*1 MYERS, Eric F. taxpayer and resident Alaska, State of individually both representative aas of other Alaska taxpayers,
residents and Appellant, ALASKA HOUSING FINANCE CORPO
RATION; and Northern Tobacco Sec Corporation,
uritization Appellees.
No. S-9941. Supreme Court of Alaska.
April *2 General, Anchorage, Bruce Attorney
sistant Juneau, General, and Attorney Botelho, M. Vassar, Wohlforth, John- Johnson, M. Robert Appellees. Brecht, Anchorage, for son & Justice, FABE, Chief Before: BRYNER, EASTAUGH, and MATTHEWS, CARPENETI, Justices.
OPINION
CARPENETI, Justice.
I. INTRODUCTION section article Alaska Constitution dedicating fu- from legislature prohibits purpose. any special directly to ture state's legislature sell But can the on a based that is future to a immediately then and of a lawsuit conclude We proceeds? appropriate to receive selling the involved lawsuit settlement the tobaceo from three is constitutional present case appropriation (1) legislative reasons: assets, power to sell includes power traditional (2) settlements lawsuit (3) legisla- revenue, and sources manage the responsibility has ture risk. PROCEEDINGS AND FACTS II. other Alaska, numerous along with In 1998 past and territories, settled states claims, provided smoking-related smoking-relat- continuing release tobacco largest four claims, against ed Settlement The Master manufacturers. manu- tobacco provided Agreement ato annual make would facturers which fund projected The state perpetuity. portion mil- $36 million $16 between to receive through annually lion Divi- Alaska a director Myers, Eric Society and Cancer American sion lob- programs, of tobacco-control proponent Maassen, Maassen, Ingaldson Peter J. significant spend a bied the Gruenstein, Peter Anchorage, P.C., anti- on the tobacco portion Appel- Anchorage, for Hickey, & Gruenstein appropri- initiatives. lants. gener- million ated $1.4 substantially less initiatives, to such al fund Attorney Gardner, Assistant D. Douglas Funding for requested. million McKinnon, than the $8.2 As- Juneau, H. General, Joseph rural upgrades school and construction was a later amended complaint his request competing priority, part superi- because a enjoin the NTSC bond or court recently had sale. concluded that then-existing funding education scheme vio Following argument oral Myersg's re- lated the state constitution and the federal quest for declaratory judgment, Superior Rights Civil Act of 1964.1 *3 Court Judge Dan Hensley A. ruled that To fund the extensive improve- school chapter 180, SLA 2000 was constitutional. ments, legislature could have appropriat- Although he noted that the anti-dedication ed funds from the general fund or applied clause to revenue, all state which could proposed have a bond measure that money included settlements, lawsuit required have approval. voter In- Judge Hensley concluded that reducing the stead, legislature, viewing the state's present to value and it payments to future from the tobacco lump a sum did not violate the anti-dedica- asset, settlement as an sought to sell it for a tion clause. He reasoned that the settlement lump sum representing value of was an asset unlike types traditional of reve- the future revenue stream from the settle- nue used for government annual state fund- proceeds ment. The from the sale could ing; that the form of the settlement peri- as then immediately be appropriated to finance odic lump instead of a sum was a the rural school improvements. mere fortuity; that settlements providing for legislature The 130, devised chapter SLA periodic payments fungible were lump accomplish to objective this without of settlements; sum and that because the con- fending constitutional principles. Chapter payment tinued of the settlement was not 180, SLA 2000 authorized the commissioner guaranteed, legislature must be able to of revenue to sell the right forty receive manage the state's assets to avoid risk. Be- percent of the annual revenue from the set cause of slippery slope argument that the tlement to the Alaska Housing Finance Cor legislature could reduce asset consisting poration (AHFC), "anticipated to be at least of a future revenue present value, stream to $93,000,000."2 The also autho it, sell and appropriate proceeds immedi- rized AHFC to create a subsidiary corpora ately, Judge Hensley emphasized that his tion and issue revenue bonds secured ruling was limited to lawsuit settlements as a forty receive percent of the tobacco particular type of Myers revenue. appeals settlement.3 then appropri this decision. $164,876,000 ated from the anticipated pro Judge After Hensley's decision, the NTSC ceeds of the school, bonds for university, issued $116 million of revenue bonds secured port, and construction, harbor renovation, forty percent of the improvement.4 future revenues from the tobacco settlement. AHFC created a subsidiary corporation, The NTSC received $93 million and the re- the Northern Tobacco Corpo- Securitization mainder was pay used to the costs of issu- (NTSC). ration public NTSC held hear- ance. The million $98 is now apparently ings to discuss the proposed sale of the to- being used for school and harbor construc- baceo settlement revenue stream. In early projects tion appropriated by chapter 131, October 2000 the NTSC board of directors SLA 2000. authorized the issuance of the bonds. At nearly time, Myers same filed this suit III. STANDARDOF REVIEW seeking a declaratory judgment chapter 180,SLA prohibition violated the on This requires case us to decide if dedication of funds IX, found in article see- enactment chapter 180, SLA 2000 violates tion 7 of the Alaska Myers Constitution. article section 7 of the Alaska Constitu- State, 1. Kasayulie 130, v. 7, 10, §§ Ch. 3AN-97-3782 Ci. SLA2000. Super., 1, September 1999). 131, 4. Ch. SLA 2000. § Ch. SLA 2000. ap whether considered have twice We judgment independent our useWe
