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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Wielechowski v. State (8/25/2017) sp-7194
BILL  WIELECHOWSKI,  RICK                                            )
HALFORD,  and  CLEM  TILLION,                                        )     Supreme  Court  No.  S-16558
)     Superior Court No. 3AN-16-08940 CI
STATE OF ALASKA and ALASKA
)     No. 7194 - August 25, 2017
PERMANENT FUND CORPORATION, )
Appearances:   Bill Wielechowski, pro  se, Anchorage,  and
Sonja N. Kawasaki, Fairbanks, for Appellants.  Kathryn R.
Vogel,  Margaret  Paton-Walsh,  and  Bill  Milks,  Assistant
Attorneys   General,   Anchorage,   and   Jahna   Lindemuth,
Attorney General, Juneau, for Appellees.  Jack B. McGee,
Law  Office  of  Jack  B.  McGee,  Juneau,  for  Amici  Curiae
Greg Capito, Jack Gitchell, and Vicki Van Fleet.
This appeal provides another opportunity to remind Alaskans that, of the
three  branches  of  our  state government,  we  are  entrusted with  the  "constitutionally
mandated duty to ensure compliance with the provisions of the Alaska Constitution."
This sometimes requires us to answer constitutional questions surrounded by political
disagreement.               Today we address a constitutional question arising from a political
dispute about the legislatively enacted Alaska Permanent Fund dividend program.
In  the  course  of  the  2016  budgetary  process,  in  accordance  with  a
statutorilyprescribed formulainplacefor overthreedecades, thelegislatureappropriated
a sum of money for dividend distributions.  But the governor then vetoed about half of
the appropriation, and the legislature did not override the veto.  One current and two
former legislators later sued to effectively set aside the governor's veto.  The thrust of
their  argument  was  that  the  1976  constitutional  amendment  creating  the  Alaska
Permanent Fund gave the legislature constitutional authority to pass laws dedicating use
of Permanent Fund income without need for annual appropriations and, therefore, not
subject  to  annual  gubernatorial  veto.                          The  legislators  argued  that  the  longstanding
dividend program was a law exempt from the anti-dedication clause.
The superior court ruled against the legislators, concluding that even if the
1976 constitutional amendment gave the legislature dedication powers over Permanent
Fund income, the legislature's actual use of the income remained subject to normal
appropriation and veto budgetary processes.  The legislators appeal, making the same
1          Malone   v.   Meekins ,  650   P.2d   351,   356   (Alaska   1982)   (citing   State   v.
A.L.I.V.E.   Voluntary, 606 P.2d 769 (Alaska                                  1980);   Plumley v. Hale                , 594 P.2d 497
(Alaska 1979);            K & L Distribs., Inc. v. Murkowski                        , 486 P.2d 351, 357 (Alaska 1971)).
2          State v. Planned Parenthood of Alaska, 171 P.3d 577, 579 (Alaska 2007).
We reiterate that "[w]e are not  legislators,  policy  makers,  or  pundits charged  with
making law or assessing the wisdom of legislative enactments."  Id.  We are concerned
only with upholding the Alaska Constitution, which "takes precedence over the politics
of the day and our own personal preferences."  Planned Parenthood of the Great Nw v.
State, 375 P.3d 1122, 1133 (Alaska 2016) (citing Alaska Const. art. XII, § 5; Malone,
650 P.2d at 356).
-2-                                                              7194
arguments to us that they made to the superior court and emphasizing what they contend
is the sound public policy behind Alaska's nearly 40-year-old dividend program.
The narrow question before us is whether the 1976 amendment to the
Alaska Constitution exempted the legislature's use of Permanent Fund income from the
Constitution's anti-dedication clause.                                                                                                           The answer cannot be found by weighing the
merits of the dividend program or by examining the statutory dividend formula.                                                                                                                                                                                                                                     The
answer is found only in the language of the Alaska Constitution.                                                                                                                                                                                        And, as we explain
below, the answer is no - the 1976 amendment did not exempt the legislature's use of
Permanent Fund income from the Constitution's anti-dedication clause.  Although the
superior court did not reach this question, the court's ultimate conclusion nonetheless is
correct:     The   legislature's   use   of   Permanent   Fund   income   is   subject   to  normal
appropriation and veto budgetary processes. We affirm the superior court's decision on
A.                       Facts
In 1976 voters approved an amendment to the Alaska Constitution creating
the   Alaska   Permanent   Fund   (Permanent   Fund)   and   dedicating   to   it   certain   state
3      To permit the revenue dedication, article IX, section 7 - an anti-dedication
clause providing that "[t]he proceeds of any state tax or license shall not be dedicated to
any special purpose" - was modified to add an exception "as provided in section 15 of
this article."4                                      And article IX, section 15 was added, as follows:
At  least  twenty-five  per  cent  of  all  mineral  lease  rentals,
royalties,  royalty  sale  proceeds,  federal  mineral  revenue
3                        See  1976 House Joint Resolution No. 39 (S.C.S. C.S.S.S. H.J.R. Res am S
39);  see also                                   Alaska Const. art. IX, §§ 7, 15.
4                        Alaska Const. art. IX, § 7.
-3-                                                                                                                                                  7194
sharing payments and bonuses received by the State shall be
placed in a permanent fund, the principal of which shall be
used             only            for         those              income-producing                                investments
specifically designated by law as eligible for permanent fund
investments.   All income from the permanent fund shall be
deposited in the general fund unless otherwise provided by
law. 5
The new section's last sentence - regarding Permanent Fund income - is the primary
focus of this decision.
A constitutional amendment was required to create and dedicate revenues
to the new Permanent Fund because Alaska's constitutional convention delegates, the
original framers of the Alaska Constitution, believed that "the dedication of revenues"
was "a fiscal evil,"6 largely because it failed "to preserve control of and responsibility for
7  The 1976 amendment's framers and
state spending in the legislature and the governor."
voters  chose  to  make  an  exception  to  this  general  prohibition  by  dedicating
constitutionally enumerated revenues to the principal of the new Permanent Fund.  The
twin goals behind this exception to the anti-dedication clause were:  (1) saving for the
future and (2) preventing wasteful spending of the oil and mineral revenue then expected
to "flood" the state.8
5              Alaska Const. art. IX, § 15.
6              State v. Alex                , 646 P.2d 203, 209 (Alaska 1982) (quoting 6 Proceedings of
the Alaska Constitutional Convention (PACC) App. V at 111 (Dec. 16, 1955)).
