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Did the Alaska Supreme Court Get it Right in its Decision in the Alaska Permanent Fund Dividend Case?

by Jack Brian McGee

Click here for a PDF file of this article

Abstract

In 1976, Alaska voters ratified an amendment to Alaska’s constitution that created the Permanent Fund. The amendment required twenty-five percent of certain revenues received by the state be placed in this Fund. In 1980, the Alaska Legislature created the Permanent Fund dividend program. Beginning in 1982, each Alaska resident received an annual dividend in the same amount. The amount of the dividend was automatically determined by a statutory formula. No appropriation was required.

In 2016, the Governor of Alaska vetoed close to one-half of the amount of the annual dividend as calculated by the statutory formula. In subsequent litigation, the Alaska Supreme Court found that a fund utilized by the dividend program was a dedicated fund. And since dedicated funds are prohibited by article IX, section 7 of the Alaska Constitution, the court rejected the claim that the fund was exempt from the prohibition and upheld the governor’s veto. The practical effect of the court’s ruling is that now any income from the Permanent Fund used to pay the yearly dividend to Alaska residents must first be appropriated and, further, is subject to the governor’s veto power.

The central question in the case turned on what is the most likely understanding Alaska voters had of the word “provided” in a single phrase in the 1976 amendment: “except as provided in section 15 of this article.” The Alaska Supreme Court found that the plain language meaning of the word “provided” in the phrase quoted above is to “supply” or “furnish.” Based on this finding, the court concluded the only dedicated fund “supplied” or “furnished” by section 15 is the Permanent Fund itself. The court found this to be the probable meaning Alaska voters had of the “except as provided” phrase.

This Article raises a number of questions about the fundamental premise that underlies the court’s conclusion. For instance, given the context in which “provided” appears in section 7, reading “provided” to mean “supplied” or “furnished” is neither common nor ordinary. A number of other arguments are also discussed in the Article.

Did the Alaska Supreme Court Get it Right in its Decision in the Alaska Permanent Fund Dividend Case?

by Jack Brian McGee

Click here for a PDF file of this article

Abstract

In 1976, Alaska voters ratified an amendment to Alaska’s constitution that created the Permanent Fund. The amendment required twenty-five percent of certain revenues received by the state be placed in this Fund. In 1980, the Alaska Legislature created the Permanent Fund dividend program. Beginning in 1982, each Alaska resident received an annual dividend in the same amount. The amount of the dividend was automatically determined by a statutory formula. No appropriation was required.

In 2016, the Governor of Alaska vetoed close to one-half of the amount of the annual dividend as calculated by the statutory formula. In subsequent litigation, the Alaska Supreme Court found that a fund utilized by the dividend program was a dedicated fund. And since dedicated funds are prohibited by article IX, section 7 of the Alaska Constitution, the court rejected the claim that the fund was exempt from the prohibition and upheld the governor’s veto. The practical effect of the court’s ruling is that now any income from the Permanent Fund used to pay the yearly dividend to Alaska residents must first be appropriated and, further, is subject to the governor’s veto power.

The central question in the case turned on what is the most likely understanding Alaska voters had of the word “provided” in a single phrase in the 1976 amendment: “except as provided in section 15 of this article.” The Alaska Supreme Court found that the plain language meaning of the word “provided” in the phrase quoted above is to “supply” or “furnish.” Based on this finding, the court concluded the only dedicated fund “supplied” or “furnished” by section 15 is the Permanent Fund itself. The court found this to be the probable meaning Alaska voters had of the “except as provided” phrase.

This Article raises a number of questions about the fundamental premise that underlies the court’s conclusion. For instance, given the context in which “provided” appears in section 7, reading “provided” to mean “supplied” or “furnished” is neither common nor ordinary. A number of other arguments are also discussed in the Article.