Court Opinion

ID: 9788833
Source: CourtListenerOpinion
Date Created: 2023-08-31 01:19:38.706561+00
Date Added: 2024-06-11T15:43:01.492657
License: Public Domain

BRYNER, Justice,
with whom FABE, Chief Justice, joins, dissenting.
I agree with the opinion's initial conclusion that the tobacco settlement revenue qualifies as a source of public revenue covered by the Alaska Constitution's anti-dedication clause.1 But I have serious doubts about the court's main conclusion that chapter 180, SLA 2000, sells this revenue without violating the anti-dedication clause. Because the superior court did not address the issues that give rise to my doubts and the record contains insufficient information to resolve them, I would vacate the summary judgment order and remand to the superior court for further proceedings.
Today's opinion approves the state's sale of its tobacco settlement rights based on their discrete and non-recurring nature, on the fortuity of the settlement's future payout provisions, and on the fact that lawsuit settlements generally are viewed as assets. But it seems to me that the opinion too quickly accepts at face value the state's assurances that the purchase and sale agreement actually sells the state's current right to its tobacco settlement revenues; and in approving this sale, the opinion gives too much emphasis to the settlement's unusual and fortuitous nature.
The qualities relied on by today's opinion may indeed suggest that the sale's future revenues are capable of being treated as a present asset. But almost anything can be conceptualized as an asset: virtually all future events having any potential impact on state revenue could be expressed in estimated economic values, labeled as assets, reduced to present value, and "securitized." And surely a future revenue stream's unusual nature or unanticipated appearance on the horizon does not, standing alone, justify calling the revenue stream a presently salable asset; nor is there any reason to suppose, assuming that the revenue stream is in fact an asset, that every sale purporting to dispose of it at present value would actually comply with the anti-dedication clause. While the presence of these factors may provide an appropriate embarkation point for constitutional inquiry, their presence cannot eliminate the need for a hard look at all other relevant circumstances.
In my view, we must examine the character of the particular revenue stream at issue and the mechanics of its proposed disposition to ensure the sale's constitutional integrity: that is, to ensure both that a marketable asset exists and that the proposed sale would actually market it in a way that the anti-dedication clause allows. At least five factors seem relevant in examining these issues:
* The source and nature of the future revenues and how the law traditionally views similar revenues.
*395e Whether the state's right to the future revenues is fully vested at the time of the sale.
e Whether any law, rule, or contractual provision prohibits the state from selling its current right to the revenue or prevents the buyer from stepping into the state's shoes.
e Whether the revenue's future value can be rationally predicted and whether the sale obliges the state to perform contractual duties that might conflict with its basic governmental duties.
e Whether the sale conveys the state's right to the revenue or a right to receive the revenue from the state.
I believe that, when examined with an eye toward these factors, the master settlement agreement, the legislation implementing the state's sale of its settlement revenues,2 and the state's purchase and sale agreement with AHFC and NTSC reveal serious potential flaws in the state's constitutional theory.
1. The source and nature of the revenue stream
Today's opinion focuses almost exclusively on this factor. The revenue stream at issue here is established by the tobacco settlement agreement; the opinion notes that the law traditionally treats legal settlements as assets. These points suggest to the court that the state's current interest in future revenues under the agreement can be regarded as an asset. But a note of caution seems necessary: the law does not invariably treat legal settlement agreements as transferrable property; it deems some settlement agreements non-transferrable because the transfer contemplated by the agreement would violate public interest. Settlements compromising future child support rights, for instance, are generally barred. Moreover, other settlement agreements are non-transferrable by their own terms. For example, a lease agreement containing an express non-assignment clause could render the lease interest not freely transferrable to a third party. In this case, as discussed below, there may exist both contractual and policy reasons for limiting transferability of the state's present settlement rights.
2. Whether the state's right is vested
The state's right to share in the master settlement agreement's settlement funds appears to be fully vested. This factor poses no apparent obstacle to treating the right as a current, marketable asset.