7              Sonneman v. Hickel, 836 P.2d 936, 938 (Alaska 1992).
8               1976  House Journal 39-40; see Williams  v.  Zobel,  619  P.2d  448,  453
(Alaska 1980), rev'd on other grounds, Zobel v. Williams, 457 U.S. 55 (1982).
-4-                                                                                          7194
The Permanent Fund's principal is a dedicated fund that cannot beaccessed
without further amending the Alaska Constitution.
The principal is devoted to "income-
producing  investments"  now  managed  by  the  Alaska  Permanent  Fund  Corporation
10    It appears that before 1982 a percentage of Permanent Fund income was
(APFC).
deposited into the general fund, with some money set aside for a dividend program;11
since 1982 Permanent Fund income has been deposited in what now is known as the
earnings  reserve  account  (earnings  reserve),  a  separate  Permanent  Fund  account
managed by APFC.12
In 1980 the legislature decided to use Permanent Fund income to pay each
eligible Alaskan  a dividend  based  on  length  of residency.13                                                           But the  United  States
Supreme  Court  ruled  that  this  dividend  plan  violated  federal  constitutional  equal
9            See  Alaska Const. art. IX, § 15 ("[T]he principal . . . shall be used only for
. . . income-producing investments . . . .").
10           Alaska Const. art. IX, § 15; AS 37.13.040 (establishing APFC "to manage
and invest the assets of the [P]ermanent [F]und and other funds designated by law").
11           Alaska Const. art. IX, § 15 ("All income from the permanent fund shall be
deposited in the general fund unless otherwise provided by law."); ALASKA  DEP 'T OF
REVENUE, REVENUE SOURCES FY 1984-1987: QUARTERLY UPDATE SEPTEMBER, 1984,
at 10 (1984).
12           AS37.13.145(a) ("Theearnings reserveaccountis established asaseparate
account in the [Permanent F]und. Income from the [Permanent F]und shall be deposited
by [APFC] into the account as soon as it is received.  Money in the account shall be
invested in investments authorized under AS 37.13.120.").   From 1982 to 1986 the
income went into a Permanent Fund "undistributed income account."  Ch. 81, § 9, SLA
13           Ch. 21, § 2, SLA 1980.
-5-                                                                         7194
protection rights,                  and so the first Permanent Fund dividends of $1,000 each were not
distributed until 1982.
The general structure for Permanent Fund dividends is largely the same
today as it is was 35 years ago; dividends are paid to eligible Alaska residents following
a  statutorily  structured  three-step  formula.                                       First,  APFC  calculates  the  "[i]ncome
available for distribution," defined as 21% of the net income of both the Permanent Fund
and the earnings reserve "for the last five fiscal years."16                                               Second, 50% of the "income
available for distribution" is transferred by APFCfromthe earnings reserve to a dividend
fund, a separate state treasury account administered by the Department of Revenue
(DOR).17  Finally, DOR"determine[s] the value ofeach permanent fund dividend for that
year  by"  dividing  the  amount  available  in  the  dividend  fund  by  "the  number  of
individuals eligible to receive a dividend payment."18
But since the dividend program's inception there has been uncertainty in
the executive and legislative branches about the limits of the statement in the second
sentence of article IX, section 15 that Permanent Fund income "shall be deposited in the
14          Zobel v. Williams                 , 457 U.S. 55, 65 (1982) ("We hold that                                          the Alaska
dividend distribution plan violates the guarantees of the Equal Protection Clause of the
Fourteenth Amendment.").
15          Ch. 102, § 19, SLA 1982.
16          AS 37.13.140.  This amount also "may not exceed net income of the fund
for the fiscal year just ended plus the balance in the earnings reserve" to avoid depleting
the earnings reserve.  Id.
17          AS 37.13.145(b); see also AS 43.23.045(a) (establishing "[t]he dividend
fund . . . as a separate fund in the state treasury").
18          AS 43.23.025(a)(1)-(3); see AS 43.23.005 (generally defining as eligible
all Alaskans who have been "a state resident during the entire qualifying year," with
-6-                                                                      7194
general fund                                       unless otherwise provided by law                                                                                                    ."             Specifically, the uncertainty has
concerned whether, in conjunction with the 1976 exemption to the article IX, section 7
anti-dedication clause, that phrase permits considering the dividend's statutory scheme
a constitutionally permissible dedication of revenues not requiring annual legislative
20   for transfers from the earnings reserve to the dividend fund.21                                                                                                                                                                                             The
legislature has made an appropriation for the transfer from the APFC earnings reserve
19                      Alaska Const. art. IX, § 15 (emphasis added).
See Alaska Const. art. IX, § 13 ("No money shall be withdrawn from the
treasury except in accordance with appropriations made by law.").
21                       See, e.g., STATE OF                                                       ALASKA, D                                   EP 'T OF                     LAW, I   NFORMAL  OP. A                                                                 TT'Y  GEN.,
1983 WL42491(Mar.10,1983)("The[P]ermanent [F]und['s]dividend fund established
under AS 43.23.045 would arguably involve an unconstitutional dedication of state
revenue if money were transferred to that fund from income of the permanent fund
ORMAL   OP.   ATT'Y   GEN.   3,   at   8   ("Because   of
without  an  appropriation.");  1980  F
decisional   law   applying   constitutional   provisions   which   require   disclosure   of   the
principal objects and effects of amendments, the effect of the words, 'unless otherwise
provided   by   law'  may  be   quite   limited.     Our   reading   of   the   decisional   law   on
constitutional amendments leads us to the conclusion here that the legislature probably
can provide by law for income from the fund to be automatically deposited back into the
fund or distributed as dividends.                                                                                          Both are part of the amendment's history and both are
closely related to the fund itself.                                                                                         Use of the income without annual appropriations for
other purposes, say for loan programs or guarantees, has no close relationship to the fund
itself and probably would not pass constitutional muster.                                                                                                                                                               Indeed, it is possible that the
Alaska Supreme Court could find that an appropriation is required under article IX,
section 13, even for deposits to the fund and distributions of income.                                                                                                                                                                                                      We doubt this
would   occur,  but   it   is   possible.");   Letter   from   Attorney   Gen.   Avrum   M.   Gross   to
Governor Jay S. Hammond (June 28, 1976) ("In the second section [of the proposed
1976 constitutional amendment], the legislature also added a proviso allowing itself to
provide by law that income from the fund may be deposited in other than the general
fund.  However, since the only exception to the dedicated-fund prohibition in sec. 7 is
the new sec. 15, it would appear that the only other place the income may be deposited
is in the permanent fund.").