tion. violated propriation issues.5 constitutional decide question presented clause, case neither but In State here. presented one similar DISCUSSION IV. purporting an act Alex, decided we v. appeal is assessment," than presented rather "special issue The sole dedicate license, the anti-dedication whether violated tax or violates the tobacco applied clause because clause against dedicat- In Sonneman prohibition revenue.9 source any special anti- of state act violated ing Hickel, a source that an we held the anti-dedication abili first discuss limited the We because purpose. clause dedication determine funding then interpretation, request agency ty of one state Highway Marine settle- by produced dedicating from revenues *4 unconstitutional, cases, unconstitu the In both Sys tem.10 of the sale that the finally conclude and clearly future allocation with acts dealt tional reduced revenues; involved case neither of outright is constitutional. sale value and present value present to to reduction Accordingly, stream. of a directly resolves nor Sonneman Alex neither Its Clause Anti-Dedication A. The present in the complex question more Interpretation case. provides IX of article 7 Section almost clause is anti-dedication Alaska The proceeds of part "[the that relevant Only constitutions. among state unique to dedicated not be shall license tax or which indi provision, a similar Georgia has of drafters The purpose."6 any special provisi Alaska of the source rectly was preserve it to adopted clause anti-dedication Georgia portion of relevant The on.11 spend for state responsibility of control appro provides: "[Nlo clause anti-dedication governor. legislature in the ing pro any object the allocate shall priation " up are set [that] funds special more '[Tlhe part fund or or tax any particular ceeds deny other it becomes more difficult 12 thereof." percentage where reached point until requests interpret has Court Supreme Georgia The has legislature nor governor neither In only once. provision anti-dedication ed its of the finances over any real control Arnall, Georgia Authority v. Ports helps State clause The anti-dedication state."7 all of appropriating a bill passed appropriation annual preserve of the a lease received rentals de governmental and ensures model the State Railroad Atlantic & Western requesting restricted not be will partments paying purpose Authority Ports all sources.8 funds 1982). (Alaska State, 210 P.2d Dep't 9. 646 Energy v. Servs. Halliburton 5. See 2000); (Alaska Chiro n. 46 41, 50 2 P.3d Labor, State, 966 P.2d 895 v. practors Justice at 940. P.2d 10. 836 1995). (Alaska appar clause anti-dedication for the The idea pro- IX article 7 of section remainder 6. The Constitution, State Model ently came from funds dedicated exceptions to the vides three virtually identical clause anti-dedication whose Fund, feder- certain Permanent prohibition-the Victor See Georgia Constitution. that of existing upon programs programs, and al 142 Convention neither Constitutional the section-but Fischer, Alaska's ratification date of VII, art. (1975); Constitution of these State argues Model appeal party States: United applies. exceptions Constitutions § in 1 7.03 Abigail (Michael & L. Shore and State National 936, 938 P.2d Hickel, 836 eds.2001). 7. Sonneman O'Donnell Con Proceedings Alaska 1992) (quoting 6 (PACC) 111 App. V at Convention stitutional VI(a); IX, III, Ga. Const. para. § art. Const. 12. Ga. 1955)). (Dec. 16, VII, para. IV. § art. or 1945 at 940. id. 8. See
bond debt.13 Georgia The Supreme Court language of the Constitution limiting all ex held that appropriation was unconstitu penditures for the state in any year one tional for two independent reasons: because the revenues of the state derived from all it violated provision concerning the cre during sources year, and declaring that ation of state debt and because it violated the the revenues shall not anticipated.2 provision prohibiting dedication of Thus, not, Wright not, did support could funds.14 validity of a sale of future lease revenues Arnall, however, respect is of Georgia's limited use in pro resolv- anti-dedication ing present case. Like vision. cases, our earlier Arnall dealt with the appropriation of future sum, neither the text of our anti-dedica- revenues and did not decide whether the sale tion clause nor the relevant provides case law of a future income stream reduced to a direct question answer to the before us. value violated the anti-dedication clause. argues "favorably" Arnall B. The Tobacco Settlement Revenue Is Wright cited v. Hardwick15 and that this Subject the Anti-Dedication supports the constitutionality of the sale of a Clause. stream of In Wright, revenue. Georgia ruled that "outright made an sale of rentals generally applied to to be received