Opinion ID: 1227032
Heading Depth: 3
Heading Rank: 3

Heading: Does the initiative dedicate revenues?

Text: The city concedes that FGCO 5.402 as currently written is a dedicated fund. [7] The question is whether the initiative, which would repeal and reenact that ordinance, itself dedicates revenues. We have not had occasion to review the clause in article XI, section 7 of the Alaska Constitution prohibiting initiatives which dedicate revenues. However, we have reviewed a similar provision in article IX, section 7, which prohibits the dedication of the proceeds of any state tax or license to any special purpose. Because the language of these two provisions is similar, we adopt a similar analysis of the meaning of each provision and the purposes behind them. This court has considered the meaning of dedicated revenues only once before. In State v. Alex, 646 P.2d 203 (Alaska 1982), we held that a mandatory tax on the sale of salmon, the proceeds of which were to be allocated to regional associations for enhancement of salmon production, was an unconstitutional dedication of revenues. In reaching that conclusion, we relied on the fact that the allocation of revenues to the regional associations was mandatory, leaving no discretion to the legislature to spend the money in any other way. We also noted that other provisions of the statute entitled the regional associations to rely on the receipt of the salmon tax funds as collateral for state loans or as evidence of their ability to establish sufficient equity in their hatcheries. As we said, [t]hese provisions are nonsensical if the assessments are not earmarked in some way so that the association has a `right' to them. Alex, 646 P.2d at 208. The questioned initiative would not create any similar right for any person or group. It would not earmark any funds for any particular organizations. Nor does it create any mandatory expenditures. In the context of the current law, it actually broadens, rather than limits, the council's discretion to spend money for the benefit of the city. FCVB nevertheless argues that the initiative would require the dedication of revenues to a specific purpose. We disagree. The initiative's statement of purpose cannot be characterized as a dedication. Indeed, the phrase used in the initiative, for the purpose of funding city facilities and services for the general public, is so broad as to include any city expenditures. Analysis of the purposes behind the prohibition of dedicated revenues confirms our conclusion. In Alex, 646 P.2d at 209-10, we cited the Alaska Statehood Commission's studies on dedicated revenues as the motivation for the inclusion of article IX, section 7 in the Alaska Constitution: Even those persons or interests who seek the dedication of revenues for their own projects will admit that the earmarking of taxes or fees for other interests is a fiscal evil. But if allocation is permitted for one interest the denial of it to another is difficult, and the more special funds are set up the more difficult it becomes to deny other requests until the point is reached where neither the governor nor the legislature has any real control over the finances of the state. 3 Alaska Statehood Commission, Constitutional Studies pt. IX, at 111 (1955). Thus the two main motivations behind the ban on dedicated revenues were to maintain the potential of flexibility in budgeting and to ensure that the legislature did not abdicate responsibility for the budget. In the initiative context, only the former motivation is relevant. The initiative in this case does not infringe on flexibility in the budget process. Indeed, it removes existing restraints on the city council's flexibility. Under the current law, the city council is encouraged, if not obligated, to appropriate certain percentages of the city's bed tax revenues to certain groups. In addition, all appropriations of bed tax revenues must be for the purpose of and shall be limited to the funding of tourist and entertainment facilities. The initiative eliminates each of these dedications. Under the initiative, bed tax revenues could be used to fund any city facility or service, not just tourist and entertainment facilities, and there is no organization entitled to receive funds simply upon approval of its budget. By no means would the initiative restrict the power of the city council in distributing the bed tax revenues. The initiative might be better described as an undedication than a dedication.