Appeal
from the Superior Court No. 3AN-16-08940 CI of the State of
Alaska, Third Judicial District, Anchorage, William F. Morse,
Judge.
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
Capita, Jack Gitchell, and Vicki Van Fleet.
Before: Stowers, Chief Justice, Winfree, Maassen, Bolger, and
Carney, Justices.
OPINION
WINFREE, Justice.
I.
INTRODUCTION
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."[1]This sometimes requires us to answer
constitutional questions surrounded by political
disagreement.[2] 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
statutorily prescribed formula in place for over three
decades, the legislature appropriated 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 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 this alternative ground.
II.
FACTS AND PROCEEDINGS
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 revenues.[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
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 state spending in
the legislature and the governor."[7] The 1976
amendment's framers and 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]
The
Permanent Fund's principal is a dedicated fund that
cannot be accessed without further amending the Alaska
Constitution.[9] The principal is devoted to
"income-producing investments" now managed by the
Alaska Permanent Fund Corporation (APFC).[10] It
appears that before 1982 a percentage of Permanent Fund
income was 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 protection rights, [14] and so the first
Permanent Fund dividends of $1, 000 each were not distributed
until 1982.[15]
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 APFC from the 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 of each 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 general fund unless otherwise provided
by law."[19] 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 appropriations[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
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 $ 1.3 62 billion transfer from
APFC's earnings reserve to DOR's dividend fund,
consistent with prior practice and the statutory
formula.[22] But in June Governor Bill 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
appropriation.
B.
Proceedings
A
current state senator, Bill Wielechowski, and two former
state legislators, 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 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 sentence of
the 1976 constitutional amendment creating the Permanent
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.
III.
STANDARD OF REVIEW
"We
review summary judgment rulings de novo and may affirm
summary judgment on any basis appearing in the
record."[25] "Questions of constitutional
and statutory interpretation, including the constitutionality
of a statute, are questions of law to which we apply our
independent judgment. We adopt the 'rule of law that is
most persuasive in light of precedent, reason, and
policy.' "[26]
IV.
DISCUSSION
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
We
provided a framework for interpreting the Alaska Constitution
in Hickel v. Cowper.[27] "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."[28] We instead "look to the plain
meaning and purpose of the provision and the intent of the
framers."[29]
"Because
of our concern for interpreting the constitution as the
people ratified it, we generally are reluctant to construe
abstrusely any constitutional term that has a plain ordinary
meaning."[30] "Constitutional provisions
should be given a reasonable and practical interpretation in
accordance with common sense."[31] "[A]bsent
some signs 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"[32] without "add[ing] 'missing
terms' to the Constitution or . . . interpreting]
existing constitutional language more broadly than intended
by . . . the voters."[33]"Legislative
history and the historical context, including events
preceding ratification, help define the
constitution."[34]
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"[35] Although a plain reading of
"state tax or license" might have suggested
otherwise, a contemporaneous attorney general opinion gave
the 1976 legislature good reason to believe that "state
tax or license" meant all state revenue.[36] And in
1982 we 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 dedication of revenues" to be
"a fiscal evil."[38] We later expressed in
Sonneman v. Hickel "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]
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 revenue.[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 otherwise provided by
law."[44] He argues that the legislature is
constitutionally permitted 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 Permanent
Fund's income, including the dedication of
earnings.[45] Wielechowski also contends that the
ballot language[46] 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 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 future generations a percentage of revenue generated
from nonrenewable resources;[48] he also sought to curb
wasteful government spending of expected increased
revenues.[49] 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 future while leaving sufficient revenues
for our present needs.[50]
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] 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 the maximum
flexibility in using the Fund's earnings-ranging from
adding to Fund principal to paying out a dividend to resident
Alaskans."[54] After that joint report, language
was added in the Senate State Affairs ...