Legislative committee approves $100,000 for ‘friendly’ lawsuit against executive branch

A billion-dollar dispute between Alaska’s legislative and executive branches may be settled by a lawsuit approved Thursday by a committee of the Alaska Legislature.

The Legislative Budget and Audit Committee, which includes members of the state House and Senate, voted unanimously to approve $100,000 and hire an outside legal firm to represent the Legislature in a dispute over the proper destination for the proceeds of a tax dispute involving the trans-Alaska Pipeline System.

No date was set for the hiring of the firm or the filing of the lawsuit.

“This is a friendly lawsuit. It is just trying to determine interpretation of an accounting process. It’s not antagonistic,” said Sen. Natasha von Imhof, R-Anchorage, the chair of the budget and audit committee.

At issue is money earned from a pair of decisions by the Federal Energy Regulatory Commission in 2016 and 2018. Those decisions reduced the amount of money that oil companies could deduct from their production taxes to compensate for the cost of running the trans-Alaska Pipeline System.

That has resulted in greater earnings by the state, as much as $1.5 billion, according to legislators’ estimates Thursday.

The Legislature’s chief auditor, relying on constitutional language, believes the additional money should go to the state’s Constitutional Budget Reserve. The administrations of former Gov. Bill Walker and current Gov. Mike Dunleavy believe the money should go to the state treasury.

Lawmakers have considered a ‘friendly’ lawsuit since at least 2020 to settle the issue, and on Thursday, the Legislature took the first official step in that direction.

Lawmakers acknowledged that this year is an election year but said it would be a mistake to view things through a political lens.

“This is not a political spat between the two branches of government at all. It’s a technical disagreement about the balance of the constitutional budget reserve,” said Sen. Bert Stedman, R-Sitka.

“Don’t read things into this that don’t exist,” he said. “The issue is, do we owe it to the CBR, or don’t we?”