Walker faces possible legal opposition for PFD cuts

Anchorage Democratic Senator Bill Wielechowski wants the Alaska Permanent Fund Corporation to defy Gov. Bill Walker’s veto roughly halving this year’s dividends.

If the veto stands, Wielechowski said he’s likely to sue to force the state to fully pay Permanent Fund dividends this fall.

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Sen. Bill Wielechowski fields a question from a reporter during a Senate Minority press availability, Jan. 28, 2015. (Photo by Skip Gray, 360 North)
Sen. Bill Wielechowski fields a question from a reporter during a Senate Minority press availability, Jan. 28, 2015. (Photo by Skip Gray, 360 North)

Senator Wielechowski said Walker didn’t have the authority to veto PFD funds. In a letter sent Wednesday to Permanent Fund Corporation Chief Executive Officer Angela Rodell,

Wielechowski cites a state law that says the corporation shall transfer an amount set by a formula for dividends.

“You just simply can’t veto a statute, regardless of what appropriation is made or not,” Wielechowski said.

If it stands, Walker’s veto will reduce the dividend from what was projected to be slightly more than two thousand dollars per person to one thousand dollars. Walker said he took the step to prevent the state from exhausting all Permanent Fund earnings in the next two years, and that the veto would actually preserve PFDs into the future.

Wielechowski cited a 1994 Alaska Supreme Court decision that says Permanent Fund earnings go directly into the earnings reserve account. From there, state law says half of the annual deposit is distributed in PFDs.

“They very clearly said this is an automatic transfer,” Wielechowski said. “So, I think the case law is clear. The interpretation of the statute is clear. And they’ve got an obligation to transfer the full funds.”

A Permanent Fund spokeswoman referred questions to the state Department of Law. Department spokeswoman Cori Mills said the state constitution requires that all annual state spending – including dividends – is subject to the governor’s veto.

“It’s been the Department of Law’s longstanding opinion that dividends do require an appropriation, just as, you know, any other money that is spent in the state,” Mills said. “And that’s because of the constitution’s requirement … that the legislature appropriates money. The governor then has the line-item veto power.”

Mills added that the 1994 Supreme Court case didn’t focus on Permanent Fund dividends.

Wielechowski said that if the Permanent Fund Corporation doesn’t agree to transfer the full amount, he and others would likely sue over it.

“I think there’s a  high likelihood that it’ll happen,” Wielechowski said. “I’m not going to say it with a 100-percent certainty, but I’ll just say there’s a high likelihood that there will be a lawsuit.”

Mills says the administration is prepared to defend its position, and the Permanent Fund Corporation’s position, to only transfer what was provided after Walker’s veto.

“We’d rather not get involved in a lawsuit, but that’s his right as well as any other citizen’s right,” Mills said.

Dividends are scheduled to be distributed on October 6th.