from the lease of the Western the tobacco settlement revenue: "[Allthough & Atlantic Railroad." The Georgia Su *5 the speaks Constitution in terms of tax or preme approved Court of the sale because license, the Supreme Alaska Court, " in State legislative the act [did] not seek to autho Alex, interpreted phrase that to include all 17 rize the creation of debt." revenues, which would money include argument is unconvincing be from lawsuit settlements." This conclusion is cause it misconstrues Arnall and overstates consistent with existing case law. the scope Wright. First, of Arnall did not Alex, In State v. we held in the context of a favorably cite Wright. Arnall distinguished tax-like assessment on the sale of fish on Wright in its analysis creation-of-debt behalf of regional aquaculture association, made no mention Wright of in its anti-dedication that "the prohibits constitution the dedication lysis.18 ana Second, Wright did not sup any of source of revenue.22 expressly We port the contention that the sale of rentals agreed with an Alaska Attorney General's from the railroad lease was constitutional opinion that states: Georgia's under provision, anti-dedication for Section 7 of Article IX Wright of the was decided Con- Georgia before adopted its given stitution can be provision.19 anti-dedication Wright was intended effect and serve its 1921, repeatedly expressed decided in purpose well before the anti-dedica only if the provision "proceeds tion words any of appeared first tax in or Georgia Constitution of fact, interpreted 1945.20 license" are appellant to mean what their Wright argued that the clearly framers intended, i.e., sale of to sources any of public future rents revenues. violated the annual appropria tion model of the Georgia constitution, but Accordingly, it is our conclusion that the stated, the court "No scheme or policy fiscal any dedication of source of revenue: for the state appears express tax, direct or license, rental, sale, bonus-royalty, 713, 246, 13. 201 Ga. (1947). 41 S.E.2d 247 19. See id. at 255. 14. Id. ('This 20. Id. provision [anti-dedication] was not (Ga.1921). 15. contained in 109 S.E. prior 903 constitution of this State 1945."). to Arnall, $.E.2d
16.
41
at 254.
Wright,
21. See
32. Alaska provides § Const. art. IX, 7; relevant 1. Araska Alex, § Const. art. see State v. part: "The contracting restrictions on debt do (Alaska 1982) P.2d 203, 210 (construing the anti- *9 apply not to debt through incurred the issuance dedication clause to include "the any sources of revenue public bonds enterprise public or revenue"). public corporation of political the State or a subdivi sion, when security the is the revenues of enterprise the corporation." or present set- transferability of the state's ing right e to the state's Whether rights. time of at the fully vested tlement revenues sale. right is vested the state's 2. Whether rule, law, e contractual or Whether in the master right to share state from The state's prohibits provision ap- funds pre- agreement's or settlement to the its current poses factor fully This stepping into vested. pears to be buyer from vents treating right as apparent no obstacle state's shoes. current, marketable asset. can e future value the revenue's Whether and whether predicted rationally the settlement the law or 3. Whether contrac- perform obliges the state sale transfer agreement bars the with might conflict duties tual from transfer- the state law bars No state duties. governmental basic under ring to receive conveys e the state's Whether point parties agreement, and right to or a the revenue right to limiting the forbidding or law to no federal the state. from the revenue it- agreement the settlement But transfer. eye with that, examined I when believe fails to The state limitation. imposes a self factors, master settlement these toward restriction, supe- neither the this discuss implementing legislation agreement, gives it opinion court's nor this rior court revenues,2 and its settlement state's sale poten- it is my view Yet attention. serious agreement and sale purchase tially critical. potential serious reveal and NTSC AHFC master XVIIl@(p) of Part theory. in the state's flaws ben- the intended explicitly limits agreement settling states to the agreement efits of the reve- nature The source provi- and this agreement; joined in the nue stream from settling states prohibits expressly sion exclusively almost opinion focuses Today's rights under assigning their enforcement at issue factor. The this agreement: tobacco settlement by the here is established portion No (p) Intended Beneficiaries. law opinion notes that agreement; rights provide Agreement shall this as as- legal traditionally treats settlements any person or by, to, be enforceable or suggest points These sets. Settling or State not a entity that reve- in future interest current the state's Settling State Party. No Released regarded agreement can nues under convey any right assign or otherwise seems caution But a note of as an asset. Agreement. of this any provision enforce invariably treat not necessary: law does to re face, language appears this On its as transferrable agreements legal settlement funds destined that all settlement quire agree- some settlement it deems property; exclusively by the state be collectible Alaska transfer