Alaska’s Supreme Court has blocked the state’s plan to borrow money to pay off hundreds of millions in debt owed to oil companies under a now-shuttered cash for tax credit program.
The ruling comes after a Juneau man, Eric Forrer, filed a lawsuit arguing that the state’s plan was unconstitutional. That plan was to pay off tax credit funds that the state owes to oil and gas producers by creating a state corporation and selling bonds.
According to the Friday ruling, the court said that this plan is exactly the kind of debt the framers of the state’s constitution were trying to avoid when they prohibited lawmakers from taking on debt under most circumstances.
Initially, Forrer’s lawsuit was dismissed in early 2019, by a Superior Court judge who said that the state’s plan was allowable under the constitution. But, Forrer appealed to the Supreme Court.
When former Gov. Bill Walker first pitched the program to the state’s legislature in 2018, the state owed about $1 billion to oil and gas companies — and that’s how much it wanted to be able to borrow under its plan. But the state has since then paid down hundreds of million of that debt. It currently owes just over $726 million.
A spokesperson from Gov. Mike Dunleavy’s office said they would likely put out a written statement on the issue later in the day, but didn’t make anyone available to talk about how the state will respond to the ruling.