Former state Sen. Rick Halford, left, and current state Sen. Bill Wielechowski answer questions about a lawsuit they filed at a press conference on Friday, Sept. 16, 2016, in Anchorage, Alaska. The lawsuit filed by Wielechowski, Halford and former state Sen. Clem Tillion claims Gov. Bill Walker acted illegally in vetoing half the money designated for Alaska Permanent Fund dividends, the annual checks that give residents a share of the state's oil wealth. (AP Photo/Dan Joling)

Former state Sen. Rick Halford, left, and current state Sen. Bill Wielechowski answer questions about a lawsuit they filed at a press conference on Friday, Sept. 16, 2016, in Anchorage, Alaska. The lawsuit filed by Wielechowski, Halford and former state Sen. Clem Tillion claims Gov. Bill Walker acted illegally in vetoing half the money designated for Alaska Permanent Fund dividends, the annual checks that give residents a share of the state's oil wealth. (AP Photo/Dan Joling)

Senators file lawsuit over Walker’s PFD veto

ANCHORAGE — Gov. Bill Walker illegally vetoed Alaska Permanent Fund earnings that were required to be transferred to dividends, a lawsuit filed Friday by a state senator and two former state senators claims.

Facing a multibillion-dollar deficit, Walker in June cut in half the annual checks that give all residents a share of the state’s oil wealth. He kept enough money in place to award qualified Alaskans a $1,000 payout rather than an anticipated $2,100 check.

That simply is not legal under the legislation that created the fund, said Democratic state Sen. Bill Wielechowski, of Anchorage, and former Republican state Sen. Rick Halford, of Chugiak. They sued along with former Republican Sen. Clem Tillion, of Halibut Cove, like Halford a former Senate president.

Wielechowski said he took it for granted Walker acted properly until he spoke to Alaskans who amended the Alaska Constitution in 1976 to create a permanent fund. There was no intent to give a governor an exclusive ability to set the dividend, he said.

“That was clearly not what was intended by the framers of the amendment,” Wielechowski said.

The Alaska Legislature could have reduced the amount placed in the account from which dividends are paid, Wielechowski said, but chose not to. The lawsuit seeks a court order for the permanent fund corporation to transfer the full amount into the account for distribution.

Halford, who spent 24 years in the House or Senate, agreed.

Walker’s decision puts both the amount of the dividend and its effects on the economy at risk, Halford said, and the issue is potentially Alaska’s biggest conflict between the haves and the have-nots since statehood.

“The millions of dollars coming out of the dividend stream this year — almost half of it comes either from retired senior citizens or children,” he said. “It is the last place we should be going to get money while we’re continuing to pour money out in tax credits and benefits that are in the hundreds of dividend to individuals at the top the economic spectrum.”

Arguments on both sides are quite clear, Wielechowski said. He wants a decision by Oct. 6, when the first dividends are expected to be paid out, but said it could take much longer.

Walker in a statement Friday said he stands by his difficult decision.

“As most Alaskans realize, and as stated by the legislature’s own financial adviser, our state is in the midst of the gravest financial crisis in our history,” he said. “We are in a $3.2 billion deficit now.”

A $1,000 dividend is close to the historical average paid Alaskans since 1982, he said. It can be sustained as part of a larger fiscal solution, he said, and the amount vetoed remains in the fund for future distributions.

“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.”

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