Is Dunleavy’s budget plan legal? Governor says yes but state senators say they have their doubts.

JUNEAU — Members of the Alaska Legislature are questioning the legality of Gov. Mike Dunleavy’s plan to replace vetoed state money with federal coronavirus aid.

In a weekend letter to the U.S. Treasury Department, Senate President Cathy Giessel, R-Anchorage, and Senate Finance Committee co-chair Natasha von Imhof, R-Anchorage, asked officials whether Dunleavy’s plan is legal.

Last week, the governor vetoed about $261 million in state funding from a pair of budget bills that address spending in two fiscal years. According to documents from the Office of Management and Budget, the governor intends to spend $191 million in federal coronavirus aid to supplant that state money.

Congress approved $1.25 billion for Alaska to spend, and the Legislature has granted Dunleavy permission to accept it.

Some of the governor’s vetoes will remain, including cuts to the ferry system and the elimination of a statewide library catalog, but the governor intends to fund a series of education programs and cover school construction debt with coronavirus aid.

“But can the governor claim to veto items in the FY21 budget, even if the funding is not directly related to COVID-19 health crisis (like school bond debt reimbursement or covering operational costs for the Alaska Marine Highway System),” the senators asked.

In a briefing with news media Monday evening, Dunleavy said the answer is yes, based on legal guidance from Attorney General Kevin Clarkson. (The Alaska Department of Law has declined to release the text of that guidance.)

But under the federal CARES Act, the inspector general at the Treasury Department, not any state official, will determine what is legal.

U.S. Sen. Lisa Murkowski, R-Alaska, was among several U.S. senators who last week asked the Treasury department for clarification. A Murkowski spokeswoman said that request was made before the governor announced his vetoes and is unrelated. Talking to reporters on Monday, she said some guidance could arrive this week. (The governor said he was expecting it by the end of the month.)

In the absence of firm rules, senators have been turning to their own lawyers. Sen. Bill Wielechowski, D-Anchorage, asked the Legislative Legal Services division for its opinion.

Attorney Megan Wallace wrote that precise clarification depends on the federal interpretation, but she concluded that there is some doubt that the governor’s actions are legal.

“It seems clear from the CARES Act itself, however, that the emergency funding cannot be used to supplement existing budget items that are unrelated to the emergency,” she wrote.

Wielechowski, a minority member of the Senate Finance Committee, said that if enough lawmakers doubt the governor’s ability to spend the coronavirus aid, the issue could end up in court.

Already, lawmakers in New Hampshire have sued their governor, saying they — and not the governor — have the authority to say what the $1.25 billion is used for.

“I think it’s just a matter of time before this boils over,” Wielechowski said.

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