because non-transferrable ments seems Alaska; language further violate agreement contemplated a third assigning to from preclude the compromising interest. Settlements right to demand the state's instance, like NTSC party are rights, for support future child agree any other benefit payment, Moreover, settle- other generally barred. master ment, directly non-transferrable agreements ment Although (MSA) agent. escrow agreement's example, a lease For terms. own their the state might not bar paragraph non-assign- this express containing an selling to NTSC interest the lease could render upon their funds party. a third retain freely transferrable say that state, seem it does receipt by the below, may exist there case, as discussed in its shoes party third put a cannot limit- policy reasons contractual both SLA 2. Ch. *10 by assigning right perform to collect essential, di constitutionally man- rectly from the agent. MSA escrow governmental dated duties. provision appear would to allow settling a view, my policy a concern of this latter state only right to sell acquire settle kind arises purchase under and sale payments ment through the state. As dis agreement and deserves serious attention. fully below, cussed more this distinction Although superior opinion court and the could have critical constitutional implicat describe the tobacco payout settlement's pro-
ions.3 "fortuitous," visions as description this hard- ly seems accurate. The agree- Predictability depen- value and ment's opening recitals make it clear that the dency performance on gov- state's is founded on carefully struc- ernmental functions tured to settling address the strong states' and continuing
This factor recognizes in promoting public interests constitutional policies health reducing youth can preclude smoking. sometimes legislation Reflect- ing ongoing these treating interests, future concerns and state revenues as mar- agreement ketable assets: establishes a example, theoreti- the revenue's cally perpetual stream of might future value speculative be so as to whose depend size will defy inversely meaningful prediction, on each thereby preclud- ability state's ing curb statutory smoking: "assetization" revenue, greater achieves, the success a state legislation since the the low- would amount to arbi- er will be payment its future trary stream. action; and irrational alterna- tively, legislative directive not-yet- to sell settling From a perspective, state's this realized revenues at might value im- inverse relationship long makes sense as permissibly constrain the executive branch's the tobacco settlement's benefits imure exelu- prerogatives by foreclosing its future ability sively settling parties, as Part XVI- opinion 3. The court's asserts that it is irrelevant pass through revenues to they the state when to ask whether there is limitation on trans- eventually paid, though they even have osten- ferability of the state's interest in the tobacco sibly already hardly been sold. It seems accu- revenues, since the rate, then, "does not inquiry say XVIII(p) Section is com- help determining whether [that interest] is a pletely silent settling on whether a constitutionally 393, Opinion saleable asset." at assign right its to receive settlement funds. n. 29. But transferability rights of the state's the court Relatedly, notes that does not Myers agreement under the settlement directly bears on specifically any argument raise based on Section scope nature and of the state's current "as- XVIII(p) and has therefore adequately failed to example, set": a limit transferability on Opinion brief the issue. at n. 29. But might altogether preclude any sale of future reve- XVIII(p) Section raises unresolved uncertainties leaving nues, the state with no salable currently concerning the point broader constitutional all; asset alternatively, at might limitation ef- Myers unquestionably has argued: whether fectively preclude the state from its entire state's sale of its future tobacco settlement reve making asset mow, the asset salable currently nues violates the Alaska Constitution's anti-dedi only by agreement an that commits the state to superior cation clause. The granted sum transfer title to its settlement they revenues as mary judgment point, on declaring is, accrue-that a dedication of future state to be Hence, summary constitutional. judgment Since revenues. inquiry transferability into permissible only is relevant if the record resolved existence of a constitutionally all salable asset. material issues in the state's favor and affir matively judgment established its as a opinion further asserts that the dissent law, Myers's matter of failure to frame his consti "incorrectly applies" this factor because Section argument particular tutional in a way does not XVIII(p) of the master relieve this duty court of its to review the record limits a rights transfer of enforcement and "is for unresolved issues of fact that bear silent on on settling whether a may assign Myers's claim. See Alaska R. Opinion Civ. funds." 56; P. Clark, American Group n. 29. Restaurant But this assertion assumes that a bar cf. conveyance rights of enforcement 1995) 889 P.2d has no 595, 598 (holding ef- party's fect on the particular character failure to call currently evidence to explained salable asset. fully As court's more attention "did in the text relieve the dissent, of this XVIII(p) Section apparently obligation court of its bars to examine the record transferring state from determining collect settle- before genuine that no issue of ma directly, consequently requiring existed"). terial fact
