Lawsuit filed challenging Legislature’s less-than-legal approach to CARES Act spending: Report

It turns out not everyone was willing to look the other way.

A lawsuit has been filed today by a Juneau resident challenging the Legislature’s approval of Gov. Mike Dunleavy’s requests to distribute nearly $1 billion in federal coronavirus aid, which the Legislature’s own attorney warned was likely unconstitutional and vulnerable to a legal challenge.

According to a report by the Anchorage Daily News, the lawsuit was filed by attorney Joe Geldhof on behalf of former University of Alaska regent Eric Forrer. Geldhof, a Republican, is no stranger to litigating issues of constitutionality in front of the Alaska Supreme Court and is also involved in the lawsuit over the state’s plan to bond oil and gas tax credits.

Though not included with the initial filing, Geldhof said he plans to file motions for temporary restraining orders to put the distribution of the money to a halt.

Forrer told the Anchorage Daily News that he’s concerned about the constitutionality of the decision and is pushing for the Legislature to be more deliberative about how the money is being spent.

“We put a crowbar in their spokes on this one, and I would hope it would inspire more rational, more reasonable, more equitable government,” he told the paper, acknowledging that the efforts would likely tie up much-needed money. “I’ve been told I’ll be vilified by this. … I’m just the guy that said stick to the constitution. (Legislators) ran around the state saying, ‘vote for me, I have all the answers, I will act in an honorable fashion.’ Just do what you said you were going to do when you were elected.”

The core issue here is the Legislature and governor’s use of the Legislative Budget and Audit Committee to distribute $568 million in direct payments to communities, $290 million to small businesses and another $100 million to fisheries (though only $50 million in federal money will actually be arriving). The Legislative Budget and Audit committee’s powers are limited by law to increasing existing appropriations of federal money.

In these cases, there was no such existing appropriations and the committee effectively created entirely new spending without the approval of the full Legislature. Megan Wallace, the director of the Legislature’s nonpartisan Legal Affairs, warned the committee that the spending could be challenged.

“If challenged, this RPL poses a risk of being deemed an unconstitutional delegation of the Legislature’s appropriation power,” she said.

Wallace previously told legislators that passing a budget bill would ensure the spending is defensible.

The Legislature has been deeply divided on this process. Though most acknowledged that it was, at the very least, pushing the bounds of legality, many argued that the immediate need to disburse the money overrode those concerns.

Others, mostly Democrats, argued in favor of returning to the still-in-progress session to pass a legal appropriations bill. They argued that not only would it protect the spending from a legal challenge, but it would allow public input and legislative oversight on the program.

LB&A Chair Rep. Chris Tuck, D-Anchorage, attempted to table the motions during the hearing but was overrode by the committee.

“The last thing I want to see is this money tied up in lengthy legal battles by our actions today,” he said.

Tuck may eventually get his way on returning to session, though, as several senators who supported sending out the money noted that they could OK the spending through the legislative ratification process.

“We recognize it’s unprecedented times and we’re pushing the bounds in some directions, but we also have the ability if there is a so-called legal challenge, we could go through the ratification process when the Legislature reconvenes sometime in the future and bless the activities of the Legislative Budget and Audit Committee,” said Sen. Bert Stedman, R-Sitka.

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1 Comment on "Lawsuit filed challenging Legislature’s less-than-legal approach to CARES Act spending: Report"

  1. turbodigits | May 13, 2020 at 9:17 pm | Reply

    Thank you, Mr. Geldhof, for challenging this before the administration started distributing funds. It’s 100% certain that lawsuits would have been filed by folks unhappy with specific disbursements, gumming up the legal and administrative works and delaying the relief this money is supposed to bring.

    It’s critical that the Legislature step up and fulfill their Constitutional duty to share & demand accountability through the appropriation process. It only takes an hour and a half to fly to Juneau, and there are only 100 of them. Maybe, given the circumstances, the National Guard could help with transporting them safely. If there’s a legal way for them to meet remotely, they could enact a temporary statute allowing them to do that, go home on the same day, and then reconvene remotely to hash out the details of the spending package.

    I hope we won’t be gifting these funds to Outside-owned businesses that use tax-free state services & infrastructure to turn profits that then flow out of state, or favoring large businesses over small ones that might have received minimal loans through the SBA Paycheck Protection Program.

    Team Dunleavy should be mindful of best practices for public officials when it comes to conflicts of interest: If it looks, smells, or sounds like one, don’t do it. The Recall effort is gathering steam again. Creating an appearance that cronies are receiving opportunistic rewards of public money isn’t going to play well after the cruelty that was inflicted on Alaskans over the past year to save money.

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