Anchorage Democrat Sen. Bill Wielechowski might go through the courts to supersede Gov. Bill Walker’s partial veto of this year’s Permanent Fund Dividend appropriation.
In a Wednesday letter to Alaska Permanent Fund Corp. Executive Director Angela Rodell, Wielechowski wrote that the corporation has a “statutory obligation” to transfer the full $1.36 billion amount from the fund’s Earnings Reserve account to the Dividend Fund and subsequently pay the previously expected PFD of about $2,100 to each eligible Alaskan, despite the governor’s June 29 veto.
Walker vetoed $666.3 million of the $1.36 billion transfer from the Earnings Reserve to the Dividend Fund contained in the 2017 fiscal year state operating budget passed by the Legislature.
The line-item veto was intended to reduce the PFD paid this October to $1,000 per individual, an action Walker has repeatedly said he felt was necessary to help preserve the state’s fiscal health in the face of $3 billion-plus annual deficits and the absence of structural changes to state finances by the Legislature.
In addition to crossing out the lump sum dividend amount and writing in his own, the governor also crossed out language in the budget that notes the transfer is “authorized under AS 37.13.145(b).” That is the statute that states the Permanent Fund Corp. “shall transfer” the formula-determined amount from the Earnings Reserve to the Dividend Fund for the annual payouts.
The Alaska Constitution gives governors broad authority to make line-item vetoes in appropriations bills, and they regularly use it on budget bills. Walker’s partial veto of the Dividend Fund transfer amount is the first time a governor has touched the money that pays the PFD.
Wielechowski, an attorney, acknowledged the veto power, but said in an interview it doesn’t apply to the PFD.
“The governor can’t veto a statute. That’s the whole point,” he said. “You’ve got a statute in place; it was debated by the Legislature. It was signed into law by a governor and it says the transfer is automatic.”
Wielechowski added it is “highly likely” he, or a group he is a part of, will sue the Permanent Fund Corp. for not following state law if the full $1.36 billion is not transferred.
APFC spokeswoman Paulyn Swanson referred questions about how the corporation will proceed with this year’s dividend to Department of Law officials.
Law spokeswoman Cori Mills said the department’s opinion since 1983 has been that an appropriation is required to transfer money out of the Earnings Reserve and into the Dividend Fund, which is administered by the Department of Revenue.
In his letter to Rodell, Wielechowski cited a 1994 Alaska Supreme Court case, Hickel v. Cowper, which focused the definition of “amount available for appropriation,” but also addressed the fund transfer.
The Supreme Court’s analysis determined Fund income “shall be deposited by the corporation into the account as soon as it is received. Therefore, money in the earnings reserve account never passes through the general fund, and is never appropriated by the Legislature.”
Wielechowski noted that there have been attorney general opinions that fall on each side of the issue, but also that the Supreme Court has already had the final say.
“The Supreme Court has interpreted (the law) to say it is an automatic transfer, so it never had to be in the budget and because it didn’t have to be in the budget, the governor can do whatever he wants; he can cross the language out,” he said. “It’s an agency obligation to make the payment, or a Permanent Fund Corp. obligation to make the transfer. It’s a simple, almost ministerial, statutory function that they have.”
Wielechowski voted against Senate Bill 128 earlier this year, which was the administration’s proposal to reformulate how dividend’s are calculated and make money from the earnings reserve account available to fund government services through an annual percent of market value, or POMV, draw from the account.
SB 128 passed the Senate 14-5 but died in the House Finance Committee by a 5-6 vote without getting to a floor vote. During the subsequent special session, the Senate refused a House request for a joint session to attempt to override the governor’s veto.
The bill, which was the centerpiece of Walker’s broader New Sustainable Alaska fiscal plan, also would have set the dividend at $1,000 per Alaskan for the next three years.
• Elwood Brehmer is a reporter for the Alaska Journal of Commerce. He can be reached at elwood.brehmer@alaskajournal.com.
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