Alaska court upholds cut to checks from oil-wealth fund
JUNEAU, Alaska (AP) — The Alaska Supreme Court has ruled that Gov. Bill Walker acted within his authority last year in reducing the amount set aside for checks from Alaska’s oil-wealth fund to state residents.
The decision released Friday sided with the state, as a lower court had, in the dispute over Alaska Permanent Fund dividends.
The case was brought by Democratic state Sen. Bill Wielechowski and two former legislators, who argued that the Alaska Permanent Fund Corp. last year was required by law to make available nearly $1.4 billion from the fund’s earnings reserve for dividends, despite Walker’s veto.
Walker, a one-time Republican no longer affiliated with a political party, had cut the amount available for dividend checks after lawmakers failed to agree on a plan to address a multibillion-dollar state budget deficit.
In its ruling, Alaska’s Supreme Court concluded that the state constitutional amendment establishing the permanent fund does not allow the dedication of permanent fund income.
“Absent another constitutional amendment, the Permanent Fund dividend program must compete for annual legislative funding just as other state programs,” the ruling states.
The ruling said the legislature’s use of permanent fund income is subject to normal appropriation and veto processes. Walker validly exercised his veto authority when reducing the amount available for dividends, it ruled.
Wielechowski, in a statement, said he was “bitterly disappointed” in the court’s decision, which he said highlighted a need to protect the dividend in the state constitution.
State Attorney General Jahna Lindemuth said she was glad that there is more clarity around use of permanent fund earnings.
The permanent fund is a kind of nest egg, which has grown through investments. Its principal is constitutionally protected but fund earnings can be spent, traditionally being used for dividends and to protect the fund against inflation.
The fund’s total value is about $60 billion.
The politically charged case has played out as lawmakers weigh a major shift that could turn the fund into an endowment and change the dividend program, which has provided annual checks to Alaskans based on a rolling average of the fund’s performance.
There has been widespread agreement that some use of permanent fund earnings will be needed to help cover government costs as the state, which has long relied on oil revenue, tries to close a deficit that has persisted amid low oil prices.
While lawmakers have yet to agree on how best to do that, there have been signs of change: for example, lawmakers capped dividends at $1,100 for this year.
Dividends reached as high as $2,072 in 2015. After Walker’s veto last year, Alaskans received checks of $1,022.