3. Whether the law or the settlement agreement bars the transfer
No state law bars the state from transferring its right to receive revenues under the settlement agreement, and the parties point to no federal law forbidding or limiting the transfer. But the settlement agreement itself imposes a limitation. The state fails to discuss this restriction, and neither the superior court nor this court's opinion gives it serious attention. Yet in my view it is potentially critical.
Part XVIIl@(p) of the master settlement agreement explicitly limits the intended benefits of the agreement to the settling states that joined in the agreement; and this provision expressly prohibits settling states from assigning their enforcement rights under the settlement agreement:
(p) Intended Beneficiaries. No portion of this Agreement shall provide any rights to, or be enforceable by, any person or entity that is not a Settling State or a Released Party. No Settling State may assign or otherwise convey any right to enforce any provision of this Agreement.
On its face, this language appears to require that all settlement funds destined for Alaska be collectible exclusively by the state of Alaska; the language further seems to preclude the state from assigning to a third party like NTSC the state's right to demand payment, or any other benefit of the agreement, directly from the master settlement agreement's (MSA) escrow agent. Although this paragraph might not bar the state from selling to NTSC the state's present right to retain future settlement funds upon their receipt by the state, it does seem to say that the state cannot put a third party in its shoes *396by assigning the state's right to collect directly from the MSA escrow agent. The provision would appear to allow a settling state to sell only the right to acquire settlement payments through the state. As discussed more fully below, this distinction could have critical constitutional implications.3
4. Predictability of value and dependency on state's performance of governmental functions
This factor recognizes that constitutional policies can sometimes preclude legislation from treating future state revenues as marketable assets: for example, the revenue's future value might be so speculative as to defy meaningful prediction, thereby precluding statutory "assetization" of the revenue, since the legislation would amount to arbitrary and irrational state action; alternatively, a legislative directive to sell not-yet-realized revenues at present value might im-permissibly constrain the executive branch's prerogatives by foreclosing its future ability to perform essential, constitutionally mandated governmental duties.
In my view, a policy concern of this latter kind arises under the purchase and sale agreement and deserves serious attention. Although the superior court and the opinion describe the tobacco settlement's payout provisions as "fortuitous," this description hardly seems accurate. The settlement agreement's opening recitals make it clear that the settlement is founded on and carefully structured to address the settling states' strong and continuing interests in promoting public health and reducing youth smoking. Reflecting these ongoing concerns and interests, the settlement agreement establishes a theoretically perpetual stream of future payments whose size will depend inversely on each state's ability to curb future smoking: the greater the success a state achieves, the lower will be its future payment stream.
From a settling state's perspective, this inverse relationship makes sense as long as the tobacco settlement's benefits imure exelu-sively to the settling parties, as Part XVI*397II(p) of the settlement agreement itself (non-fortuitously) seems to require. The state stands to receive less if it succeeds in curbing smoking, but its loss of settlement revenues through decreased smoking will presumably be more than offset by the economic and public health benefits gained through the successful state regulatory efforts that caused the decrease in smoking. As long as the future revenues belong to the state, then, there is no possibility of irreconcilable tension between the state's two theoretically conflicting interests-maximizing its settlement revenues, on the one hand, and protecting the health and safety of its citizens, on the other. The settlement thus offers settling states a "win-win" situation.
But a sharp disparity of interests potentially arises when, as here, the state divorces its interest in receiving future settlement revenues from its vital interests in public health and safety by transferring its current right to future revenues to a group of third-party investors. As we have seen, under the terms of the master settlement agreement itself, the state's rights to receive benefits under the agreement cannot be assigned directly to a third party like NTSC; those rights can only be assigned vicariously, since the settlement agreement precludes their direct enforcement by anyone but a settling state. For this reason, the terms of the master settlement agreement apparently led the AHFC and NTSC to oblige the state, in the purchase and sale agreement, to pledge to make all efforts within its lawful powers to maximize the investors' future revenue stream-presumably, even if this means place-ing the investors' financial interests ahead of the state's governmental duty to protect the health and safety of its citizens.
