Sen. Wielechowski files lawsuit challenging governor's PFD cuts

Senator Bill Wielechowski, D-Anchorage, has filed a lawsuit against Governor Bill Walker’s decision to cut this year’s Permanent Fund Dividend checks to $1,000, less than half the amount of last year’s payout.

The controversial decision was made in late June, when

one of which prevented more than $666 million from being transferred to the Permanent Fund’s earnings reserve, resulting in drastically smaller dividend checks for 2016.

Restructuring the Permanent Fund to help pay for state government was a key component of Walker’s plans to ease the state’s daunting budget deficit. But after the unpopular proposal failed to get the needed support in the House, the Governor announced more than $1.3 billion in widespread cuts and deferred state spending to encourage lawmakers to pass a long-term financial plan for the state.

The governor's PFD veto has been widely criticized by both members of the public and state lawmakers since its announcement. Sen. Wielechowski has been one of the staunchest opponents, saying the governor's office does not have the legal authority under the state's constitution to make cuts to the dividend.

Wielechowski was at Anchorage's Nesbett Courthouse Friday morning along with former legislator Rick Halfort, where they formally filed the lawsuit.

"Hundreds of hours of research leads me to conclude that the Governor does not have the authority to cut Dividends in the way he proposes," Wielechowski wrote in a letter addressed to the public. "The Governor cannot veto existing law. No governor can. His veto power extends only to appropriations and bills."

Wielechowski also argued that cutting the PFD would limit the amount of cash injected into the state economy by Alaskan consumers spending their hefty yearly dividends. The loss of cash flow would only worsen the state’s financial woes, he said.

“The PFD remains the most direct infusion of cash by Alaska into the economy,” Wielechowski said. “During a fiscal crisis, the last thing we should be doing is pulling $700 million straight out of our economy, and that’s just what cutting the Dividend would do.”

In a statement issued in response to the lawsuit, Governor Bill Walker said that he stands by his "difficult but necessary" decision to veto part of this year's PFD, saying that the cuts are needed to protect and preserve future dividends as the state grapples with dwindling savings and a massive budget deficit.

"I’m disappointed that an incumbent legislator who failed to work towards a solution to our fiscal crisis—a solution that would protect the long-term viability of the PFD—has decided instead to pursue this lawsuit eight weeks prior to his re-election bid," Walker said. "This suit detracts from the real issue: solving Alaska’s fiscal crisis so we can then begin to grow Alaska."

When asked if the pending litigation could result in a hold on this year’s payouts, Wielechowski said he checked with the Department of Law and they have no intention of placing a stay on the PFD.