-7-                                                                                                                                                   7194
to the DOR dividend fund every year since 1982, apparently to avoid potential conflicts
with the Alaska Constitution's anti-dedication clause.
In May 2016 the legislature passed an appropriation bill that included an
estimated $1.362 billiontransfer fromAPFC's                                                                     earningsreserveto DOR's dividend fund,
22      But in June Governor Bill
consistent with prior practice and the statutory formula.
Walker exercised his line-item veto power and reduced the estimated $1.362 billion
transfer to $695.65 million.23   The legislature met in July but did not vote to override the
governor's veto.24   This resulted in 2016 Permanent Fund dividend payments of $1,022
to  eligible  Alaskans,  about  half  of  what  had  been  expected  under  the  legislature's
B.               Proceedings
Acurrent statesenator, Bill Wielechowski,and two former statelegislators,
Rick Halford and Clem Tillion (collectively Wielechowski), brought suit against the
State of Alaska and APFC (collectively the State).  Relying on the second sentence of
the  Permanent  Fund  clause,  Wielechowski  sought  a  declaration  that  the  dividend
program                    statutes                contain                 a       constitutionally                            permissible                       revenue                  dedication
"automatically"  transferring  prescribed  revenues  from  the  earnings  reserve  to  the
dividend  fund  without  need  for  legislative  appropriation  and  not  subject  to  the
governor's veto.  The State opposed, arguing that the 1976 constitutional amendment
created an anti-dedication clause exemption only for revenues going into the Permanent
22               Ch. 3, § 10, 4SSLA 2016;                                         see  AS 37.13.145(b).
23               See  Alaska Const. art. II, § 15 (providing the governor "may, by veto, strike
or reduce items in appropriation bills").
24               See Alaska Const. art. II, § 16 ("[A]ppropriation bills . . . , although vetoed,
become law by affirmative vote of three-fourths of the membership of the legislature.").
-8-                                                                                              7194
Fund and not for revenues going out of the Permanent Fund.                                                                                                                                                                                                                               The State alternatively
argued that even if the Alaska Constitution permits legislative dedication of Permanent
Fund income, the statutory transfer from the earnings reserve to the dividend fund still
must meet constitutional appropriation and veto requirements.
After  expedited   proceedings the superior court ruled                                                                                                                                                                                                  that the earnings
reserve revenue transfer to the dividend fund requires an appropriation and must survive
a gubernatorial veto.                                                                         The court did not decide whether the revenue transfer would be a
"permissible dedication" under the Alaska Constitution.                                                                                                                                                                                                         Emphasizing the governor's
strong veto control over spending provided by the Alaska Constitution, the court stated
"[i]t   is unlikely that the proponents of the [P]ermanent [F]und would intend so drastic
a   change   in   the   governor's   role   over   the   budget   by   such   a   vague   vehicle"   as  the
concluding sentenceofthe1976                                                                                                                  constitutional amendmentcreating                                                                                                                           thePermanent                                                     Fund.
The court determined that "[w]hat makes the least sense is that the proponents of the
permanent fund clause would exempt the income of the [P]ermanent [F]und from the
threat of a gubernatorial veto without expressly stating that intention."
Wielechowski appeals. Three other "long-time Alaska residents who each
filed   for   a   2016   Permanent   Fund   [d]ividend"   filed   an   amicus   brief   supporting
Wielechowski.
"We review summary judgment rulings de novo and may affirm summary
25             "Questions of constitutional and
judgment on any basis appearing in the record."
statutory interpretation, including the constitutionality of a statute, are questions of law
Seybert v. Alsworth, 367 P.3d 32, 36 (Alaska 2016) (quoting Angleton v.
Cox, 238 P.3d 610, 614 (Alaska 2010)).
-9-                                                                                                                                                                               7194
to which we apply our independent judgment.                                           We adopt the 'rule of law that is most
persuasive in light of precedent, reason, and policy.' "
A.	         The Alaska Constitution Does Not Exempt Permanent Fund Income
From The Constraints Of The Anti-Dedication Clause.
1.	         Framework for interpreting the Alaska Constitution
Weprovidedaframework forinterpretingtheAlaskaConstitutionin Hickel
v.  Cowper.                "Our  analysis of a constitutional provision begins with,  and  remains
grounded in, the words of the provision itself.  We are not vested with the authority to
add missing terms or hypothesize differently worded provisions . . . to reach a particular
result."          We instead "look to the plain meaning and purpose of the provision and the
intent of the framers."
"Because of our concern for interpreting the constitution as the people
ratified it, we generally are reluctant to construe abstrusely any constitutional term that
hasaplain ordinary meaning."                              "Constitutional provisionsshould begiven areasonable
and practical interpretation in accordance with common sense."                                                        "[A]bsent some signs
26            State v. Ketchikan Gateway Borough                                    , 366 P.3d 86, 90 (Alaska 2016)
(footnote  omitted)  (quoting  Se.  Alaska  Conservation  Council  v.  State,  202  P.3d   1162,
1167  (Alaska  2009))  (citing  State  v.  Schmidt,  323  P.3d  647,  655  (Alaska  2014)).
27          874 P.2d 922, 926-28 (Alaska 1994).
28          Id. at 927-28.
29          Id. at 926 (quoting ARCO Alaska, Inc. v. State, 824 P.2d 708, 710 (Alaska
1992)) (citing Kochutin v. State, 739 P.2d 170, 171 (Alaska 1987)).