397 stream.4 the income receipt of AHFC's (non- itself agreement the settlement II(p) of purchase and express terms of the But the The state require. to fortuitously) seems Specif this conclusion. agreement belie sale curbing in if it succeeds less to receive stands in to enhance agreement strives ically, the revenues loss of settlement smoking, but its requiring the by explicitly vestor confidence smoking presumably will through decreased (1) things, to among other promise, and to by the economic offset than more be by required law may be through the as "take all actions gained benefits health public defend, maintain, protect efforts regulatory fully preserve, to successful inter long NTSC's] and as smoking. [AHFC's As confirm in and decrease caused state, then, (2) any action that will est[sl"; take belong [to] "not revenues future receive legal right adversely [their] affect ten- of irreconcilable possibility is no there (8) theoretically Assets"; "impair not to two the state's the Tobacco sion between until interests-maximizing its settle- of Bondholders" conflicting rights and remedies hand, protect- discharged"; and revenues, fully paid and the one "are the bonds ment citizens, on use its safety (4) of its and [to] and action ing [tol health "not take set- thus offers The settlement permit the other. reasonable efforts best situation. ... would by a "win-win" others tling states taken action to be amendment, sub hypothecation, in the result poten- disparity of interests sharp But a of, termination, discharge or ordination, or here, when, divorces tially arises of, the validity effectiveness impair the receiving future settlement in interest its (5) Decree"; to "imme or the Consent MSA public in interests vital from its revenues proceeds to the Trustee diately pay over transferring current safety and health by the State received any Tobacco Assets of third- group to a revenues future right to (6) each and error"; "exercise and seen, under have As we party investors. remedy under MSA." and every right agreement of the master terms benefits rights to receive itself, the state's relationship between the inverse Given assigned di- agreement cannot under future settlement settling state's of a size NTSC; those like party a third rectly to future success and the state's payments vicariously, since assigned can rights smoking, these public dangers of curbing the di- precludes their agreement and intolerable may well create promises settling anyone but enforcement rect the state's between tension irreconcilable reason, the terms For this state. maximize obligation to contractual led apparently agreement master non-delegable gov for bondholders state, oblige the NTSC AHFC and health duty protect ernmental pledge agreement, sale purchase and point, our At some safety citizens. of its powers within its lawful efforts to make all legisla necessarily cireumseribes constitution investors' maximize private contractual approve authority to tive place- if means even this stream-presumably, effect have arrangements ahead financial interests ing the investors' constitutionally executive's preempting duty protect governmental too, are con there so prerogatives;5 based citizens. safety of its health govern that no branch lines stitutional contracting to cross authorized for this potential dismisses The court powers governmental away core its own concluding that "Mlusory," conflict as kind of right to Hence, if the state's even duties.6 to take obligates the state ... "Inlothing income stream. steps to maximize under might oth- agreement master settlement interfere with only not to obligated (Alaska Alex, 211-13 P.2d State 6. Opinion n. 29. Cf. delegating its 1982) legislature from (precluding Court, Superior Agency v. Pub. associations). Defender private Cf. taxing power to 1975) (holding separation P.2d 947 ordering the judiciary precludes powers particular cases of prosecute attorney general to court). contempt of regarded erwise be asset, as a marketable priate State-Specified Account for such Set- tling State." concerns of preclude nature well
"securitizing" these future revenues. purchase and sale seems to *12 parties
Because the
superior
recognize
and the
this
court
restriction
evidently
but
at-
develop
tempts
did not
meaningfully
by
to skirt
it
requiring
address this
the state to
issue, I believe that it
create a trust
warrants
within its "State-Specified
further con-
Ac-
count"
having
sideration on
and
remand.
pledge
payments
to the account
trustee
upon
deposit.
their
currently
As
presented,
5. Whether
the sale mechanism does
the details of
arrangement
this
sketchy.
are
purports
what
it
to do
arrangement
precisely
is not
described
in
parties'
briefing or in
every
Not
purports
transaction is what
it
decision,
court's
and the
agreement
trust
it-
to be. And the constitutionality of the trans
self apparently has not been included in the
action at
issue here
ultimately
must
appellate record. But
likely
the most
seenar-
judged by
does,
what it
purports
not what it
io seems to be that as soon as the state's
to do.
