Court Opinion

ID: 9618747
Source: CourtListenerOpinion
Date Created: 2023-08-22 05:16:43.484384+00
Date Added: 2024-06-11T12:03:49.682737
License: Public Domain

DIMOND, Senior Justice,
joined by MATTHEWS, Justice, dissenting.
I dissent from the majority’s holding that the permanent fund dividend program, AS 43.20.010-100 (Ch. 21, SLA 1980) is constitutional. I do so on the grounds that, under the equal protection clauses of the United States and Alaska Constitutions, first, the state may not impose an unlimited dura-tional residency requirement, and second, the state may not award dividends in the interest derived from the permanent fund retrospectively back to statehood.1
I
When the only difference separating the $1,050.00 that one resident will receive this year from the $50.00 received by another is twenty years of residency in the state, I do not believe that the present distribution system can be characterized as imposing anything other than a lengthy, and in fact, an open-ended, durational residency requirement. I believe this violates the equal protection clauses of both the United States and the Alaska Constitutions. This is so even though the benefit involved here may not be as important as some of the other rights or benefits conditioned on periods of residency that have been considered in past decisions.
A statute imposes a durational residency requirement when it creates distinctions between residents on the basis of their length of residency.2 Ordinarily, durational residency requirements create two classes of *466residents. One class receives a particular benefit because its members have resided in the state for more than a specified period of time, while the other class is denied the same benefit because its members have not resided in the state for the specified period of time. The statute in question in this case does not create the usual durational residency requirement. All residents of Alaska over eighteen years of age are immediately eligible to share in the income from the permanent fund. However, by the terms of this statute, the number of years a person has been a resident of Alaska determines how large his or her share will be each year in the income from the fund. Thus, the statute specifically creates distinctions between residents based upon the duration of their residency in Alaska.3 A statute creating such distinctions can only be identified as one which imposes a durational residency requirement.
The decisions of the United States Supreme Court dealing with durational residency requirements establish that such requirements are constitutionally permissible in certain cases, either as an element of proof that one is a bona fide resident, Vlandis v. Kline, 412 U.S. 441, 458, 93 S.Ct. 2230, 2237, 37 L.Ed.2d 63, 72 (1973), or for other legitimate state interests, Sosna v. Iowa, 419 U.S. 393, 406, 95 S.Ct. 553, 560, 42 L.Ed.2d 532, 544 (1975). But it has never been questioned that durational residency requirements, when valid, must be reasonable in length. Thus, Mr. Justice Stewart, writing for the Court in Vlandis, stated, “Nor should our decision be construed to deny a State the right to impose on a student, as one element in demonstrating bona fide residence, a reasonable durational residency requirement, which can be met while in student status.” 412 U.S. at 452, 93 S.Ct. at 2236, 37 L.Ed.2d at 72 (footnote omitted) (emphasis added). When durational residency requirements have been struck down, the dissenters who would permit the requirements have usually been careful to note their views that such requirements must be reasonable in length. Chief Justice Warren, joined by Justice Black, dissenting in Shapiro v. Thompson, 394 U.S. 618, 89 S.Ct. 1322, 22 L.Ed.2d 600 (1969), three times noted his view that Congress could authorize the states to impose “minimal residence requirements.” 394 U.S. at 644, 646, 648, 89 S.Ct. at 1336, 1337, 1338, 22 L.Ed.2d at 621, 622, 623 (emphasis added). In the same case, Mr. Justice Harlan in dissent stated:
Nor do I believe that the period of residence required in these cases-one year-is so excessively long as to justify a finding of unconstitutionality on that score.
394 U.S. at 677, 89 S.Ct. at 1354, 22 L.Ed.2d at 640. Similarly, Chief Justice Burger, dissenting in Dunn v. Blumstein, 405 U.S. 330, 363, 92 S.Ct. 995, 1013, 31 L.Ed.2d 274, 296 (1972), expressed his view that a “reasonable period” (emphasis added) could be imposed on newcomers before granting them their voting franchise.
In my view, the underlying premise of the United States Supreme Court in these cases is that while durational residency requirements may be imposed for legitimate purposes, once the durational requirement is fulfilled, it is not permissible beyond that point for a state to allocate its resources or benefits on the basis of length of residency. If such treatment were permissible the requirement that durational residency periods be reasonable and limited in scope would lose most of its meaning. Thus, the state could impose a limited durational residency requirement, such that all persons must be *467residents of Alaska for some reasonable time period before they may share in the dividend program. However, I believe that once this requirement is fulfilled, all residents must be treated equally; that is, all residents must receive the same payments under the dividend program.
II
The majority apparently agrees with the state’s contention that the present disparities in payments4 caused by awarding dividends from the permanent fund’s income on the basis of years of residency are justified. This is so because, the state says, “Oldtim-ers will die or move away and today’s new residents will become tomorrow’s oldtim-ers,” and “[i]t is the difference between looking at two residents in a still photograph or looking at them along with all other residents as participants in a motion picture.”