30          Id.
31          Id. (quoting ARCO Alaska , 824 P.2d at 710) (citing Kochutin, 739 P.2d at
-10-	                                                                   7194
that the term at issue has acquired a peculiar meaning by statutory definition or judicial
construction, we defer to the meaning the people themselves probably placed on the
provision"                    without "add[ing] 'missing terms' to the Constitution or . . . interpret[ing]
existing  constitutional  language  more  broadly  than  intended  by  .  .  .  the  voters."
"Legislative history and the historical context, including events preceding ratification,
help define the constitution."
2.              The anti-dedication clause
Prior  to  the  1976  constitutional  amendment  the  anti-dedication  clause
stated:  "The proceeds of any state tax or license shall not be dedicated to any special
purpose . . . ."                      Although a plain reading of "state tax or license" might have suggested
otherwise, a contemporaneous attorney general opinion gave the 1976 legislature good
And in 1982 we
reason to believe that "state tax or license" meant all state revenue.
31             (...continued)
32             Id.
33             Id.  at 927.
34             Statev. Ketchikan GatewayBorough                                                   ,366P.3d 86,90                        (Alaska2016) (citing
State v. Alex, 646 P.2d 203, 208 (Alaska 1982);                                                                 Hootch v. Alaska State-Operated Sch.
Sys., 536 P.2d 793, 800, 804 (Alaska 1975)).
35             Alaska Const. art. IX, § 7 (amended 1976).
36             See 1975 FORMAL  OP. A                                   TT'Y  GEN. 9, at 24 ("[I]t is our conclusion that the
dedication of  any source of public revenue                                                             . . . is limited by the state Constitution to
those existing when the Constitution was ratified or required for participation in federal
programs." (emphasis added)),                                            quoted in Alex                    , 646 P.2d at 210.
-11-                                                                                         7194
confirmed in                   State v. Alex                that the anti-dedication clause "prohibits the dedication of any
source of revenue."                           37
We  first  explained  in  Alex  how  convention  delegates  considered  "the
38  We later expressed in Sonneman v. Hickel
dedication of revenues" to be "a fiscal evil."
"that  the  reason  for  the  prohibition  [on  dedications]  is  to  preserve  control  of  and
responsibility  for  state  spending  in  the  legislature  and  the  governor."39                                                                                                   "Without
earmarked  funds,  the  constitutional  framers  believed  that  the  legislature  would  be
required to decide funding priorities annually on the merits of the various proposals
presented."40                    And we explained more recently in State v. Ketchikan Gateway Borough
that the anti-dedication clause helps "govern the legislature's and the governor's 'joint
responsibility . . . to determine the State's spending priorities on an annual basis.' "41
37             646 P.2d at 210;                        see also Se. Alaska Conservation Council v. State                                                                       , 202
P.3d 1162, 1170 (Alaska 2009) ("[T]he prohibition [on dedications] is meant to apply
broadly.  If only revenue collected as taxes or license fees were included, there would
have been no need to expressly exempt 'all mineral lease rentals, royalties, royalty sale
proceeds, federal mineral revenue sharing payments and bonuses received by the State'
to  ensure   that   placing   those   revenues   in   the   Permanent   Fund   did   not   violate   the
constitution." (footnote omitted) (quoting Alaska Const. art. IX, § 15) (citing Alaska
Const. art. IX, § 7)).
38             646 P.2d at 209 (quoting 6 PACC App. V at 111 (Dec. 16, 1955)).
39              836 P.2d 936, 938 (Alaska 1992).
40             Id. at 938-39; see also id. at 939 ("They have to sell their viewpoint along
with everybody else." (quoting 4 PACC 2367 (Jan. 17, 1956) (comments of Delegate
Barrie White))).
41             366 P.3d 86, 101 (Alaska 2016) (alteration in original) (quoting Simpson
v. Murkowski, 129 P.3d 435, 447 (Alaska 2006)); see also id. ("Through the dedicated
funds clause, the delegates sought to avoid the evils of earmarking, which the delegates
feared would 'curtail[] the exercise of budgetary controls and simply [would] amount[]
-12-                                                                                          7194
We   repeat  our   prior   statements,   and   those   from   the   constitutional
convention, to emphasize the significance of the anti-dedication clause to the state's
budgetary framework.                     No party suggests that Permanent Fund income is not state
42   Our starting point must therefore be that the anti-dedication clause prohibits
the dedication of Permanent Fund income unless the 1976 constitutional amendment
exempted not only the dedication of enumerated revenues into the Permanent Fund, but
also  -  as  Wielechowski  argues  -  the  legislature's  potential  future,  unspecified
dedication of revenues out of the Permanent Fund.
3.         Wielechowski's arguments
Wielechowski contends that the 1976 constitutional amendment creating
and dedicating revenues to the Permanent Fund also created legislative authority to
dedicate Permanent Fund income. He first contends that the entire article IX, section 15
clause, including the second sentence, is explicitly exempt from the anti-dedication
clause of article IX, section 7.43  He then relies on the second sentence's language that
"income from the [P]ermanent [F]und shall be deposited in the general fund  unless
44  He argues that the legislature is constitutionally permitted
otherwise provided by law."
41         (...continued)
to an abdication of legislative responsibility.' " (alterations in original) (quoting Alex ,
646 P.2d at 209)).
42         See Alaska Const. art. IX, § 15 ("All income from the [P]ermanent [F]und
shall be deposited in the general fund unless otherwise provided by law.").
43         Alaska Const. art. IX, § 7 ("The proceeds of any state tax or license shall
not be dedicated to any special purpose, except as provided in section 15 of this article
. . . ." (emphasis added)).
44         Alaska Const. art. IX, § 15 (emphasis added).
-13-                                                               7194
to dedicate Permanent Fund income to the dividend fund by statute, because that would
be "provided by law."