I therefore believe that it is crucial to
payment
deposited
in the state-
examine the mechanics of the state's sale of
specified account,
(the
the account's trustee
rights
NTSC
order to deter
bank in which the
deposited)
funds are
di-
mine if
actually
immediately
vides the
according
funds
to the terms of the
conveyed what
purported
to convey: "all
purchase
agreement,
and sale
disbursing for-
right,
title and interest of the State ...
ty percent
sixty percent
NTSC and
to the
"forty
and to"
percent of the revenue ...
general
fund.
that the
State has a
to receive from
time to time under the MSA." There is rea
The preliminary
prospectus
describing
son to doubt that it did.7
NTSC's tobacco settlement asset-backed
appears
bonds
to confirm
interpretation,
this
already
As
mentioned,
the master settle-
emphasizingthat
may
"[the State
convey
not
agreement
ment
appears
preclude
and has
conveyed
not
to NTSC or the Series
state from assigning to NTSC the state's
any right
Bondholders
to enforce the
right to receive the tobacco settlement
funds
terms of the MSA"
declaring
that the
directly from the
agent;
MSA escrow
agent
MSA escrow
"will disburse the [settle
agreement
require
seems to
the funds
ment] funds to the Settling States."
be held for the benefit of the
MSA
agent
escrow
payment
due,
until
prospectus
includes a flow chart
they
then be
appro-
"transferred to the
lends
support
further
to this reading. This
Although
accurately
observes that
because it
channels
through
revenues
inquiry
help
does not
determining
they
dedicated state
paid.
fund as
wheth-
er the revenue stream is an asset,
at 393,
Opinion
purchase
8. The
agreement
and sale
contains an
n. 29,
the court's
observation misconstrues
ambiguous provision in which
promises
inquiry's point, which is not to determine wheth-
(as
to "cause
Agent
the Escrow
defined in the
er the revenue
actually
is an asset but to
MSA) to deliver the
directly
Tobacco Assets
precisely
ascertain
what that asset is and wheth-
the Trustee for the
Corporation."
benefit of the
specific
er the
conveyance
manner of its
violates
Yet because the MSA
require
itself seems to
payment
anti-dedication
clause. Nor is the court
"State-Specified
cor-
into the
Ac-
count,"
that,
asserting
rect in
and because it also
because the
makes the
master
state the
settle-
beneficiary
sole
payment,
agreement
likely
it seems
does not forbid the state simply designated
the state has
its bank as a
revenues,
its current
interest in the future
empowered
trustee and
it to divide and distribute
"it is
why
irrelevant
[to ask]
chose
agent's
the MSA
payments,
escrow
upon deposit,
mechanism
Opinion
that it did."
n.
according
purchase
agreement's
and sale
text,
29. As detailed in
although
the master
terms.
-It
possible
is nevertheless
that a different
may
preclude
mechanism has been established. Because the
revenues,
sale of the state's
agree-
issue could
importance
be of central
and has not
ment's
appear
terms
payout
to dictate mecha-
addressed,
been
I think that it needs to be devel-
nism that
constitutionally problematic
oped on remand.
the dedication
precisely what
flowing This
payments
depicts settlement
chart
all,
the Alaska
agent
if the
escrow
After
prohibits.
the MSA
account,
simple
where
state-specified
be cireumvented
clause could
Ac-
revenue.
as state
received
to be
into
appear
depositing state
expedient of
chart,
in the state
receipt
after
cording the
instead
trust accounts
prerestricted
sepa-
two
into
account,
money is divided
fund,
the clause
compliance with
then
general
flowing to
percent
funds,
forty
rate
accounting in-
minor
to a
reduced
would be
state-pre-
sixty percent
NTSC
convenience.
The chart
fund.
general
sumably to the
payment
forty percent
Cook,
NTSC's
Director of
labels
Notably, Tamara Brandt
revenues,"
that NTSC
suggesting
"pledged
Legislative Af
Legislative Services
*13
by
pay-
direct
monies
acquire these
precise
does not
and warned
Ageney, foresaw
fairs
settlement, but instead
the MSA
from
September
danger
in her
ly this
representing
revenues
from state
payment
Coghill Ad
John
Representative
to
memo
re-
the total
forty percent share
NTSC's
appropria
under
dressing
problem
by the state.
ceived
anti-dedication
than the
clause rather
tions
set-
then,
the master
Seemingly,
because
that,
"because
clause,
commented
Cook
from
the state
prohibits
agreement
tlement
to
money is to flow
"Tobacco Settlement
settle-
collect
right
to
its
assigning
appropria
an
receipt without
upon
AHFC
pay-
requires settlement
ment revenues
un
tion,
may be vulnerable
arrangement
state-specified
a
deposited to
ments to be
IX,
constitution."
of the state
see. 13
der Art.
benefit,
payments
for
account
9
state-specified ac-
necessarily arrive at
fact that
The
revenues.