The court dismisses the potential for this kind of conflict as "Mlusory," concluding that "Inlothing ... obligates the state to take steps to maximize the income stream. The state is obligated only not to interfere with AHFC's receipt of the income stream.4 But the express terms of the purchase and sale agreement belie this conclusion. Specifically, the agreement strives to enhance investor confidence by explicitly requiring the state to promise, among other things, (1) to "take all actions as may be required by law fully to preserve, maintain, defend, protect and confirm [AHFC's and NTSC's] interest[sl"; (2) "not [to] take any action that will adversely affect [their] legal right to receive the Tobacco Assets"; (8) not to "impair the rights and remedies of Bondholders" until the bonds "are fully paid and discharged"; (4) "not [tol take any action and [to] use its best reasonable efforts not to permit any action to be taken by others that ... would result in the amendment, hypothecation, subordination, termination, or discharge of, or impair the validity or effectiveness of, the MSA or the Consent Decree"; (5) to "immediately pay over to the Trustee the proceeds of any Tobacco Assets received by the State in error"; and (6) to "exercise each and every right and remedy under the MSA."
Given the inverse relationship between the size of a settling state's future settlement payments and the state's future success in curbing the public dangers of smoking, these promises may well create an intolerable and irreconcilable tension between the state's contractual obligation to maximize revenues for bondholders and its non-delegable governmental duty to protect the public health and safety of its citizens. At some point, our constitution necessarily cireumseribes legislative authority to approve private contractual arrangements that have the effect of preempting the executive's constitutionally based prerogatives;5 so too, there are constitutional lines that no branch of government is authorized to cross by contracting away its own core governmental powers and duties.6 Hence, even if the state's right to receive future settlement payments under the master settlement agreement might oth*398erwise be regarded as a marketable asset, concerns of this nature may well preclude "securitizing" these future revenues.
Because the parties and the superior court did not develop or meaningfully address this issue, I believe that it warrants further consideration on remand.
5. Whether the sale mechanism does what it purports to do
Not every transaction is what it purports to be. And the constitutionality of the transaction at issue here must ultimately be judged by what it does, not what it purports to do. I therefore believe that it is crucial to examine the mechanics of the state's sale of revenue rights to NTSC in order to determine if the sale actually and immediately conveyed what it purported to convey: "all right, title and interest of the State ... in and to" "forty percent of the revenue ... that the State has a right to receive from time to time under the MSA." There is reason to doubt that it did.7
As already mentioned, the master settlement agreement appears to preclude the state from assigning to NTSC the state's right to receive the tobacco settlement funds directly from the MSA escrow agent; the agreement seems to require that the funds be held for the benefit of the state by the MSA escrow agent until payment is due, and that they then be "transferred to the appropriate State-Specified Account for such Settling State."
The purchase and sale agreement seems to recognize this restriction but evidently attempts to skirt it by requiring the state to create a trust within its "State-Specified Account" and by having the state pledge its settlement payments to the account trustee upon their deposit. As currently presented, the details of this arrangement are sketchy. The arrangement is not precisely described in the parties' briefing or in the superior court's decision, and the trust agreement itself apparently has not been included in the appellate record. But the most likely seenar-io seems to be that as soon as the state's settlement payment is deposited in the state-specified account, the account's trustee (the bank in which the funds are deposited) divides the funds according to the terms of the purchase and sale agreement, disbursing forty percent to NTSC and sixty percent to the state general fund.
