On Thursday, an Alaska Superior Court judge blocked an Anchorage spending cap initiative from appearing on the April ballot.
A group of conservatives filed an initiative application in November to “tighten” the existing Municipality of Anchorage spending cap and install it in the Municipal Charter, the city’s version of a constitution.
“Under the improved Spending Cap, taxpayers will have more protection but city services and city worker wages will still be allowed to grow along with the rate of inflation,” the group said on its Facebook page, Bring Back the Spending Cap.
The initiative is sponsored by Alaska Policy Forum (APF) Education Research Fellow Bob Griffin and Terre Gales, a Republican who challenged Rep. Don Young (R-Alaska) in the 2012 primary and then lost to Anchorage Assemblyman Forrest Dunbar in the 2016 municipal election.
Rep. Chris Birch (R-Anchorage), a former three-term Assembly member, praised the initiative on the House floor Wednesday and during a House minority press conference Thursday, saying it served as an example for the State on limiting government spending.
Several spending limit options have been introduced in the legislature this session.
Birch said he was collecting signatures for the Anchorage initiative in his Capitol office.
Both the proposed Anchorage and State spending caps have the support of the conservative group Americans for Prosperity.
Jeff Schmitz, Lupe Marroquin, and Matt Fraize sued Municipal Clerk Barbara Jones after she certified the initiative in December and allowed the petitioners to begin collecting signatures.
Schmitz is the Secretary of the Taku-Campbell Community Council and, as an advocate for the cycling community, the Streets and Trails Committee Chair.
Marroquin served as Anchorage Election Coordinator before unsuccessfully running as a Democrat against former Rep. Bob Lynn (R-Anchorage) in 2010 and 2012.
Fraize is a member of the Anchorage Police Department who has been involved in causes benefiting people with Down Syndrome, like the Special Olympics Alaska.
APF said the plaintiffs are “Liberals try[ing] to sink [the] Anchorage Spending Cap Petition and Gouge Citizens.”
In his decision Thursday, obtained by Alaska Dispatch News (ADN), Judge Erin Marston ruled that the initiative violates provisions in the Alaska Constitution and the Municipal Charter by “usurping discretion and control over municipal finances which were intended to rest with the Assembly alone.”
Marston ordered that the Municipality withdraw approval of the initiative, stop reviewing petition signatures, and keep the initiative language off the April ballot.
As the effective defendant in the case, the Municipality has the right to appeal, but may not have the motivation.
If Marston’s decision survives, the spending cap will be the second Anchorage initiative blocked for legal reasons this year.
Earlier this month, Municipal Attorney Bill Falsey recommended against an initiative that would have required people to use the bathroom matching their sex at birth. The initiative also protected businesses that discriminate against the LGBTQ community for religious reasons, violating the single-subject requirement for ballot initiatives.
Inspiration for the Spending Cap Initiative
In 1983, Anchorage voters approved a charter amendment tying the amount of taxes the Municipality can collect each year to the Consumer Price Index (CPI), the previous year’s revenue, and population change. That section of the charter is known as the Tax Cap.
That same year, the Assembly passed an ordinance that limited spending. It is now chapter 06.10.037 of the Municipal Code: “Per capita expenditures in the general government operating budget for tax-supported services shall be increased over the previous year’s budget by amount no more than the percentage increase in the July CPI over the previous July CPI and those additional increases necessary to provide voter and legally mandated services.”
That last phrase — “and those additional increases necessary to provide voter and legally mandated services” — is one that the initiative sponsors would consider a loophole.
Falsey told ADN that the spending cap was not calculated for the budgets in 2012, 2013, or 2014, during the administration of former Mayor Dan Sullivan. Upon review, the 2013 budget exceeded the spending cap.
Mayor Ethan Berkowitz’s 2017 budget also exceeded the cap by $9 million, prompting the Assembly to suspend the cap for two years. The sponsors filed their initiative in response.
The initiative makes clear that budget amendments and supplementals are included in the cap. The “additional increases” phrase does not appear in the initiative.
“The improved Spending Cap language will limit ALL city spending growth to population and inflation changes with a few specific common sense exceptions like, emergency expenditures, judgment settlements, and voter approved bond debt,” APF explained, adding, “If the city finds the improved Spending Cap too constraining, it can always make a case to the voters to exceed the Spending Cap — through the ballot.” (emphasis in original)
Sullivan was the first person to sign the initiative application. The Municipality Charter requires the signatures of ten registered voters in addition to the sponsors before the application can be considered.
The application was also signed by former Assemblywoman Cheryl Frasca; former Assemblyman and Sullivan Chief of Staff Larry Baker; Spenard Community Council Auditor Tom McGrath; and former Alaska Libertarian Party Chair and United for Liberty co-founder Allen Michael Chambers.
The remaining signatories are affiliated with APF: David Boyle, Executive Director; David Nees, Research Associate; Linda Boyle; Ray Kreig; and Lee Ann Kreig.
David Boyle ran unsuccessfully for Anchorage School Board in 2008 and 2009. Nees took up the mantle in 2010, running for School Board every subsequent year except 2014, each time unsuccessfully.
Judge Marston’s Ruling
Article XII section 11 of the Alaska Constitution reads in part, “Unless clearly inapplicable, the law-making powers assigned to the legislature may be exercised by the people through the initiative, subject to the limitations of Article XI.”
Article XI governs initiatives and referenda. Section 7 specifically prevents initiatives from dedicating revenues and making or repealing appropriations.
The spending cap sponsors were confident that their initiative did not “make or repeal appropriations.”
However, in Alliance of Concerned Taxpayers, Inc. v Kenai Peninsula Borough, the Alaska Supreme Court struck down a ballot initiative that would have required voter approval for capital projects exceeding $1 million.
Alliance of Concerned Taxpayers (ACT) made a similar argument that their initiative did not explicitly make or repeal an appropriation.
“Referring capital projects to voters, however, will almost invariably result in voters ‘vetoing’ certain projects, at which point there is nothing the Borough can do to go forward with the project,” the Court responded. “[T]he voters’ ability to veto a capital project, even prior to budget approval, infringes on the assembly’s ability to allocate resources among competing uses because there is nothing that the assembly can do to appropriate money for that project.”
“[W]e conclude that allowing voters to veto any capital improvement projects of over $1 million has the effect of diluting the Borough Assembly’s exclusive control over the budget and is therefore an impermissible appropriation,” the Court ruled in Kenai.
On Thursday, Judge Marston wrote that the proposed Anchorage spending cap “on the municipal budget is broader than the proposed initiative in Kenai… However, the broad nature of this restriction does not lessen the degree to which it ‘infringes on the assembly’s ability to allocate resources among competing uses.'”
Like ACT, the spending cap sponsors point to City of Fairbanks v Fairbanks Convention and Visitors Bureau, where the Interior Taxpayers Association filed a ballot initiative expanding uses for a local bed tax.
The Supreme Court upheld that initiative, but Marston notes the Court viewed it narrowly as a repeal of law, not the repeal of an appropriation.
In contrast, Marston wrote, the spending cap initiative “does not repeal any particular law, but prospectively limits the legislature’s ability to create a budget exceeding certain limits, affirmatively taking this decision out of the control of the assembly.”
Not only is that unconstitutional, Marston ruled; it is also a violation of Article III of the Municipal Charter, excluding initiatives and referenda from establishing budgets or appropriating funds.