as state
count
wrinkle-that
transactional
This subtle
into a
deposited
payments
through
routed
must be
than into
rather
account
state-specified
by the MSA
being paid
instead
the state
not, by
certainly would
fund
general
state's
to
NTSC-appears
directly to
agent
escrow
upon de-
character
itself,
their basic
change
express non-
settlement's
be dictated
revenue;
how the
it clear
nor is
posit as state
aptly
and as Cook
provision;
assignment
pay-
contractually alter the
could
state
bearing on
notes,
has a crucial
wrinkle
revenue
as state
character
ments' basic
although the
constitutionality. For
the sale's
creating a trust
receipt by
their
the time of
ad-
might permit an
anti-dedication
after
them
that divides
account
within
di-
right
collect
to
of the state's
sale
vance
paid
funds must be
if the
deposit. For
their
square-
agent, it
escrow
rectly
MSA
from the
benefit
its exclusive
the state for
to
selling NTSC
to
from
the state
ly prohibits
account, it would
state-specified
in a
received
the future
the state
right to receive
dedicate
to
decision
that the state's
appear
itself will
state
revenues
specificpurposes
more
one or
account to
agent.
escrow
from the MSA
fund.
a
make it
dedicated
merely
serves
appropriation. Otherwise
subject
year
added.)
complete rendition
(Emphasis
A more
an invalid
lease creates
that the
is a risk
there
follows:
is as
Cook's remarks
right
conveyed
to receive
debt....
If
my
main concern
have identified
You
contin-
lease
also,
like the
example,
revenue
financing
used in
mechanism
respect
of the revenue
gent
appropriation
upon
right
to me that
It seems
HB 281.
received,
there
purpose
it is
once
revenues, regardless of
future state
to receive
"To-
However,
because
little
be
stream,
problem.
raise
could
of the
the source
AHFC
money
flow to
is to
Settlement"
bacco
usually implicated
not
issues
ar-
appropriation,
receipt
upon
without an
simply
types
assets
of state
other
the sale of
Art.
may
under
rangement
vulnerable
be
ap-
application of the constitutional
because
be
It could
state constitution.
13 of the
sec.
gen-
requirement
It
is avoided.
propriation
never receives
urged
that the
defense
money
received
recognized
erally
go
it will
because
Settlement"
the "Tobacco
state,
federal
money
from the
received
even
therefore,
and,
be-
it never
directly to AHFC
specific limit-
sources
government or other
argu-
appropriation.
This
subject
comes
functions,
it
appropriated before
must be
ed
game
a shell
much like
too
ment sounds
example,
the state
when
spent....
For
reassuring me.
very
leasel,]
each
payment of the rent
a
enters into
That
agreement
master
future settlement
revenues as soon as the
explicitly preclude
does not
states
from state receives them. AHFC and NTSC thus
transferring
present
their
interests in future
appear
buying
to be
the fruit of the state's
speaks only
funds and instead
tree,
itself,
years
the tree
restricting
settling
a
"assign
state's
advance; yet the anti-dedication clause re
convey any
otherwise
to enforce" the
quires
time,
this fruit to
year
be sold one
at a
agreement's
provisions hardly rescues
ripens.
as it
transfer of future revenues from the
point
seems
proscriptions.
stressing again:
worth
clause's
assignment
anti-dedication clause
of the
looks to the
character
receive the state's
conveyance
as well
timing.
as its
Be-
paradigmat-
the state is
cause the
agreement
master settlement
ically
re-
revenues;
dedication of state
it
quires settlement funds to be held for the makes no constitutional difference that
state,
exelusive benefit
settling
re-
purchase
and sale
conveys pres-
quires
paid
those funds to be
into the state-
ent
interest
future revenue
specified account,
precludes
stream if that stream
through
flows
from transferring any right to enforce the
reaching
hands before
NTSC's banks.
agreement's provisions,
appears
that nei-
While
goes
state,
ther
considerable
NTSC nor the
acting on NTSC's
*14
lengths
behalf,
justify
the transaction
compel
relying
could ever
a distribution of
opinions
on
directly
NTSC;
instead,
settlement
funds
attorneys
various former
gen-
eral,
the funds
seemingly pass
opinions
must
these
persuasive
lack
NTSC
force for
through the state.
if
present
Yet
trans-
same reason that both
merely
action
conveys
right
to receive
court's
today's opinion
decision and
are un-
through
revenues
the state when
convincing.
attorney
general opinions
eventually
them,
it
receives
then the state's
all
conceptual
address the
question of wheth-
presently conveyed property interest
is not
er a
right
state's
to receive future settlement
what the state claims it to be:
it is not an
revenues can be valued and
sold as
asset.
conveyance
immediate
of the state's title to
But
considering
point,
they
simply
the revenue
present
itself but
a
assume,
faith,
accept
pledge to hand over the state's future reve-
proposed
actually
sale
convey
will
a share of
accrue,
they
nues when
through an airtight
state's
to receive the settlement
mechanism structured
to ensure that
payment. None
attorney
of the
general
pledge will be honored.
