS 43.23.045(a)) for the payment of
permanent fund dividends and for administrative and
associated costs for the fiscal year ending June 30, 2017.[75]
In Alaska Legislative Council v. Knowles we held that the governor has no
authority to strike descriptive language in appropriation bills.76 Although the governor
has authority to “strike or reduce” “a sum of money dedicated to a particular purpose,”77
the governor does not have authority to “distort the legislative intent, and in effect create
legislation inconsistent with that enacted . . . by the careful striking of words, phrases,
75
Ch. 3, § 10, 4SSLA 2016 (as amended).
76
21 P.3d 367, 371-75 (Alaska 2001).
77
Id. at 371; see Alaska Const. art. II, § 15.
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clauses or sentences.”78 Stated differently, “[t]he governor can delete and take away, but
the constitution does not give the governor power to add to or divert for other purposes
the appropriations enacted by the legislature.”79
Governor Walker properly vetoed a portion of the transfer to the dividend
fund by striking some language from the 2016 appropriations bill. Unlike the Alaska
Legislative Council governor’s attempt to veto language placing restrictions on his
spending,80 Governor Walker struck only language concerning the legislature’s estimated
2016 transfer amount. In doing so Governor Walker did not alter the legislature’s
purpose; the appropriation bill still stated that the transfer was “for the payment of
permanent fund dividends and for administrative and associated costs for the fiscal year
ending June 30, 2017.”81
Wielechowski argues that the governor had no authority to strike the
“descriptive” reference to AS 37.13.145(b) because he effectively vetoed a statute. But
we addressed a similar argument in Simpson v. Murkowski.82 In Simpson we concluded
that the governor had constitutional authority to veto an appropriation for longevity
78
Alaska Legislative Council, 21 P.3d at 373 (quoting State ex rel. Sego v.
Kirkpatrick, 524 P.2d 975, 981 (N.M. 1974)) (citing Rush v. Ray, 362 N.W.2d 479, 482
(Iowa 1985); Welden v. Ray, 229 N.W.2d 706, 713 (Iowa 1975)).
79
Id. at 371 (emphasis added).
80
See id. at 370-71 (indicating governor struck language making
appropriation contingent on a salary cap for “employees . . . located outside Alaska”
(quoting ch. 98, § 6, SLA 1997; ch. 100, §§ 47, 70, SLA 1997)).
81
Ch. 3, § 10, 4SSLA 2016 (as amended).
82
129 P.3d 435, 446-47 (Alaska 2006).
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bonus payments even though a statute mandated the payments.83 Governor Walker
likewise validly exercised his veto authority to reduce an appropriation despite a
seemingly mandatory statute.
Because: (1) Governor Walker struck only language related to the amount
of funds to be transferred; (2) the language in the appropriation bill post-veto would
make less sense if only the number had been struck and reduced; and (3) language about
the transfer’s purpose remained, we conclude that Governor Walker properly exercised
his veto authority.
V. CONCLUSION
Because the plain language of article IX, sections 7 and 15 does not permit
the dedication of Permanent Fund income, and because Governor Walker properly
exercised his veto authority when reducing the legislatively authorized transfer from the
earnings reserve to the dividend fund, we AFFIRM the superior court’s decision in favor
of the State of Alaska and the Alaska Permanent Fund Corporation.
83
Id.-26- 7194