Can the Alaska Legislature appropriate funds it doesn’t have for future fiscal years? No.
The Alaska Supreme Court ruled that the legislature cannot dedicate future revenues for future budgetary cycles and make those budget decisions for future lawmakers. The Alaska Legislature can, as it has in the past, set aside funds from the current budgetary cycle to be spent in future years for Alaska’s school districts.
In Dunleavy v. Alaska Legislative Council, the Alaska Supreme Court reversed a Superior Court decision and agreed with the Attorney General that the practice of appropriating future-year revenues—referred to as “forward funding”—is unconstitutional.
The case centers on a bill the legislature passed in 2018 that sought to appropriate funds for education from revenues over the next two consecutive fiscal years, fiscal year 2019 and fiscal year 2020. The bill sought to authorize, more than a year in advance, the spending of future revenues to pay for education in 2020.
In 2019, Juneau Superior Court Judge Daniel Schally ruled that the Legislature could fund education for years into the future, if it chose, even if the revenues were not yet in the state treasury.
Gov. Mike Dunleavy had argued that the forward funding is not constitutional. The Department of Law said that it violated the state constitution’s prohibition against dedicated funds. The constitutional also specifies an annual state budget.
Schally, a far-left judge, said at the time that Dunleavy had violated his constitutional obligation to “faithfully execute the laws” of Alaska.
Schally was wrong, said the Supreme Court.
“The Alaska Supreme Court is upholding the Alaska Constitution with this opinion,” said Alaska Attorney General Treg Taylor. “The ruling says the legislature is always okay to spend money they have in this year or future years. What’s not okay is to spend money they don’t yet have, because that takes away the funding prerogative from future legislatures.”
In an opinion by Alaska Supreme Court Justice Peter J. Maassen, the court wrote that the drafters of the Alaska Constitution “envisioned an annual budget that comprehensively addresses the State’s current needs and the resources currently available to meet those needs.” The court concluded that forward funding “undercuts an important aspect of the constitutional design: protecting the State’s flexibility in the future to respond to then-present needs with then-present resources.”
It explained that “allowing this form of forward funding for education a year in advance would open the door for forward funding in other contexts and more years in advance, weakening the annual budgeting process intended by the Constitution’s framers.”
The Court acknowledged the importance of providing school districts with advanced notice of their annual budget, but the Court emphasized that “there are avenues that do not raise constitutional concerns.
For example, as was the practice from 2010 to 2014, the legislature may appropriate public education funds from the upcoming fiscal year to cover expenditures in the subsequent fiscal year. Unlike the forward funding practice at issue here, this would ensure that education funds were set aside well in advance of distribution —giving school districts time to plan their budgets —without appropriating funds from future budgetary cycles.”