Sen. Bill Wielechowski and company’s quest to restore the 2016 dividend arrives in the Alaska Supreme Court today. The case was thrown out by Superior Court Judge William Morse last year, but the Anchorage Democrat appealed the decision. Oral arguments are set to take place today at 1:30 p.m.
There’s little action expected out of the Legislature—both chambers are out until Thursday—so most eyes are turned to the Alaska Supreme Court today. The outcome of the lawsuit could have a big impact on the state’s budget problems, adding another $700 million in unpaid bills.
In case you’re not intimately familiar with the case, we’ve put together a primer on the lawsuit.
Where to watch
Gavel Alaska will have a livestream of the oral arguments today at 1:30 p.m., which is embedded below.
So what is this lawsuit?
Simply put, the lawsuit challenges the governor’s ability to veto funding for the annual PFD.
After the Legislature failed to restructure the permanent fund to bolster the budget last year, a move that would’ve reduced the dividend, Walker went ahead and cut the dividend in half anyways. On June 29, 2016, Walker announced he’d vetoed about $700 million of the funding for the dividends, effectively reducing the PFD from $2,052 to $1,022.
The move included the deletion of some budget language, but more on that later.
Sen. Bill Wielechowski, an Anchorage Democrat, was joined by former legislators Rick Halford and Clem Tillion in filing suit against Walker and the Permanent Fund Corporation. The lawsuit was filed in September 2016 and thrown out just a few months later by Anchorage Superior Court Judge Morse.
Morse dismissed the lawsuit from the bench during the same hearing where Wielechowski and the state presented their arguments. It made for a quick dismissal, and Wielechowski vowed to appeal the lawsuit to the Supreme Court.
What are their key arguments?
Wielechowski and company argue the case on three main and interconnected points:
The dividend is a dedicated appropriation. The lawsuit argues the amendment that exempted the permanent fund from the constitution’s prohibition on dedicated funds also exempts the dividend from constitutional prohibition on dedicated spending. The dividend was put in place well after the creation of the permanent fund, but Wielechowski argues constitutional amendment exempts everything related to the permanent fund from everything related to the prohibition on the dedication of funds or expenditures.
The dividend is automatic and therefore not a regular appropriation that can be vetoed. The lawsuit argues that because the dividend amount is set by a formula in state law it can’t be targeted by a veto. This relies in part on the first point, arguing the constitutional exemption combined with state law makes the dividend automatic.
A governor can’t veto budget language. Part of Walker’s veto of the dividend required deleting reference to the dividend formula law. The lawsuit argues the governor’s budgetary line item veto power is limited to eliminating or reducing spending. By changing language, he’s effectively committing a “quasi-legislative act” as the lawsuit explains.
What’s the state’s argument?
The state argues Wielechowski’s case relies on unfounded interpretations of state law that ignore the intent and spirit of the law.
There’s no evidence to support the dividend is protected by the constitution. The state argues that the amendment creating the permanent fund and the surrounding campaign didn’t envision a dividend. Wielechowski’s suggestion that the amendment “silently” created a protection for a dividend is unfounded, the state argues.
State law and precedent show the dividend is an appropriation. This point argues that because the Legislature has regularly included appropriations for the dividend that it isn’t as automatic as Wielechowski argues. The state also points out that the governor’s ability to veto is core to the concept of checks and balances the government is founded upon.
Walker can veto budget language as long as it doesn’t change the intent of the appropriation. The state argues Wielechowski has the wrong interpretation of the governor’s line item veto power. The deletion of language in the budget was permitted because the end goal was to exercise his power to reduce an appropriation in the budget. The governor can veto language as long as it’s not changing an appropriation’s purpose.
What will the outcome be?
Both sides have filed exhaustive and well-reasoned briefs with the Supreme Court. Whether the justices side with Wielechowski or the state will likely depend on whether they’re keen on reading into technicalities or with precedent and the spirit of the law. Judge Morse sided with the spirit of the law when he argued the governor has broad authority to serve as a check on legislative spending through his veto power.
Still, word is the Department of Law told some majority members on the Senate Finance Committee that they weren’t certain they’d win the case. Why the state might have told senators this is unclear and there may be some other motivation than just keeping them informed. It could be the state doesn’t expect the case to be resolved quickly.
Don’t expect as fast a resolution as provided by Judge Morse. The Supreme Court will likely take its time to weigh in on the case. It could take months and a satisfying outcome isn’t guaranteed. The Supreme Court, as it has done with other lawsuits, could find that Morse made his decision on a flawed reading of the law and send it back to him with new instructions.