The preliminary prospectus describing NTSC's tobacco settlement asset-backed bonds appears to confirm this interpretation, emphasizing that "[the State may not convey and has not conveyed to NTSC or the Series 2000 Bondholders any right to enforce the terms of the MSA" and declaring that the MSA escrow agent "will disburse the [settlement] funds to the Settling States." 8
The prospectus includes a flow chart that lends further support to this reading. This *399chart depicts settlement payments flowing from the MSA escrow agent to the Alaska state-specified account, where the payments appear to be received as state revenue. According to the chart, after receipt in the state account, the money is divided into two separate funds, with forty percent flowing to NTSC and sixty percent to the state-presumably to the general fund. The chart labels NTSC's forty percent payment as "pledged revenues," suggesting that NTSC does not acquire these monies by direct payment from the MSA settlement, but instead as payment from state revenues representing NTSC's forty percent share of the total received by the state.
Seemingly, then, because the master settlement agreement prohibits the state from assigning its right to directly collect settlement revenues and requires settlement payments to be deposited to a state-specified account for its benefit, settlement payments necessarily arrive at the state-specified account as state revenues. The fact that the settlement payments are deposited into a state-specified account rather than into the state's general fund certainly would not, by itself, change their basic character upon deposit as state revenue; nor is it clear how the state could contractually alter the future payments' basic character as state revenue at the time of their receipt by creating a trust within its account that divides them after their deposit. For if the funds must be paid to the state for its exclusive benefit and received in a state-specified account, it would appear that the state's decision to dedicate this account to one or more specific purposes merely serves to make it a dedicated fund. This is precisely what the dedication clause prohibits. After all, if the anti-dedication clause could be cireumvented by the simple expedient of depositing state revenues into prerestricted trust accounts instead of the general fund, then compliance with the clause would be reduced to a minor accounting inconvenience.
Notably, Tamara Brandt Cook, Director of Legislative Services for the Legislative Affairs Ageney, foresaw and warned of precisely this danger in her September 20, 2000, memo to Representative John Coghill Addressing the problem under the appropriations clause rather than the anti-dedication clause, Cook commented that, "because the "Tobacco Settlement money is to flow to AHFC upon receipt without an appropriation, the arrangement may be vulnerable under Art. IX, see. 13 of the state constitution." 9
This subtle transactional wrinkle-that the settlement payments must be routed through the state instead of being paid by the MSA escrow agent directly to NTSC-appears to be dictated by the settlement's express non-assignment provision; and as Cook aptly notes, the wrinkle has a crucial bearing on the sale's constitutionality. For although the anti-dedication clause might permit an advance sale of the state's right to collect directly from the MSA escrow agent, it squarely prohibits the state from selling to NTSC the right to receive from the state the future revenues that the state itself will receive from the MSA escrow agent.
*400That the master settlement agreement does not explicitly preclude states from transferring their present interests in future settlement funds and instead speaks only of restricting a settling state's right to "assign or otherwise convey any right to enforce" the agreement's provisions hardly rescues a present transfer of future revenues from the anti-dedication clause's proscriptions. The anti-dedication clause looks to the character of the conveyance as well as its timing. Because the master settlement agreement requires settlement funds to be held for the exelusive benefit of the settling state, requires those funds to be paid into the state-specified account, and precludes the state from transferring any right to enforce the agreement's provisions, it appears that neither NTSC nor the state, acting on NTSC's behalf, could ever compel a distribution of settlement funds directly to NTSC; instead, the funds must seemingly pass to NTSC through the state. Yet if the present transaction merely conveys the right to receive settlement revenues through the state when it eventually receives them, then the state's presently conveyed property interest is not what the state claims it to be: it is not an immediate conveyance of the state's title to the revenue stream itself but only a present pledge to hand over the state's future revenues when they accrue, through an airtight mechanism structured to ensure that the pledge will be honored.
