04 TM 004 Legislative Service Office 213 State Capitol Cheyenne, Wyoming 82002 Telephone: (307) 777-7881 Fax: (307) 777-5466 E-mail: [email protected] Website: http://legisweb.state.wy.us

Quick Reference Memorandum

Date: January 20, 2004

To: Senator Barrasso

From: Don Richards, Senior Research Analyst

Subject: State Provided Payments to Wyoming Citizens

Question: 1. Can the Wyoming Legislature appropriate payments to all state residents, e.g., authorize a $1,000 check per state resident similar to payments made to citizens of Alaska?

Response: 1. In short, no. It is not possible to devise a mechanism to appropriate part of the current surplus directly (and equally) to all residents without a constitutional amendment. Two sections of the appear to address the issue of state payments to individuals. Article 3, Section 36 states "No appropriation shall be made for charitable, industrial, educational or benevolent purposes to any person, corporation or community not under the absolute control of the state, nor to any denominational or sectarian institution or association." The plain language of this section appears to prohibit direct appropriations to individuals. Next, Article 16, Section 6 states, "Neither the state nor any county, city, township, town, school district, or any other political subdivision, shall loan or give its credit or make donations to or in aid of any individual, association or corporation, except for necessary support of the poor…" (emphasis added) This language appears to limit the ability of the state and political subdivisions of the state to disperse money to individuals but does provide the capacity to provide direct support under certain circumstances.

Currently, the state operates a program that provides direct payments to the elderly and disabled in the form of a tax refund for certain taxes (W.S. 39-11-109(c)). However, this program has specific income guidelines for individual qualification. Therefore, the tax refund program is arguably both providing necessary support of the poor and is a payment, which "represents an allowance for sales and use tax refund, property tax refund and a refund for utility or energy costs" as articulated in statute. Although this is an example of a statutory "refund" program, it is not a reimbursement of actual taxes paid. Finally, refunds or credits do not appear to be excluded by the Constitution.

The Alaska dividend payment program, through which qualified residents of Alaska receive dividend payments based on the investment earnings of the state's permanent fund, is also a statutory program. However, the Alaska Constitution has some important, differences when considering this program as template for Wyoming. Specifically, Article 8, Section 2 of the Alaska Constitution states, "The legislature shall provide for the utilization, development, and conservation of all natural resources

1 04 TM 004 belonging to the State, including land and waters, for the maximum benefit of its people." Further, Article 9, Section 6 states, "No tax shall be levied, or appropriation of public money made, or public property transferred, nor shall the public credit be used, except for a public purpose." (emphases added) In fact, the constitutionality of Alaska's permanent fund dividend payments has been challenged on several grounds. Most directly, a federal district court held that the payments were, indeed, made for a public purpose within the meaning of Article 9, Section 6. (Beattie v. U.S., 635 F. Supp. 481 (D. Alaska 1986).)

The differences in the language of the two state constitutions, particularly the specificity of the Wyoming Constitution, does not allow that decision to support a similar program for Wyoming. This fundamental public purpose notion may also be inferred from (although not explicitly stated in) Wyoming's Constitution. However, the primary difference between the two constitutions is Article 16, Section 6 of Wyoming's Constitution, which goes beyond this general public purpose provision to further restrict payments to individuals except for the "necessary support of the poor."

The Wyoming and Alaska permanent funds are similar in that they are both funded by taxes from the extraction of natural resources. However, the Wyoming Constitution limits the distribution of the proceeds, while Alaska's Constitution allows for broader distribution as deemed appropriate by the Legislature. Article 15, Section 9 of the Wyoming Constitution also requires all income generated by the investment of the permanent fund be deposited into the general fund by the State Treasurer. In contrast, Article 9, Section 15 of the Alaska Constitution provides, "All income from the permanent fund shall be deposited in the general fund unless otherwise provided by law." (emphasis added) The state of Alaska has created a public corporation, which invests the permanent funds and shares a portion of the dividends with the residents through the dividend payment program. The difference in the two constitutions seems to afford the enhanced flexibility to designate another fund or purpose to which the investment proceeds may be directed rather than depositing them into the state's general fund and making subsequent appropriations.

Nothing in this memo should be construed as legal advice. Should you desire a comprehensive legal review of this issue, I would direct you to the LSO Legal Services Division or the Attorney General's Office. If you have further questions on this or any other issue, please do not hesitate to contact me at 777-7881.

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