Wielechowski   contends   that   the   framers   of   the   1976   constitutional
amendment intended to provide future legislatures "maximum flexibility" in using the
45     Wielechowski also
Permanent Fund's income, including the dedication of earnings.
contends that the ballot language46 and newspaper articles emphasizing future legislative
flexibility bolster his position.47                                                  The State disagrees, arguing that the plain language of
article IX, section 15 dedicates only specific revenues into the Permanent Fund principal,
and that no history concerning either the purpose of the amendment's framers or the
45               See   1976 House Journal 685 ("The purpose of the language in the last
sentence of the resolution is to give future legislatures the maximum flexibility in using
the fund's earnings - ranging from adding to fund principal to paying out a dividend
to resident Alaskans."); see also Hearing on H.J.R. 39 Before the H. Fin. Comm., 9th
Leg., 2d Sess. 02:53:30-02:54:37 (Feb. 21, 1976) (hereinafter Testimony of Sterling
Gallagher),http://www.akleg.gov/ftr/archives/1976/HFIN/H76R31-HFIN-760000.mp3
(testimony of Sterling Gallagher, Comm'r of Revenue) (discussing the possibility of
using Permanent Fund income as "a pledge or dedication . . . for securities of the state");
Hearing on H.J.R. 39 Before the H. Fin. Comm., 9th Leg., 2d Sess. 00:02:41-00:03:56
(Feb.  21,  1976)  (hereinafter  Testimony  of  Jim  Rhode),  http://www.akleg.gov/ftr/
archives/1976/HFIN/H76R32-HFIN-760000.mp3 (testimony ofJimRhode) (discussing
how Permanent Fund income "could be pledged in the bond covenants for the security
of state agencies or general obligation bonds").
46               DIV.   OF   ELECTIONS, S                                  AMPLE   GENERAL   ELECTION  BALLOT   (1976) ("The
income from the fund would be deposited in the State's General Fund and be available
for appropriation for the State                                                unless law provided otherwise                                                    ." (emphasis added)).
47               See   Susan   Andrews,  Lawmakers   Would   Shape   Permanent   Fund,
ANCHORAGE  TIMES, Oct. 24, 1976, at A3 ("There are a number of possibilities for use
of the earnings - and the legislature will decide those uses.");                                                                                                   Permanent Fund Raises
Use Issue               , A     NCHORAGE  DAILY  NEWS, Oct. 22, 1976 ("There have been many proposals
for possible fund uses.").
-14-                                                                                                     7194
information provided to the voters shows an intent to allow the legislature to dedicate
Permanent Fund income.
We   agree   with   the   State.     We   conclude   that   the   1976   constitutional
amendment does not allow the dedication of Permanent Fund income.                                                                                                                                                  We reach this
conclusion based on the plain language of the anti-dedication and Permanent Fund
clauses of the Alaska Constitution; contrary to Wielechowski's arguments, our review
of the record concerning the framers' intent and voters' understanding only bolsters our
conclusion. We address the latter two issues first solely for historical perspective before
addressing the plain language analysis.
a.                 Framers' intent
A permanent fund was proposed by then-Governor Jay Hammond to save
for futuregenerations                                          apercentageofrevenuegenerated fromnonrenewableresources;                                                                                                                                  48
he also sought to curb wasteful government spending of expected increased revenues.
In the letter transmitting his proposal, Governor Hammond explained:
I       have                introduced                           this             resolution                         proposing                           a
constitutional amendment because I believe strongly that the
revenues from our non-renewable resources belong to future
generations of Alaskans as well as ourselves.  A permanent
fund as I have proposed will set aside a modest portion of the
proceeds   from   the   exploitation   of   our   non-renewable
resources for investment in our futurewhileleaving sufficient
revenues for our present needs.[50]
48                  1976 House Journal 39-40.
49                 See Williams v. Zobel, 619 P.2d 448, 453 (Alaska 1980), rev'd on other
grounds, Zobel v. Williams, 457 U.S. 55 (1982).
50                  1976 House Journal 40.
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Although Governor Hammond's permanent fund language was subsequently modified
by   the   legislature,   the   overall   structure   of   his  proposed   amendment   to   the   Alaska
Constitution   remained   the   same:     (1)   a   percentage   of   revenue   from   nonrenewable
resources would be placed into a permanent fund; (2) the permanent fund principal could
be used only for income-producing investments; and (3) the legislature would have
access to the permanent fund income.                                                                                                         51
The House amended the permanent fund clause's treatment of income to
include  an  alternative  to  mandatory  general  fund  deposits:                                                                                                                                                                            "All  income  from  the
permanent fund shall be deposited in the general fund  unless otherwise provided by
law."52                        Although there was some discussion about how the phrase "unless otherwise
provided by law" might allow income from the fund to be used as security for bonds,53
51                       Compare  1976 HouseJoint                                                                             Resolution No.                                          39(S.S.H.J.R. 39) (substituting
in H.J.R. 39 by request of the governor:                                                                                                                      "Ten per cent of all mineral lease rentals,
royalties,   royalty   sale   proceeds,   revenue   sharing   payments,   bonuses,   and   mineral
production taxes received by the state shall be placed in a permanent fund, the principal
of which shall be used only for income investments.                                                                                                                                                    The legislature may appropriate
additional amounts to the permanent fund which shall become a part of the principal of
the fund.                          All income from the permanent fund shall be deposited in the general fund."),
with   Alaska Const. art. IX, § 15 ("At least twenty-five per cent of all mineral lease
rentals, royalties, royalty sale proceeds, federal mineral revenue sharing payments and
bonuses received by the State shall be placed in a permanent fund, the principal of which
shall be used only for those income-producing investments specifically designated by
law as eligible for permanent fund investments.                                                                                                                                      All income from the permanent fund
52                        1976 House Joint Resolution No. 39 (C.S.S.S. H.J.R. am 39) (emphasis
53                       See, e.g., Testimony of Sterling Gallagher, supra note 45 (discussing how
dedicating income from permanent fund "could be a great enhancement" as security for
"debt service"); Testimony of JimRhode, supra note 45 (opining that "the phrase 'unless
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a joint report from the House Judiciary and Finance Committee chairs stated only that
"[t]he purpose of the language in the last sentence of the resolution is to give future
legislatures themaximumflexibilityin usingtheFund'searnings -ranging                                                                                       fromadding
54     After that joint
to Fund principal to paying out a dividend to resident Alaskans."
report,  language  was  added  in  the  Senate  State  Affairs  Committee  specifically
referencing dedications - to the fund's principal, but not of the fund's income55 - but
the language was later removed in the next committee of referral.56
There was virtually no discussion by the 1976 constitutional amendment's
framers about dedicating Permanent Fund income, and they had reason to know that the
fund's  income  would  be  state  revenue  subject  to  the  constitution's  anti-dedication
clause.57   The only relevant discussions were by non-legislators - primarily concerning
the possibility of using fund income as security for bonds - and Wielechowski points
53            (...continued)
otherwise directed by the legislature' . . . would be a sufficient legal peg so that income
from the permanent fund could be pledged in the bond covenants for the security of state
agencies or general obligation bonds").