I do not regard this argument as valid. It is logically impossible' to test the effects of a program which differentiates between people based solely on their length of residence without using the same future period of residence for all people in the sample. Thus we can make sense of an hypothetical case involving two forty-year old Alaskans one of whom has lived here twenty years and the other ten years, who will both die after living here for another ten years.5 However, if we alter the case and assume that the second person will live here for thirty years then the two people have not been, by definition, similarly situated and there is no reason to expect them to have received, in the aggregate, equal funds.
The state’s argument is no different than arguing that a new resident who is not eligible for welfare because he does not meet a one year residency requirement is not treated differently from a one year resident who receives welfare because the former may remain in the state longer than the latter. This argument, of course, has been rejected by Shapiro v. Thompson, 394 U.S. 618, 89 S.Ct. 1322, 22 L.Ed.2d 600 (1969), and deserves no better treatment here.
Moreover, not only is the argument logically wrong, it is based on assumptions which are contradicted by the state’s current projections. The majority suggests that a new resident who stays in the state until the year 2001 will be better off than today’s long term resident. I do not think that this is a realistic assumption, and certainly it is not one that is supported by existing data.
Alaska is now in a position where it will earn, for at least the next ten years, an unprecedented surplus of funds from oil and gas taxes and royalties. Projections show, though, that after a peak in earnings around 1990, revenue will drop off as Pru-dhoe Bay the state’s main source of revenue-is depleted.6 Meanwhile, population growth is expected to continue steadily.7 The implication of these projections is that government spending will need to expand to provide services for a growing population at a time when the sources of revenue needed to fund these programs will be decreasing.8 Future legislatures, which as the *468state conceded are not bound to continue the dividend program, are likely to find that it will be impossible to pay dividends because all the interest from the permanent fund will be required to pay the costs of general government.
It is thus possible to surmise that the next few years will be the key period for participation in the dividend program. During this period dividend payments will be made at a time when the state will have enough of a budget surplus that use of permanent fund interest to fund state government will not be necessary, while the population receiving dividends will still be relatively small.
But the award of dividend payments for each year of residency since Alaska became a state in 1959 does not contemplate only one payment this year of accumulated dividends. What the statute provides for is the continued accumulation of dividends for each year in the future. Thus, one who has now been a state resident since 1959 will receive this year twenty-one dividends, or $1,050.00.9 Next year, he or she will receive twenty-two dividends, the succeeding year, twenty-three dividends, and so forth. It follows from this that long-term residents of the state are likely to receive most of the benefits under the program.
By the time today’s newly born or arrived residents have accumulated an equal number of dividends in the income from the permanent fund, the program may not exist in anything close to its present form. Besides probably receiving less money from the dividends, it is also likely that these residents will have to begin paying income taxes.10 I do not mean to intimate that such a pessimistic forecast is certain to occur. But at the same time I think it is unrealistic to believe that the dividend program’s continued viability in future years can serve as a justification for a disparity in payments today.
The majority seems to place some reliance on language in Sosna v. Iowa, 419 U.S. 393, 406, 95 S.Ct. 553, 560, 42 L.Ed.2d 532, 544 (1975), in which the United States Supreme Court suggested that denying a divorce to a new resident for a year would be permissible because it would not permanently deprive anyone of a right but would only delay its availability. Aside from the fact that a year prior to Sosna we rejected Sosna’s holding in State v. Adams, 522 P.2d 1125, 1132 (Alaska 1974), the delay involved in Sosna was only one year. In Sosna it was at ¡east likely that new residents would achieve equality.
I do not believe that Sosna’s logic can be extended to uphold a law that denies equal protection on the theory that the same benefit might be available as long as twenty years from now, since such a theory simply rests on speculation. I believe that the dividend distribution program must be examined from the perspective of what is in fact happening now, not from the perspective of the hopes and expectations the program might generate about the future. This is especially true of a program that depends, in large part, upon a finite, nonrenewable resource.
Assuming that strict scrutiny equal protection analysis is not appropriate when reviewing disparities in the award of a dividend payment, the balancing test in State v. Erickson, 574 P.2d 1 (1978), still requires that legislative classifications
must be reasonable, not arbitrary, and must rest upon some difference having a fair and substantial relationship to the object of the legislation ....
