Supremes rule on Dividend cut: Legal to veto unless enshrined in constitution - Must Read Alaska
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Sunday, June 13, 2021
HomeThe 907Supremes rule on Dividend cut: Legal to veto unless enshrined in constitution

Supremes rule on Dividend cut: Legal to veto unless enshrined in constitution

The Alaska Permanent Fund Dividend has been calculated in a nonpolitical formula by tradition since the first checks were cut in 1982. The amount of dividends was always tied to the actual performance of the Permanent Fund.

But when Gov. Bill Walker sliced the dividend in half in 2016, he changed the course of Alaska history. The Permanent Fund Dividend can now be used as a blunt political instrument.

The Alaska Supreme Court on Friday upheld Walker’s right to veto the dividend. In a unanimous decision, the court discarded the arguments made by Democrat Sen. Bill Wielechowski, and former Republican Sens. Rick Halford and Clem Tillion, who had sued the governor.

The judges said that the dividend is like any other appropriation in the budget, which makes it subject to veto. Walker set last year’s dividend at $1022, when normally Alaskans would have received more than $2,050, due to the strength of the fund, which is now worth over $60 billion.

The cut took $650 million out of Alaskans’ wallets in 2016 but the dividend was close to the historical average for dividends, which is $1,150.

This year the Legislature did the cut for him, by setting the amount at $1,100. Alaskans who qualify will receive their checks the first week of October.

The argument made by Wielechowski, Halford, and Tillion was that the 1976 constitutional amendment creating the Permanent Fund gave lawmakers constitutional authority to pass laws dedicating use of fund’s income without need for annual appropriations. Therefore, because the dividend is unlike other appropriations, it is not subject to a gubernatorial veto.

But judges said that even if the constitutional amendment gave the legislature dedication powers over the dividend, the matter is part of the normal appropriation and veto processes that govern the budget.

“We conclude that Governor Walker validly exercised his constitutional veto authority when reducing the transfer amount from the earnings reserve to the dividend fund,” the judges wrote.

THE DANGER WITH THE DECISION

Amy Demboski, who hosts a conservative talk show on KVNT, cautioned, “Well, there you have it. Your PFD will forever more be subject to the political whim of the Legislature and governor. The only way to protect it is a constitutional amendment.”

Sen. Mike Dunleavy, a Republican candidate for governor, has been calling for a constitutional amendment for a while, and he left the Senate Republican majority caucus earlier this because he disagreed with his fellow Republicans over their decision to set the dividend lower than it would be if calculated in the traditional method.

“We need to constitutionalize the Permanent Fund Dividend, sooner, rather than later,” he said today. “That was overlooked when they constitutionalized the Permanent Fund. If we don’t do this, the politicians will spend all that money in the blink of an eye. This coming session, like-minded people will need to work together to protect the dividend for future generations.”

The court decision is here.

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Suzanne Downing had careers in business and journalism before serving as the Director of Faith and Community-based Initiatives for Florida Gov. Jeb Bush and returning to Alaska to serve as speechwriter for Gov. Sean Parnell. Born on the Oregon coast, she moved to Alaska in 1969.

Latest comments

  • Great. Even the R’s are apparently in favor of socialist wealth redistribution. The Dividend is a reckless expenditure of State income. I was OK with it because we could afford it for 30-some years. But we can’t afford it anymore – NOT when we are facing new broad taxes to pay for it. It also disrupts and distorts our natural economy, a portion of it is taken by the IRS, and politicians use it to promote their socialist agenda. Bottom line is a broad based tax is not constitutional as long as the Dividend continues (in its current form). Want to dispute that? See you in the AK Supreme Court!

    • You miss an important point Chris, the oil in the ground belongs to the people, not the government. Jay Hammond understood that the government would look at the oil royalty investments as a slush fund, and foresaw the explosive growth of state government and the problems that would bring. We’re not talking about wealth redistribution with the PFD, we’re talking about letting the people have what’s theirs already. Gov Walker stole from the people off Alaska because he doesn’t have the sense to fill the pipe and cut the size of state government – not a single lay-off, not even his chef.

      • You are incorrect sir. Yes the people own the oil and the income is subject to appropriation through their elected representatives of their constitutionally-formed government. There is no dedicated fund. Tbere is no direct ownership. And it is wealth redistribution when you need a broad based tax to continue funding the dividend and also protect the Permanent Fund. You are making the same failed argument that Wojo, Halford and Tillion just tried.

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