54            1976 House Journal 685.
55              1976 House Joint Resolution No. 39 (S.C.S. C.S.S.S.H.J.R. 39) ("The
legislature may dedicate additional proceeds both as to source and percentage which
shall become a part of the principal of the fund.   Any additional dedication may be
revoked by the legislature, but revocation may not make the principal amount in the
permanent fund subject to appropriation.  Other income from the permanent fund shall
be deposited in the general fund." (emphasis added)).
56             See 1976 House Joint Resolution No. 39 (S.C.S. C.S.S.S.H.J.R. Res. 39).
57            See 1975 FORMAL  OP. A                             TT'Y  GEN. 9, at 24 ("[I]t is our conclusion that the
dedication of any source of public revenue . . . is limited by the state Constitution to
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to no statement by any legislator during any legislative hearing indicating an intent to
give the legislature broad authority to dedicate Permanent Fund income. There was little
evident recognition, let alone the robust discussion that would be expected, for what
Wielechowski   now   posits   was   a   sweeping   constitutional   change   and  a   consequent
sweeping change to the state's budgetary framework.                                                                                                                                                                                          We conclude there is insufficient
legislative history to suggest that the framers of the 1976 constitutional amendment
intended to allow dedication of Permanent Fund income.
b.                           Voters' intent
The   voters   approving    the   1976   constitutional   amendment   certainly
understood it would restructure the Alaska Constitution to allow the diversion of state
revenues into the Permanent Fund, which then would generate income the legislature
could use in future years.                                                                                           But looking to "any published arguments . . . to determine
what meaning voters may have attached to the [proposed constitutional amendment],"                                                                                                                                                                                                                                                                                                           58
we see no evidence that voters would have understood the amendment to also permit
future legislative dedications of Permanent Fund income. The ballot initiative language
did not expressly say the fund's income could be dedicated.59                                                                                                                                                                                                                         A newspaper column by
58                            See Alaskans for a Common Language, Inc. v. Kritz                                                                                                                                                                                             , 170 P.3d 183, 193
(Alaska 2007) (citing                                                                             Falcon v. Alaska Pub. Offices Comm'n                                                                                                                                                  , 570 P.2d 469, 472 n.6
(Alaska 1977));                                                        see also id.                                       at 192 ("While we often look to legislative intent to construe
the   meaning   of   ambiguous   statutes,   we   take   a   slightly   different   approach   when
interpreting initiatives enacted by the voters." (citing                                                                                                                                                                                      Falcon, 570 P.2d at 472 n.6)).
59                            SAMPLE GENERAL ELECTION  BALLOT,  supra  note 46 ("Thisproposal would
amend Article IX, Section 7 (Dedicated Funds) and add a new section to Article IX,
Section 15 (Alaska Permanent Fund) of the Alaska Constitution.                                                                                                                                                                                                                                        It would establish a
constitutional permanent fund into which at least 25 percent of all mineral lease rentals,
royalties, royalty sale proceeds, federal mineral revenue sharing payment[s] and bonuses
received by the State would be paid.                                                                                                                                 The principal of the fund would be used only for
income-producing investments permitted by law.                                                                                                                                                                                The income from the fund would be
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Governor Hammond advocating for the amendment's passage days before the election
gave no indication the fund's income could be dedicated.                                                                                                                                60  The sponsor statement for
61        Published news
the amendment did not say the fund's income could be dedicated.
articles did not say the fund's income could be dedicated, and often they suggested the
opposite.62                            Wielechowski points to nothing explicitly asking voters to pass the 1976
59                   (...continued)
deposited in the State's General Fund and be available for appropriation for the State
unless law provided otherwise.").
60                   Jay  Hammond,  Opinion,  The  Governor's  Point  of  View,  ANCHORAGE
TIMES, Oct. 27, 1976, at 6 ("[M]ake no mistake, it is for the people, not the governor, nor
the legislature singly to determine how your savings are invested and the interest used.");
see  id.  ("The  income  from  the  Permanent  Fund  will  be  available  for  general
appropriation by the legislature, but the principal of the fund may not be touched.  It
could only be removed from the fund by another constitutional amendment.").
61                   ALASKA    STATE   CHAMBER   OF   COMMERCE,   STATEMENT   IN   FAVOR  OF
PROPOSITION NO. 2:  ALASKANS SHOULD STRONGLY SUPPORT THE ESTABLISHMENT OF
A "PERMANENT FUND" (1976) ("While it is to be hoped that such a fund may contribute
to cutting cost or, at least, holding the line on state spending, its major value would be
that it would require our elected officials to pause, reflect and research any proposal
beforeblindly                                 authorizing expenditureoftaxpayers'                                                                                    monies. Thiswould                                               provideneeded
time for the press and the public to also be aware of the pending project and its merit,
instead of being out of public view and hidden in the spending pattern of normal day-to-
day operations. Projects invested in with sources from the 'Permanent Fund' could help
broaden Alaska's narrow based economy and bring more stability to our State.").
62                   See 2 Plans, 1 Fund, ANCHORAGE  DAILY  NEWS, Apr. 21, 1976 ("Exactly
how the permanent fund is set up would be the job of future legislatures.                                                                                                                                                                    Our elected
representatives, by law, would prescribe how the money is to be invested.                                                                                                                                                                           That may
demand a different application of the fund from one year to the next, but flexibility to
meet changing demands is guaranteed by current legislation. Likewise,                                                                                                                                                           futurelegislators
would be able to decide what to do with the considerable earnings of the fund.                                                                                                                                                                            Perhaps
that extra dividend will be needed sometimes for general operating expense; at other
times, perhaps the dividends could be simply reinvested in the fund itself.                                                                                                                                                                The freedom
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constitutionalamendmentbecausetheamendment would permit,                                                                       even in part, legislative
dedication of the fund's income.
