Forrer v. State
In Forrer v. State, 471 P.3d 569 (Alaska 2020), the supreme court held that a debt-creating statute was unconstitutional because (1) subject-to-appropriations bonds are “debt” for purposes of Article IX, section 8 of the Alaska Constitution—and thus require Alaska voters’ authorization—and (2) the legislative scheme authorizing the bonds did not qualify for an exemption to the public approval requirement. (Id. at 590, 596). The legislature created a public corporation, capable of borrowing up to $1 billion of subject-to-appropriations bonds, to offset the future fiscal unpredictability that outstanding tax incentives imposed. (Id. at 573). A taxpayer sued, alleging various constitutional violations of the Alaska Constitution’s debt-limitation provisions in Article IX, section 8, and the State moved to dismiss for failure to state a claim. (Id. at 582). The superior court granted the motion to dismiss after finding that the enactment did not create “debt” within the meaning of section 8. (Id.). On appeal, the State argued for a narrow construction of “debt” that would have exempted the scheme from section 8’s public approval requirement, or alternatively that the enactment at issue qualified for an exemption. (Id. at 587, 595). After outlining the history of the Alaska Constitution’s debt-limitation provision, (id. at 574–77), the supreme court summarized the bond scheme’s legislative history, noting that the bill generated controversy due to its apparent conflict with section 8’s public authorization requirement. (Id. at 579–81). Illuminating the word “debt” through a holistic reading of the Alaska Constitution and its framers’ intent, the court found that subject-to-appropriation bonds fit squarely within that term and therefore required voters’ authorization. (Id. at 585–90.). The court found unpersuasive the State’s attempt to analogize the subject-to-appropriations bonds to debt instruments that had been found outside debt limitation provisions’ scope. (Id. at 590–95). Reversing the lower court’s decision, the supreme court held that the legislature’s provision of subject-to-appropriations bonds without Alaska voters’ authorization was unconstitutional because (1) subject-to-appropriations bonds are within the meaning of “debt” in Article IX, section 8, and thus require the public’s endorsement, and (2) the scheme did not qualify for any exemption from this requirement. (Id. at 590, 596).