Id. at 11, quoting Isakson v. Rickey, 550 P.2d 359, 362 (Alaska 1976) (emphasis omitted). Equal treatment of all Alaskans is *469the norm, not the exception, required by our constitution.11
The statute offers three reasons justifying the present distribution system:
... to encourage persons to maintain their residence in Alaska and to reduce population turnover in the state;
... to encourage increased awareness and involvement by the residents of the state in the management and expenditure of the Alaska permanent fund (art. IX, sec. 15, state constitution); [and]
... to provide a mechanism for equitable distribution to the people of Alaska of at least a portion of the state’s energy wealth derived from the development and production of the natural resources belonging to them as Alaskans.12
I cannot conclude that the reasons advanced by the legislature justify a retrospective distribution of state benefits.
First, as to the need to create an incentive to reduce population turnover, the state has argued at some length that the money received from the dividends is too small in the beginning years of the program to attract new residents. If true, then the reverse seems to follow: the money involved is too small in the initial years to be of any real significance in making a dedsion to stay in the state. Consequently, I do not believe it can be argued that for newer residents of the state the program will have the effect of reducing population turnover. And as to long-term residents-principally those who have resided in Alaska since 1959 — it is not at all unlikely that they had already committed themselves to remain in Alaska prior to the 1980 legislative enactment we are considering here. Thus, the need to create an incentive to reduce population turnover, specified as one of the purposes of the statute, does not really apply to long-term residents. By virtue of their length of residence in Alaska, it would appear unnecessary to give them the extra incentive to remain in the state by giving them the dividends from earnings of the permanent fund.
I can understand why in some circumstances the state might desire to reduce turnover within a particular group of the population.13 But I cannot understand why all longer term residents should now be given this extra incentive to remain in the state when newer residents are not. I agree with the majority that the unstable nature of Alaska’s population has created serious problems, but it seems obvious that the same problems are present regardless of *470which segment of the population is “turning over.” Reducing population turnover can best be accomplished by giving all bona fide residents14 an equal share in the income from the permanent fund. This objective cannot justify the present unequal distribution system.
As to the second purpose, that Alaskans should be interested in the manner in which the government manages the permanent fund, it seems reasonable to assume that those with the greatest interest in its management will be those receiving the most money from it. But I cannot understand why one group of residents should be given an incentive to be more interested than another. I believe that the awareness and involvement of all Alaskans in the management of the permanent fund could be encouraged most by giving all bona fide residents15 an equal share of dividend payments. I do not believe this avowed purpose can justify awarding different numbers of dividend payments on the basis of length of residency.
Finally, the program is supposed to accomplish an equitable distribution of the income from the permanent fund. The state’s principal contention in this regard is that it is equitable to reward past residency to the exclusion of any other consideration because length of residency approximates the contributions an individual has made to the state. I do not believe that a “past contributions” rationale can support the present distribution of benefits on either constitutional or equitable grounds.
The United States Supreme Court has twice indicated that a state may not allocate services or resources to its residents based on a past tax contributions rationale. Thus, in Shapiro, the Court stated:
Appellants argue further that the challenged classification may be sustained as an attempt to distinguish between new and old residents on the basis of the contribution they have made to the community through the payment of taxes... . Appellants’ reasoning would logically permit the State to bar new residents from schools, parks, and libraries or deprive them of police and fire protection. Indeed it would permit the State to apportion all benefits and services according to the past tax contributions of its citizens. The Equal Protection Clause prohibits such an apportionment of state services.
394 U.S. at 632-33, 89 S.Ct. at 1330, 22 L.Ed.2d at 614. The last quoted statement was footnoted, and in the footnote the Court recognized an exception, stating:
We are not dealing here with state insurance programs which may legitimately tie the amount of benefits to the individual’s contributions.
394 U.S. at 633 n.10, 89 S.Ct. at 1330 n.10, 22 L.Ed.2d at 614 n.10. In view of the very limited scope of the footnoted exception, I do not think that a narrow construction of the language preceding the footnote is warranted.
In Vlandis v. Kline, 412 U.S. 441, 93 S.Ct. 2230, 37 L.Ed.2d 63 (1973), the Court had before it a Connecticut statute denying lower residency tuition rates to college students who were nonresidents when they applied to the state university but who became residents while attending the university. The Court struck down the statute while indicating that a reasonable durational residency requirement could be imposed on a student “as one element in demonstrating bona fide residence.” 412 U.S. at 452, 93 S.Ct. at 2236, 37 L.Ed.2d at 72. However, the Court expressed grave doubts as to whether Connecticut could impose a tuition scheme charging less to old residents than to new (assuming bona fide residence *471in both cases) in recognition of the fact that the old residents had contributed more to the state. The Court stated:
But even if we accepted the State’s argument that its statutory scheme operates to apportion tuition rates on the basis of old and new residency, that justification itself would give rise to grave problems under the Equal Protection Clause of the Fourteenth Amendment. For in Shapiro v. Thompson, supra, the Court rejected the contention that a challenged classification could be sustained as an attempt to distinguish between old and new residents on the basis of the contribution they have made to the community through past payment of taxes.
412 U.S. at 450 n.6, 93 S.Ct. at 2235 n.6, 37 L.Ed.2d at 70-71 n.6. It is true that the language in Shapiro and Viandis to which I have referred concerns tangible contributions: namely, the payment of taxes. But I do not believe that the Court’s reasoning would be any different if the argument had been based on intangible contributions.16 I do not believe that rewarding past contributions is a permissible objective for the same reason expressed in our decision invalidating the 1980 income tax statute:
We believe that the reason the Supreme Court of the United States has indicated that it is not a “constitutionally permissible state objective,” Shapiro, 394 U.S. at 633, [89 S.Ct. at 1330] 22 L.Ed.2d at 614, to apportion state benefits and services according to the past eontribu-tions of its citizenry, is that such a rationale logically could lead to pervasive and profound inequality in nearly all phases of a state’s relationship with its citizens. That, in any event, is our view of the implications of the argument.
Williams v. Zobel, 619 P.2d 422, 429 (Alaska 1980) (plurality opinion).
As to the equity of such a distribution, I believe there must be equity for those younger, newer residents who have shown an inclination to settle in Alaska and make a commitment to the future of the state. I do not think the present program does this. I believe it has the effect, of insulating long-term residents from sharing the state’s oil wealth with newcomers during what is likely to be the critical years of the distribution of funds.
I think this statement applies to the children of Alaska as well. Take, for example, a one-year-old child whose parents have settled and lived in Alaska for some time and have committed themselves to make Alaska their home. The child is reared in Alaska, but under AS 43.23.010(b)(1) of the permanent fund statute, that child would not be eligible for a dividend until he or she is eighteen years old-which is seventeen years away. The rights of children are not protected under the program, so if it later becomes impossible to pay dividends the child would receive nothing. This can hardly be considered an “equitable distribution of ... the state’s energy wealth to the *472people of Alaska.” After all, children are “people,” and, more importantly, are “persons” entitled to equal rights, opportunities, and protection under the law under article I, section 1, of the Alaska Constitution.
Ill
To summarize, it is undisputed that the retrospective aspects of this legislation will lead to large present disparities in payments. It is impermissible, in my opinion, to justify these disparities on the theory that they will be erased at some future time, because that is simply untrue as to people who are similarly situated except for their past length of residency, and further because such a theory is uncertain and speculative in nature. This latter reason is especially forceful since the program depends primarily on the existence of a nonrenewable resource that one can reasonably assume will be exhausted in the not too distant future.
As indicated above, the state contends that three objectives justify the present disparities. Two of them-that of population turnover and the incentive to manage the permanent fund wisely, can best be accomplished by giving both long-term and short-term residents basic equality when distributing income payments from the earnings of the permanent fund. These objectives cannot justify the retrospective payment of dividends. The third objective, that of rewarding past contributions, raises serious federal and state constitutional equal protection issues. In considering the test of State v. Erickson, 574 P.2d 1 (1978), it is not necessary to consider any of these objectives in the final balancing approach used in that opinion. Two of them are plainly insufficient and the third, in my opinion, is not a legitimate state purpose.
Finally, I have grave reservations as to whether even prospective operation of this program would be valid. Although not presenting the same questions as the retrospective operation of the statute, I believe it is impermissible to create perpetual distinctions between classes of residents, as newcomers become state residents in the future.
The state’s concern that our unique benefit programs should not serve as a “magnet” may well be justified. But I think that any distribution of state benefits must treat all bona fide Alaska citizens equally after a reasonable period of residence in the state.
I agree with Presiding Superior Court Judge Moody that the permanent fund distribution statute, in its present form, is unconstitutional as violating the equal protection clause of the Alaska Constitution, article I, section 1. I also believe that the statute violates the equal protection clause of the United States Constitution.