This form of sale-a dedication of proceeds from a source of future state revenue-would be impermissible whether characterized as a current sale at present value or as a promise to sell in the future.10 It may be true that immediate "assetization" and sale of the state's settlement rights makes it possible for the state to "receive all of the tobacco settlement payments now, rather than over a period of years." But constitutionally speaking, the salient fact is that the state receives its immediate payment not in exchange for its right to receive settlement revenues directly from the MSA escrow agent, but in exchange for irrevocably pledging to hand over its future settlement revenues as soon as the state receives them. AHFC and NTSC thus appear to be buying the fruit of the state's revenue tree, not the tree itself, years in advance; 11 yet the anti-dedication clause requires this fruit to be sold one year at a time, as it ripens.
The point seems worth stressing again: an assignment of the right to receive the state's future revenues from the state is paradigmat-ically a dedication of state revenues; it makes no constitutional difference that the purchase and sale agreement conveys a present interest in the state's future revenue stream if that stream flows through the state's hands before reaching NTSC's banks.
While the state goes to considerable lengths to justify the transaction by relying on opinions of various former attorneys general, these opinions lack persuasive force for the same reason that both the superior court's decision and today's opinion are unconvincing. The attorney general opinions all address the conceptual question of whether a state's right to receive future settlement revenues can be valued and sold as an asset. But in considering this point, they simply assume, or accept on faith, that the state's proposed sale actually will convey a share of the state's right to receive the settlement payment. None of the attorney general opinions take stock of the master settlement agreement's anti-assignment provision or discuss the agreement's apparent nullification of the state's ability to sell its direct rights to collect the revenue.
Former Attorney General Charles Cole's letter to Senator Torgerson exemplifies the omission: it expressly acknowledges that "once money is received by the State, it is 'public revenue' which may not be dedicated for a special purpose"; but the letter then accepts the state's characterization of the transaction at face value, assumes without examining the point that the settlement money will not be received by the state, and thus *401concludes that the sale will be valid.12 Conceptually, the letter's observations are unassailable. Yet they incorrectly assume the truth of the state's unexplained and potentially unwarranted assertion that the "chose in action"-the thing that is to be sold here-is the state's right to receive the settlement.13 Because the master settlement agreement appears to require that the state receive the MSA settlement first-before anyone else does-the chose in action may not be a share of the settlement proceeds as such, but merely a share of the state's settlement share.
Creating and freely trading in the present value of this kind of chose in action might be commonplace and entirely proper in the world of private finance. But in the sphere of state government, article IX, section 7 of the Alaska Constitution would strictly forbid it. For as Attorney General Cole's memorandum emphasizes, "upon receipt by the State, but not before, the 'proceeds' of the settlement are subject to the Section 7 constitutional restriction"; and "[olncee money is received by the State, it is 'public revenue' which may not be dedicated for a special purpose."
In summary, the state's brief portrays the disputed transaction as a sale of the state's right to receive a stream of tobacco settlement funds. The superior court accepted this characterization of the disputed asset without serious question, and so has the court in its opinion. Yet it appears that this characterization may not reflect reality and may be barred by the express terms of the master settlement agreement. The transaction might more accurately be described as a sale of the right to receive from the state a portion of the state's future settlement revenues as soon as the state receives them. This distinetion is critical for purposes of the anti-dedication clause. Moreover, it seems possible that other policy concerns might independently preclude recognizing the state's right to future settlement payments as a currently marketable asset: sale of that asset could potentially pit the state's contractual obligations to NTSC and its bondholders against the state's fundamental governmental duty to ensure public safety and welfare.
Neither the appellate record nor the ree-ord before the superior court provides sufficient information to resolve these concerns definitively. As matters currently stand, I *402do not believe that the record can support a declaratory judgment in favor of either party. I would therefore vacate the superior court's judgment and remand for further proceedings.
For these reasons, I dissent from the court's decision affirming the superior court's judgment.