opinions take stock of the master settlement
This form of sale-a
proceeds
dedication of
agreement's anti-assignment provision or dis-
from a source of future state revenue-would
agreement's
cuss the
apparent nullification of
impermissible
whether characterized as a
ability
state's
to sell
rights
its direct
present
current sale at
promise
value or as a
collect the revenue.
to sell in the
may
future.10 It
be true that
Attorney
Former
General Charles Cole's
immediate
"assetization"
and sale of the
letter
Torgerson
to Senator
exemplifies the
rights
state's settlement
possible
makes it
expressly
omission:
acknowledges
state to "receive all of the tobacco settle
money
"once
State,
is received
payments now,
ment
it is
peri
rather than over a
'public
years."
may
od
revenue' which
But
be dedicated
constitutionally speaking,
special purpose";
for a
salient fact is that the
but
letter
receives its
then
payment
accepts
immediate
not in
exchange
state's
for its
characterization
of the
right to receive
value,
transaction at
face
assumes without
from the
agent,
MSA escrow
but in exchange
examining
point
that the settlement mon-
for irrevocably pledging to
ey
hand over its
state,
will not
be received
and thus
Alex,
10. See
concludes as a sale of the state's disputed transaction are unas observations the letter's ceptually, settle- receive a stream of tobacco incorrectly assume they Yet sailable. accepted superior court funds. The poten unexplained and of the truth disputed asset of the this characterization the "chose assertion tially unwarranted question, and so has the without serious here- is to be sold thing that in action"-the that this opinion. appears Yet it the settlement.13 right to receive is the state's reality may not reflect characterization the master Because express terms of the by the may be barred the state receive require that appears to agreement. The transac- master settlement anyone else first-before MSA accurately as might more be described tion a share not be in action chose does-the from the state right to receive sale of the such, mere but proceeds as of the reve- future settlement portion of the state's share. state's settlement ly a share receives them. as the state nues as soon purposes of freely trading in the is critical for This distinetion Creating and Moreover, it seems clause. might be in action kind of chose of this value might in- policy concerns possible that other entirely proper commonplace and recognizing the state's preclude dependently sphere But in the finance. private world as a to future settlement 7 of section article government, sale of that as- currently asset: marketable strictly forbid Alaska Constitution pit the state's contractu- potentially set could memo- Attorney Cole's General it. For and its bondholders obligations to NTSC al receipt by the "upon emphasizes, randum governmental fundamental against the state's before, State, 'proceeds' but not safety and welfare. duty to ensure 7 con- subject the Section money nor the ree- restriction"; appellate record "[olncee Neither stitutional *15 State, 'public provides suffi- it revenue' by superior court the received ord before special a these concerns to resolve may not be dedicated information cient which stand, currently I definitively. matters As purpose." right under state law the Therefore Attorney Cole's General pertinent text of 12. proceeds under the Tobacco follows: letter is as may be sold personal property which is state IX, Alaska Constitu- Section Article Furthermore, any property. as other tax proceeds of provides tion right future stream receive a any special dedicated to not be or license shall property personal seitlement under by Although provision is limited this purpose. value, in value to similar a which has tax proceeds "state of a express terms to the payments from right to receive license," although proceeds or property. personal real and other state sale of not, strictly speaking, do Tobacco right which property of current value It is this license, proceeds tax or derive from being contemplates legislation proposed 1982) Alex, v. 646 P.2d in State AHFC, proceeds of the sale and it is sold to prohibi- Supreme held that the Court Alaska pur- for a appropriated will be which any public encompasses sources "the tion payments. of future pose, the stream by upon receipt Accordingly, revenues." legislation proposed remove These features before, State, "proceeds" of the riot but prohibition in Article dedicated fund from the consti- subject Section 7 Section restriction. tutional However, unpaid right to receive future conclusory that its future assertion 13. The state's dis- is to be the settlement under installments begs ques- action" are "a chose in upon proceeds their re- tinguished from the this used to "sell" the mechanism tion whether money is received ceipt by Once the State. transfer of immediate effected an "chose" State, may not "public which revenue" it is reve- right the future to receive special purpose. On the a be dedicated agent. It is the MSA escrow nues future install- to receive hand, other wonder, regard, how the interesting State, property owned a ments is in a might sale mechanism view the same IRS property personal other real the same as parties: would it private law, between transaction At common owned State.... receipt as NTSC's income treat under the installments receive future the income would it tax revenues, "thing com- action," more the state? money received from NTSC monly a chose in action.... to as referred do not believe that the support record can
declaratory judgment par- favor of either ty. I would superior therefore vacate the judgment
court's and remand for further proceedings. reasons,
For these I dissent from the court's affirming decision court's judgment. NELSON, Appellant,
Charles L. Alaska, Appellee. STATE of No. A-8113. Appeals Court of of Alaska. April