. While this statutory scheme is not retroactive because it is effective beginning only this year, rather than as of 1959, I believe the scheme is retrospective in the sense that it requires looking to the past to determine the number of dividends each resident will receive-one for each year of residency in Alaska since 1959.

. See Dunn v. Blumstein, 405 U.S. 330, 334-35, 92 S.Ct. 995, 999, 31 L.Ed.2d 274, 279-80 (1972); Shapiro v. Thompson, 394 U.S. 618, 627, 89 S.Ct. 1322, 1327, 22 L.Ed.2d 600, 611 (1969).

. This is illustrated by the following example: X is a twenty-five year old resident of Alaska who moved to the state one year ago. Y is a twenty-five year old life-long resident of Alaska. X and Y are both residents of Alaska but when permanent fund benefits are calculated, X will receive one dividend while Y will receive twenty-one. X will never catch up to Y because she has exercised her fundamental right to travel, nor will X’s benefits ever be equal to those of Z, a twenty-five year old, ten-year resident of the state for the sole reason that X exercised her fundamental right at a later point in time than did Z. Because these classifications act to penalize those residents who have recently exercised their right to travel by denying them benefits equal to those received by longer term residents they are, in effect, dura-tional residency requirements.

. The disparity in payments between old and new residents will grow larger in the near future because the size of the dividend payment is predicted to increase. Gross dividends for 1980 and 1981 are estimated to be $130 million. The Alaska Department of Revenue has estimated that gross dividends will grow to $479 million by 1986. Alaska Economic Information and Reporting System, Quarterly Report at 12 (July 1980).

. In this case the first always will receive substantially more money than the second over the ten year period ($5,000 at current rates) or any other period one may care to posit.

. See Alaska Dep’t of Revenue, Petroleum Revenue Div., Petroleum Production Revenue Forecast Quarterly Report 1-2 (June 1980).

. See Alaska Dep’t of Labor, Alaska Population Overview 11 (1979).

. The majority impliedly recognizes the truth of these projections. Thus, they say,
Alaska’s oil and mineral wealth is based on nonrenewable resources which will become depleted at some point in the future, potentially leaving Alaska with the choice of either terminating certain governmental programs *468or continuing them through increases in taxation. 619 P.2d at 453 (Alaska 1980).