. Araska Const. art. IX, § 7; see State v. Alex, 646 P.2d 203, 210 (Alaska 1982) (construing the anti-dedication clause to include "the sources of any public revenue").

. Ch. 130, SLA 2000.

. The court's opinion asserts that it is irrelevant to ask whether there is any limitation on transferability of the state's interest in the tobacco settlement revenues, since the inquiry "does not help in determining whether [that interest] is a constitutionally saleable asset." Opinion at 393, n. 29. But the transferability of the state's rights under the settlement agreement bears directly on the nature and scope of the state's current "asset": for example, a limit on transferability might altogether preclude any sale of future revenues, leaving the state with no currently salable asset at all; alternatively, a limitation might effectively preclude the state from selling its entire asset mow, making the asset currently salable only by an agreement that commits the state to transfer title to its settlement revenues as they accrue-that is, by a dedication of future state revenues. Hence, an inquiry into transferability is relevant to the existence of a constitutionally salable asset.
The opinion further asserts that the dissent "incorrectly applies" this factor because Section XVIII(p) of the master settlement agreement only limits a transfer of enforcement rights and "is silent on whether a settling state may assign its right to receive settlement funds." Opinion at 393, n. 29. But this assertion assumes that a bar on conveyance of enforcement rights has no effect on the character of the state's currently salable asset. As explained more fully in the text of this dissent, Section XVIII(p) apparently bars a state from transferring its right to collect settlement revenues directly, consequently requiring the revenues to pass through the state when they are eventually paid, even though they have ostensibly already been sold. It hardly seems accurate, then, to say that Section XVIII(p) is completely silent on whether a settling state may assign its right to receive settlement funds.
Relatedly, the court notes that Myers does not specifically raise any argument based on Section XVIII(p) and has therefore failed to adequately brief the issue. Opinion at 393, n. 29. But Section XVIII(p) raises unresolved uncertainties concerning the broader constitutional point that Myers has unquestionably argued: whether the state's sale of its future tobacco settlement revenues violates the Alaska Constitution's anti-dedication clause. The superior court granted summary judgment on this point, declaring the sale to be constitutional. Since summary judgment would be permissible only if the record resolved all material issues in the state's favor and affirmatively established its right to judgment as a matter of law, Myers's failure to frame his constitutional argument in a particular way does not relieve this court of its duty to review the record for unresolved issues of fact that bear directly on Myers's constitutional claim. See Alaska R. Civ. P. 56; cf. American Restaurant Group v. Clark, 889 P.2d 595, 598 (Alaska 1995) (holding that party's failure to call particular evidence to court's attention "did not relieve the superior court of its obligation to examine the record before determining that no genuine issue of material fact existed").

