JUNEAU, Alaska (AP) — An Alaska resident sued the state Monday over Gov. Bill Walker’s plan to allow for the issuance of bonds to pay off the state’s outstanding oil tax credit obligations.
The lawsuit was filed in state court on behalf of Alaska resident Eric Forrer, a former member of the University of Alaska Board of Regents.
The action comes just days after the bill passed the Legislature; Walker has yet to sign it into law.
The lawsuit challenges the bill’s constitutionality, and Forrer said he’s concerned with the precedent that could be set if the bill is allowed to stand.
The state constitution limits the power to incur state debt.
But Attorney General Jahna Lindemuth has said that her office reviewed the matter and was confident the proposed bonds would be lawful. In a recent legal opinion, she said the proposed bonds would not be considered state debt subject to the constitutional restraints.
That’s because the proposed bonds would be “subject-to-appropriation” bonds, she wrote, meaning that payment of the bonds would be contingent upon whether the legislature sets aside money for them each year.
Maria Bahr, a Department of Law spokeswoman, was not sure late Monday if the state had been served. She said by email that the department generally doesn’t comment on matters in active litigation.
The bill proposes establishing a new state corporation that would be empowered to sell up to $1 billion in bonds to pay off the state’s remaining oil tax credit obligations.
The Legislature last year voted to end the tax credit program, which was geared toward small producers and developers, saying it had become unaffordable.
Walker hailed the passage of the bonding bill Friday, saying in a release that it “will close out old debts to oil and gas entities, help companies invest in their operations and put Alaskans to work.”
The lawsuit argues the bonding proposal contains enforceable provisions requiring the state to repay future bond holders, regardless of whether money is appropriated by the Legislature.
It also contends the issuance of such bonds will have an effect on the state’s credit rating and its ability to incur additional credit.
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