. The value of a dividend this year has been set at $50.00. Dividends are predicted to increase in value for a number of years in the future. See note 4 supra.

. The Alaska state income tax statute was repealed by the legislature at a special session in September, 1980.

.Article I, section 1, of the Alaska Constitution states:
Inherent Rights. This constitution is dedicated to the principles that all persons have a natural right to life, liberty, the pursuit of happiness, and the enjoyment of the rewards of their own industry, that all persons are equal and entitled to equal rights, opportunities and protection under the law; and that all persons have corresponding obligations to the people and to the State.
Additionally, article VIII, section 17, provides specifically with regard to disposition of the state’s natural resources:
Uniform Application. Laws and regulations governing the use or disposal of natural resources shall apply equally to all persons similarly situated with reference to the subject matter and purpose to be served by the law or regulation.
Section 2 of this article requires the state to manage its natural resources “for the maximum benefit of its people.” This is not the same thing as management for the maximum benefit of long-term residents. See Hicklin v. Orbeck, 565 P.2d 159 (Alaska 1977).

. Ch. 21, § 1, SLA 1980. These sections are not in the order in which they appear in the statute’s statement of purposes.

. For example, free admission to pioneer homes, AS 47.25.020-.030, and a state longevity bonus, AS 47.45.010, both require lengthy residency periods. Both those programs, however, are apparently designed to help those individuals who would like to retire in the state but cannot do so because of the high cost of living. The state might well want to limit these benefits to those that would suffer the most hardship by being forced to leave, and it seems reasonable to suppose that a long period of residency would be some indicia of close ties to Alaska and the disruption that leaving might cause. AS 14.40.763 and AS 14.40.825 provide for forgiveness of student loans based on years worked in the state. In a state with a shortage of skilled manpower it seems reasonable to attract students to return to the state upon graduation to practice their profession.

. I believe a statute could require a reasonable period of residence in a state to establish the newcomer’s bona fide residency before permitting the person to share in the dividend payments. See Vlandis v. Kline, 412 U.S. 441, 452, 93 S.Ct. 2230, 2236, 37 L.Ed.2d 63, 72 (1973), where it is stated:
Nor should our decision be construed to deny a State the right to impose on a [person] as one element in demonstrating bona fide residence, a reasonable durational residency requirement ....

. See note 14 supra.

. The majority finds two cases persuasive when concluding that rewarding past intangible contributions is a permissible purpose.. These are Starns v. Malkerson, 326 F.Supp. 234 (D.Minn.1970), aff’d without opinion, 401 U.S. 985, 91 S.Ct. 1231, 28 L.Ed.2d 527 (1971), and Reeves, Inc. v. Stake,-U.S. -, 100 S.Ct. 2271, 65 L.Ed.2d 244 (1980). These cases do not seem persuasive to me. When, as the majority notes, Vlandis v. Kline, 412 U.S. 441, 93 S.Ct. 2230, 37 L.Ed.2d 63 (1973), cites Starns with approval, it is because Starns upheld a statute that imposed a one-year residency requirement as “merely one element ... to demonstrate bona fide domicile.” 412 U.S. at 452 n.9, 93 S.Ct. at 2236 n.9, 37 L.Ed.2d at 72 n.9. Thus, the Supreme Court in Viandis did not specifically approve of the district court’s reliance on a past tax contributions rationale. Even if this rationale can support a one-year residency requirement, I do not believe it can justify the perpetual distinctions which the statute before this court creates between residents on the basis of their length of residency in Alaska. The second case, Reeves, involves an interpretation of the commerce clause. As the majority notes, Reeves “upheld South Dakota’s policy of selling cement from its state-owned plant only to state residents." 619 P.2d at 460 (Alaska 1980) (emphasis added). South Dakota did not impose a durational residency requirement which residents would have to fulfill before buying cement from the state-owned plant. Thus, I do not believe Reeves is persuasive authority when determining the validity of a durational residency requirement under the equal protection clause.