We are not persuaded that newspaper language Wielechowski points to
shows voters understood the 1976 constitutional amendment would give the legislature
63  nothing in that language necessarily
the ability to dedicate Permanent Fund income;
points to dedication of revenues rather than appropriation in the normal course.  And as
with his argument about the framers' intent, Wielechowski's ballot summary argument
is  based  on  implicit  suggestion  and  inferred  intent,  gleaned  here  from  the  ballot
summary's statement that Permanent Fund income would be deposited in the general
fund and "available for appropriation . . . unless law provided otherwise."64                                                                            It is a far
leap to conclude voters understood and intended that phrase to give the legislature broad
power to dedicate Permanent Fund income for any purpose and any duration with little
restriction.  Surely there would have been some public discourse about a grant of such
62            (...continued)
to choose must be built into the fund."); Permanent Fund Raises Use Issue, supra note
47 ("A frequent argument against the fund comes from opponents who say dedicated
funds are insensitive to future, unpredictable needs.  What if there is some unexpected
need in the future, they ask, and much of the state's assets are locked up in the fund and
can't be reached for solutions? To that complaint, proponents answer that the flexibility
of allowing future legislatures to decide on precise uses will prevent the 'locked up'
circumstance.").
63           See Andrews, supra note 47, at A3 ("There are a number of possibilities for
use of the earnings - and the legislature will decide those uses."); Hammond, supra
note  60,  at  6  ("[M]ake  no  mistake,  it  is  for  the  people,  not  the  governor,  nor  the
legislature singly to determine how your savings are invested and the interest used.");
Permanent Fund Raises Use Issue, supra note 47 ("There have been many proposals for
possible fund uses.  They range from paying direct dividends to Alaskans to using the
money to underwrite such vast projects as hydroelectric dams.").
64            SAMPLE  GENERAL  ELECTION  BALLOT,  supra  note 46.
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sweeping legislative authority; its absence, like the absence of discussion in the 1976
legislature, is telling.
c.              Plain meaning
The second sentence of article IX, section 15 states:                                                                           "All income from the
permanent fund shall be deposited in the general fund unless otherwise provided by
The phrase "unless otherwise provided by law" does not plainly allow the
legislature to dedicate Permanent Fund income; the phrase appears to simply provide an
alternative to depositing the income into the general fund. And this is precisely what the
legislature has done by creating the unique earnings reserve:  (1) an account existing
outside of the general fund; (2) appropriable by the legislature; (3) managed by APFC;
(4) invested in income-producing assets; and (5) as the State argues, treated differently
66     The second sentence of the
than other state revenues because of public expectations.
65              Alaska Const. art. IX, § 15.
66              See  AS 37.13.145(a);                                 Hickel v. Cowper                           , 874 P.2d 922, 934 (Alaska 1994)
(explaining how earnings reserve works).
In  Hickel  we considered, on an expedited basis, what funds were "available
for   appropriation"   within   the   meaning   of   article   IX,   section   17(b)   of   the   Alaska
Constitution, concerning the Constitutional Budget Reserve.                                                                                         Hickel, 874 P.2d                         at 925-26.
By defining and identifying appropriable state funds we helped determine when the
legislature could "withdraw from the budget reserve fund by a simple majority vote."
Id. at 923.  And we held that the balance of the earnings reserve contains appropriable
funds within the meaning of article IX, section 17 "because appropriations may be made
from it and it is not subject to expenditure without legislative action."  Id. at 935.
In deciding that the balance of the earnings reserve was "available for
appropriation"   we   also   looked   at   the   dividend   transfer   provisions.     See   id.   at   934
(discussing AS 37.13.145(b)).  Apparently looking solely to the transfer statute and not
appreciating that the legislature had been appropriating transfers throughout the years,
we stated that the transfers from the earnings reserve to the dividend fund occurred
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Permanent Fund clause permits the creation and use of the earnings reserve for deposit
of the fund's income pending appropriation; it does not give the legislature the authority
to dedicate that income.
Nor can the plain meaning of the exception added to the anti-dedication
clausebeunderstood                           to grant thelegislature                         such broad authority. It     exempts dedications
67     "Provided" here is
"as  provided in                     section 15," not as                        permitted by                   that section.
synonymous with "supply, furnish."68                                                  A dedication is quite explicitly supplied in the
first sentence of article IX, section 15:  "At least twenty-five per cent of all [specific
mineral revenues] . . .  shall be placed  in a [P]ermanent [F]und."69                                                                                     Even the most
expansivereadingoftheclause'ssecond sentence -"unless otherwiseprovided by law"
- could be understood only to permit  further dedications, not to provide  them.
Interpreting the 1976 constitutional amendment to allow dedications of
Permanent Fund income would create an anti-dedication clause exception that would
swallow the rule.  We remain "unwilling to add 'missing terms' to the Constitution or
to interpret existing constitutional language more broadly than intended by . . . the
66            (...continued)
"automatically."   Id.  ("A percentage of the money in the [earnings] reserve . . . is
automatically transferred to the dividend fund at the end of each fiscal year." (citing
AS  37.13.145(b))).                            But  we  were  not  asked  to  decide  whether  the  transfer  was  a
constitutionally permissible dedication of Permanent Fund income, and our previous
characterization of the action as "automatic[]" does not control here. Our decision today
reinforces our holdingin Hickel that the earnings reserve "is availablefor appropriation."
Id. ;  see  also  id.  at  935.
67            Alaska Const. art. IX, § 7 (emphasis added).
68            WEBSTER 'S  THIRD  NEW  INTERNATIONAL  DICTIONARY   1827  (1966).
69            Alaska  Const.  art.  IX,  §   15  (emphasis  added).
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voters."           Without   an   explicit   exception   to   the   anti-dedication   clause,   we   will   not
"abstrusely"interpret the Permanent Fund clauseto permit the dedication of its income.