. Opinion at 393, n. 29.

. Cf. Pub. Defender Agency v. Superior Court, 534 P.2d 947 (Alaska 1975) (holding that separation of powers precludes judiciary from ordering the attorney general to prosecute particular cases of contempt of court).

. Cf. State v. Alex, 646 P.2d 203, 211-13 (Alaska 1982) (precluding legislature from delegating its taxing power to private associations).

. Although the court accurately observes that this inquiry does not help in determining whether the revenue stream is an asset, Opinion at 393, n. 29, the court's observation misconstrues the inquiry's point, which is not to determine whether the revenue stream actually is an asset but to ascertain precisely what that asset is and whether the specific manner of its conveyance violates the anti-dedication clause. Nor is the court correct in asserting that, because the master settlement agreement does not forbid the state from selling its current interest in the future revenues, "it is irrelevant [to ask] why the legislature chose the mechanism that it did." Opinion at 393, n. 29. As detailed in the text, although the master settlement agreement may not preclude a present sale of the state's future revenues, the agreement's terms appear to dictate a payout mechanism that may be constitutionally problematic because it channels the future revenues through a dedicated state fund as they are paid.

. The purchase and sale agreement contains an ambiguous provision in which the state promises to "cause the Escrow Agent (as defined in the MSA) to deliver the Tobacco Assets directly to the Trustee for the benefit of the Corporation." Yet because the MSA itself seems to require payment directly into the "State-Specified Account," and because it also makes the state the sole beneficiary of the payment, it seems likely that the state has simply designated its bank as a trustee and empowered it to divide and distribute the MSA escrow agent's payments, upon deposit, according to the purchase and sale agreement's terms. -It is nevertheless possible that a different mechanism has been established. Because the issue could be of central importance and has not been addressed, I think that it needs to be developed on remand.

. (Emphasis added.) A more complete rendition of Cook's remarks is as follows:
You have identified my main concern with respect to the financing mechanism used in HB 281. It seems to me that selling the right to receive future state revenues, regardless of the source of the revenue stream, could raise constitutional issues not usually implicated by the sale of other types of state assets simply because application of the constitutional appropriation requirement is avoided. It is generally recognized that money received by the state, even money received from the federal government or other sources for specific limited functions, must be appropriated before it may be spent.... For example, when the state enters into a leasel,] payment of the rent each year is subject to appropriation. Otherwise there is a risk that the lease creates an invalid state debt.... If the conveyed right to receive revenue is also, like the lease example, contingent upon appropriation of the revenue for that purpose once it is received, there would be little problem. However, because the "Tobacco Settlement" money is to flow to AHFC upon receipt without an appropriation, the arrangement may be vulnerable under Art. IX, sec. 13 of the state constitution. It could be urged in defense that the state never receives the "Tobacco Settlement" because it will go directly to AHFC and, therefore, it never becomes subject to appropriation. This argument sounds too much like a shell game to be very reassuring to me.

. See Alex, 646 P.2d at 210.

. Cf. Eisner v. Macomber, 252 U.S. 189, 206, 40 S.Ct. 189, 64 L.Ed. 521 (1920) (using the analogy of a tree and its fruit to illustrate the important distinction between a transfer involving capital, that is, an asset that produces a benefit, and one involving income, or the benefit itself).

. The pertinent text of Attorney General Cole's letter is as follows:
Article IX, Section 7, of the Alaska Constitution provides that the proceeds of any state tax or license shall not be dedicated to any special purpose. Although this provision is limited by its express terms to the proceeds of a "state tax or license," and although the proceeds of the Tobacco settlement do not, strictly speaking, derive from the proceeds of any tax or license, in State v. Alex, 646 P.2d 203 (Alaska 1982) the Alaska Supreme Court held that the prohibition encompasses "the sources of any public revenues." Accordingly, upon receipt by the State, but riot before, the "proceeds" of the settlement are subject to the Section 7 constitutional restriction.
However, the right to receive future unpaid installments under the settlement is to be distinguished from the proceeds upon their receipt by the State. Once money is received by the State, it is "public revenue" which may not be dedicated for a special purpose. On the other hand, the right to receive future installments is a property right owned by the State, the same as other real and personal property owned by the State.... At common law, the right to receive future installments under the settlement is a "thing in action," more commonly referred to as a chose in action....
Therefore under state law the right to receive future proceeds under the Tobacco settlement is state personal property which may be sold as any other state property. Furthermore, the right to receive a future stream of payments under the seitlement is personal property which has a present value, similar in value to the right to receive future payments from the sale of other state real and personal property. It is this property right of current value which the proposed legislation contemplates being sold to AHFC, and it is the proceeds of the sale which will be appropriated for a public purpose, not the stream of future payments. These features remove the proposed legislation from the dedicated fund prohibition in Article IX, Section 7.

. The state's conclusory assertion that its future revenues are "a chose in action" begs the question whether the mechanism it used to "sell" this "chose" effected an immediate transfer of the state's right to receive the future settlement revenues directly from the MSA escrow agent. It is interesting to wonder, in this regard, how the IRS might view the same sale mechanism in a transaction between private parties: would it treat NTSC's income as a receipt of tobacco settlement revenues, or would it tax the income as money NTSC received from the state?