Opinion ID: 2350715
Heading Depth: 3
Heading Rank: 2

Heading: Requiring Prior Voter Approval For All Capital Projects With A Cost Of Over $1 Million Is An Impermissible Appropriation.

Text: Proposition 4 required prior voter approval for Borough capital projects with a total cost of more than $1 million. It was approved by Borough voters in 2005. As it appeared codified at KPB 05.04.110 (2005), it provided: (A.) All capital improvement projects to be constructed or acquired by the borough must be approved by the voters of the borough at a regular or special election, before the project is constructed or acquired if the total project cost is more than $1,000,000, including architectural, engineering, inspection, design, administration or any other cost.... (B.) When the total projected cost of a capital improvement project as defined in this section is more than $1,000,000 it must receive an affirmative vote by no less than 60 percent of the affected voters voting at a borough election for such a project to be approved. The question presented here is whether Proposition 4 is an appropriation and therefore an impermissible initiative. Alaska Statute 29.26.100 grants the power of lawmaking by initiative on the local level to municipal residents. But the statute also restricts the initiative power, directing that [t]he powers of initiative and referendum... do not extend to matters restricted by art. XI, § 7 of the state constitution. Article XI, section 7 of the Alaska Constitution, in turn, states that [t]he initiative shall not be used to dedicate revenues, [or to] make or repeal appropriations. The superior court found that Proposition 4 was invalid because a voter approval requirement would restrict the budget and capital program appropriation power vested by the Legislature in the assembly, and that in light of the constitutional restrictions on the initiative power [i]mposing a prior voting resident [approval] threshold by initiative would improperly restrict the power of the assembly to make appropriations. ACT argues that the ordinance does not violate article XI, section 7 of the Alaska Constitution because it does not explicitly make or repeal an appropriation. ACT distinguishes Proposition 4 from other initiatives whose primary object is to require the outflow of government assets because it does not dispose of public assets nor does it involve the making of an appropriation of public assets. ACT argues that we have narrowly construed the constitutional prohibition on initiatives making or repealing an appropriation. The Borough contends that we have read the prohibition more broadly, to reach any initiative that restricts the government's authority to allocate funds between competing needs, thereby arrest[ing] the assembly's control over the budget. While the term appropriation is not defined in the statute or in the Alaska Constitution, we have held that an initiative proposes to make an appropriation if it `would set aside a certain specified amount of money or property for a specific purpose or object in such a manner that is executable, mandatory, and reasonably definite with no further legislative action.' [28] We have described in detail the two-part inquiry to determine whether a particular initiative is an improper appropriation. First, we determine whether the initiative deals with a public asset. [29] There is no question that the municipal funds involved are public assets; no item is more clearly a public asset than public revenue. [30] Second, we determine whether the initiative would appropriate [the public] asset, which involves looking to the two core objectives of the constitutional limitation. [31] The first objective is to prevent `give-away programs' that appeal to the self-interest of voters and endanger the state treasury by allowing rash, discriminatory, and irresponsible appropriations. [32] The second, related objective is to preserv[e] legislative discretion by ensuring that the legislature, and only the legislature, retains control over the allocation of state assets among competing needs. [33] This second core objective was recognized in our decision in McAlpine v. University of Alaska. [34] The initiative in McAlpine dictated the creation of a community college system separate from the University of Alaska and required the university to transfer a specified amount of property to the community college system. [35] We held that the initiative was impermissible not because it was a give-away of resources but because it designate[d] the use of state assets. [36] We have since clarified that the constitutional restriction on the initiative power is meant to retain the legislature's control of the process of making appropriations. [37] We held that an initiative is unconstitutional when it causes the voters to essentially usurp the legislature's resource allocation role. [38] Finally, we recently explained that the primary question in assessing the second core objective is whether the initiative narrows the legislature's range of freedom to make allocation decisions in a manner sufficient to render the initiative an appropriation. [39] This case presents the question whether an initiative may run afoul of the core objectives underlying the initiative restrictions when it allocates public assets away from a particular purpose. We hold that it can. We conclude that Proposition 4 sufficiently narrows the Borough's ability to make allocation decisions to render it an appropriation. ACT relies heavily on our decision in City of Fairbanks v. Fairbanks Convention & Visitors Bureau. [40] There, we upheld an initiative that repealed a city code designating a certain portion of bed tax revenues for purposes of tourism development, and instead deposited the revenues in a discretionary fund. [41] We reasoned that the initiative did not reduce the city council's control over the appropriations process but rather increased its discretion in appropriating funds. [42] In addition, we explained that a measure was not an appropriation where it did not reflect an action taken by the governing body after annual approval of the budget. [43] ACT argues that there is no prohibition against allowing voters to approve a major project in advance of the budget approval. Referring capital projects to voters, however, will almost invariably result in voters vetoing certain projects, at which point there is nothing the Borough can do to go forward with the project. In ACT's view this means that the municipal funds are still available to be used at the Borough's discretion. But the voters' ability to veto a capital project, even prior to budget approval, infringes on the assembly's ability to allocate resources among competing uses because there is nothing that the assembly can do to appropriate money for that project. In Pullen v. Ulmer , we struck down an initiative that established a salmon harvest priority system as contravening both of the core objectives of the constitutional provision because it would lead to the very real possibility that [some groups] will be excluded from using the resource. [44] Under our decision in Pullen, an initiative may make an impermissible appropriation not only when it designates public assets for some particular use, but also when it allocates those assets away from a particular group or purpose. [45] Proposition 4 dictates the same result, although in a less direct fashion: While the ordinance itself does not allocate public assets, it requires that voters be permitted to allocate those resources. Practically, when voters refuse to approve a capital project they allocate municipal funds away from the particular project, which interferes with the Borough's exclusive power to allocate funds among competing uses. Proposition 4 thus violates the underlying purposes of the constitutional restrictions on municipal citizens' initiative power. [46]