Whether any prior legislature or administration treated the dividend programas if it were
a dedication has no bearing on our analysis; what matters is what the Alaska Constitution
The plain language of the 1976 constitutional amendment creating the
Permanent Fund does not exempt Permanent Fund income from the constraints of the
anti-dedication  clause.                 We  affirm  the  superior  court  on  this  alternative  ground,73
although the conclusion that a revenue transfer from the earnings reserve to the dividend
fund requires an appropriation and must survive a gubernatorial veto flows naturally
from our decision.   Absent another constitutional amendment, the Permanent Fund
dividend  program  must  compete  for  annual  legislative  funding  just  as  other  state
70        Hickel,  874  P.2d  at  927.
71        Id.  at  926.
72         See  id.  at  925  &  n.7.
73         See   Seybert   v.  Alsworth ,   367  P.3d   32,   36   (Alaska   2016)   ("We   review
summary  judgment  rulings  de  novo  and  may  affirm   summary judgment  on  any  basis
appearing  in  the  record."  (quoting  Angleton  v.  Cox,  238  P.3d  610,  614  (Alaska  2010))).
We  therefore  do  not  decide  and  express  no  opinion  on  the  specific  ground  ruled  upon  by
the  superior  court.
74         See  Sonneman  v. Hickel,  836 P.2d  936,  938-39  (Alaska  1992) ("[T]he
constitutional framers believed that the legislature would be required to decide funding
priorities annually on the merits of the various proposals presented.").
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B.	               The Governor Validly Exercised Veto Authority When Reducing The
Amount Of Funds For Transfer.
Wielechowski   also   challenges   the   manner  in  which   Governor   Walker
exercised his veto power, arguing                                                                that  he improperly "struck descriptive language,
resultingin                    an [unconstitutional]infringementon                                                                legislativepower." The                                         State contends
that because Governor Walker did not alter the appropriation's purpose, he properly
exercised his veto authority.
WeconcludethatGovernor Walker validly                                                                            exercisedhisconstitutionalveto
authority when reducing the transfer amount from the earnings reserve to the dividend
fund.     After   the   governor's   veto   struck   existing   language   and   inserted  a   new
appropriation amount, the legislature's transfer authorization stated:
Theamount authorized under AS37.13.145(b) for transfer by
the Alaska Permanent Fund Corporation on June 30, 2016,
estimated to be $ 1,362,000,000, 695,650,000 is appropriated
from the  earnings  reserve  account  (AS  37.13.145)  to  the
dividend   fund   (AS   43.23.045(a))   for   the   payment   of
permanent   fund   dividends   and   for   administrative   and
associated costs for the fiscal year ending June 30, 2017.
In Alaska Legislative Council v. Knowles we held that the governor has no
authority to strike descriptive language in appropriation bills.76                                                                                                         Although the governor
has authority to "strike or reduce" "a sum of money dedicated to a particular purpose,"77
the governor does not have authority to "distort the legislative intent, and in effect create
legislation inconsistent with that enacted . . . by the careful striking of words, phrases,
75                Ch. 3, § 10, 4SSLA 2016 (as amended).
76                21 P.3d 367, 371-75 (Alaska 2001).
77               Id.  at 371;                 see  Alaska Const. art. II, § 15.
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clauses or sentences."                            Stated differently, "[t]he governor can delete and take away, but
the constitution does not give the governor power to add to or divert                                                                         for other purposes
the appropriations enacted by the legislature."                                                  79
Governor Walker properly vetoed a portion of the transfer to the dividend
fund by striking some language from the 2016 appropriations bill.  Unlike the Alaska
Legislative Council  governor's attempt to veto language placing  restrictions on his
80 Governor Walker struck only languageconcerningthelegislature'sestimated
2016 transfer amount.   In doing so Governor Walker did not alter the legislature's
purpose; the appropriation bill still stated that the transfer was "for the payment of
permanent fund dividends and for administrative and associated costs for the fiscal year
ending June 30, 2017."81
Wielechowski  argues  that  the  governor  had  no  authority  to  strike  the
"descriptive" reference to AS 37.13.145(b) because he effectively vetoed a statute.  But
82   In Simpson we concluded
we addressed a similar argument in Simpson v. Murkowski.
that the governor had constitutional authority to veto an appropriation for longevity
78            Alaska Legislative Council                               , 21 P.3d at 373 (quoting                            State ex rel. Sego v.
Kirkpatrick, 524 P.2d 975, 981 (N.M. 1974)) (citing                                                          Rush v. Ray              , 362 N.W.2d 479, 482
(Iowa 1985);                 Welden v. Ray                 , 229 N.W.2d 706, 713 (Iowa 1975)).
79            Id. at 371 (emphasis added).
80            See   id.            at   370-71   (indicating   governor   struck   language   making
appropriation contingent on a salary cap for "employees . . . located outside Alaska"
(quoting ch. 98, § 6, SLA 1997; ch. 100, §§ 47, 70, SLA 1997)).
81            Ch. 3, § 10, 4SSLA 2016 (as amended).
82             129 P.3d 435, 446-47 (Alaska 2006).
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bonus payments even though a statute mandated the payments.                                                                                                                                                                                                                                                                                                                                  Governor Walker
likewise   validly   exercised   his   veto  authority   to   reduce   an   appropriation   despite   a
seemingly mandatory statute.
Because: (1) Governor Walker struck only language related to the amount
of funds to be transferred; (2) the language in the appropriation bill post-veto would
make less sense if only the number had been struck and reduced; and (3) language about
the transfer's purpose remained, we conclude that Governor Walker properly exercised
his veto authority.
Because the plain language of article IX, sections 7 and 15 does not permit
the dedication of Permanent Fund income, and because Governor Walker                                                                                                                                                                                                                                                                                                                                                                                      properly
exercised his veto authority when reducing the legislatively authorized transfer from the
earnings reserve to the dividend fund, we AFFIRM the superior court's decision in favor
of the State of Alaska and the Alaska Permanent Fund Corporation.
83                                   Id.
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