619 P.2d 448 (Alaska 1980), 5400, Williams v. Zobel

Docket Nº:5400.
Citation:619 P.2d 448
Opinion Judge:RABINOWITZ, Chief Justice.
Party Name:Thomas WILLIAMS, Commissioner of Revenue, and State of Alaska, Appellants, v. Ronald M. ZOBEL and Patricia L. Zobel, husband and wife, Appellees.
Attorney:Susan Burke, Asst. Atty. Gen., Avrum M. Gross, Sp. Asst. Atty. Gen., Wilson L. Condon, Atty. Gen., Juneau, for appellants. Mark Sandberg, Camarot, Sandberg & Hunter, Anchorage, for appellees. Robert C. Erwin, Erwin & Smith, Anchorage, for amicus curiae Kenai Peninsula Borough.
Judge Panel:Before RABINOWITZ, C. J., CONNOR, BURKE and MATTHEWS, JJ., and DIMOND, Senior Justice. DIMOND, Senior Justice, joined by MATTHEWS, Justice, dissenting.
Case Date:October 24, 1980
Court:Supreme Court of Alaska
 
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Page 448

619 P.2d 448 (Alaska 1980)

Thomas WILLIAMS, Commissioner of Revenue, and State of

Alaska, Appellants,

v.

Ronald M. ZOBEL and Patricia L. Zobel, husband and wife, Appellees.

No. 5400.

Supreme Court of Alaska

October 24, 1980

Page 449

[Copyrighted Material Omitted]

Page 450

Susan Burke, Asst. Atty. Gen., Avrum M. Gross, Sp. Asst. Atty. Gen., Wilson L. Condon, Atty. Gen., Juneau, for appellants.

Mark Sandberg, Camarot, Sandberg & Hunter, Anchorage, for appellees.

Robert C. Erwin, Erwin & Smith, Anchorage, for amicus curiae Kenai Peninsula Borough.

Before RABINOWITZ, C. J., CONNOR, BURKE and MATTHEWS, JJ., and DIMOND, Senior Justice.

OPINION

RABINOWITZ, Chief Justice.

This is an appeal from the summary judgment of the superior court which invalidated, as a matter of equal protection and the right of interstate migration, the permanent fund income distribution statute, AS 43.23.010-.100, 1 passed in April, 1980, by the Alaska legislature. 2 We reverse the superior court's summary judgment as to the permanent fund distribution statute.

In so doing, we are re-affirming our modification of the equal protection test which had traditionally been applied in the right-to-migrate context by this court. 3 Before discussing the permanent fund income distribution statute itself (section II), we review our reasons for modifying the test (section I).

I. The Federal and State Equal Protection Tests as They Relate to the Right of Interstate Migration

Initially, our analysis of state equal protection law tracked that of federal law by the United States Supreme Court closely in all areas, including that of classifications penalizing the exercise of the right of interstate migration. 4 As we used the traditional

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"two-tier" analysis 5 under our equal protection clause, there was no need to differentiate between the federal and state modes of analysis.

Following some broad language in the United States Supreme Court case of Dunn v. Blumstein, 405 U.S. 330, 92 S.Ct. 995, 31 Ed.2d 274 (1972), 6 we interpreted this line of cases as holding that any durational residency requirement 7 imposed a penalty on the right of interstate migration, and thus automatically invoked the "strict scrutiny" analysis: 8

All durational residency requirements inherently infringe upon the fundamental constitutional right of interstate travel. Hence, all such requirements are prima facie invalid and will be countenanced only when they serve a compelling state interest.

State v. Adams, 522 P.2d 1125, 1131 (Alaska 1974) (footnotes omitted).

However, the United States Supreme Court made it clear that this interpretation was incorrect as a matter of federal equal protection law. In Memorial Hospital v. Maricopa County, 415 U.S. 250, 94 S.Ct. 1076, 39 L.Ed.2d 306 (1974), the Supreme Court, although invalidating that durational residency requirement, made it clear that some durational residency requirements would not penalize the right of interstate migration, and thus would not invoke strict scrutiny. 9 This was made even clearer in

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the case of Sosna v. Iowa, 419 U.S. 393, 95 S.Ct. 553, 42 L.Ed.2d 532 (1975), which upheld a one-year durational residency requirement for filing a divorce petition. Thus, under federal law, a durational residency requirement does not automatically invoke strict scrutiny.

That our interpretation in this area was stricter than the federal interpretation is also shown by the rulings in our cases, which struck down durational residency requirements which the United States Supreme Court probably would have upheld. For example, in State v. Adams, 522 P.2d 1125 (Alaska 1974), we struck down a one-year durational residency requirement for eligibility to file for a divorce, very similar to the one upheld by the United States Supreme Court in Sosna v. Iowa, 419 U.S. 393, 95 S.Ct. 553, 42 L.Ed.2d 532 (1975). 10

Our cases, still functioning under the two-tier approach, continued to regard durational residency requirements as automatically triggering strict scrutiny, and rejected the distinctions by which federal equal protection cases in this area separated strict scrutiny cases from rational basis cases. 11 Implicitly, our course was based on a recognition that removing these cases from the strict scrutiny approach would require that they be judged by a rational basis standard, which would give insufficient weight to the important right involved. 12 But the need for an "intermediate approach" between these two extremes 13 was apparent in an increased willingness to find a "compelling state interest," a very difficult standard to fulfill under federal law. 14

In State v. Erickson, 574 P.2d 1 (Alaska 1978), we adopted a new equal protection analysis, using one uniform balancing approach rather than the two-tier approach which had been increasingly subjected to criticism on several grounds. 15

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Since Erickson, and prior to our decision in Zobel I, we had decided two cases which involved the right of interstate migration, and in both the question of Erickson's application to this area was postponed. See Thomas v. Bailey, 595 P.2d 1 (Alaska 1979); Castner v. City of Homer, 598 P.2d 953 (Alaska 1979).

In Zobel I, we announced our decision to apply Erickson to the right-to-migrate context. 16

In our view the uniform balancing approach adopted in Erickson is much more appropriate in this context than the two-tier analysis used in our prior cases. Further, we will no longer regard all durational residency requirements as automatically triggering strict scrutiny and requiring a showing that such a classification is absolutely necessary to promote a compelling state interest. Instead, we will balance the nature and extent of the infringement on this right caused by the classification against the state's purpose in enacting the statute and the fairness and substantiality of the relationship between that purpose and the classification. 17

In those situations in which federal law would apply strict scrutiny, this court must also. This divergence of the two sets of analyses will necessitate separate consideration of the permanent fund earnings distribution statute under federal and state equal protection law.

II. The Permanent Fund Earnings Distribution System

The recent tremendous wealth bestowed upon Alaska by the development of oil and mineral resources has created governmental problems unique to this state. Both the original establishment of the permanent fund and the later statute establishing a system for distributing the earnings from the fund represent novel mechanisms to deal with this wealth.

The creation of the fund was a response to two specific concerns. First, the people of the state recognized that Alaska's oil and mineral wealth is based on nonrenewable resources which will become depleted at some point in the future, potentially leaving Alaska with the choice of either terminating certain governmental programs or continuing them through increases in taxation. The permanent fund channels some of the current wave of moneys into just what its name implies-a permanent fund, the earnings from which will help to defray the costs of government at that future time when the nonrenewable resources run out.

The second concern was the temptation to use the current flood of funds for costly, wasteful, and unnecessary government projects. Typically, some limit is placed on this tendency by the fact that funding for such programs must come from the taxpayers. With this damper removed, the people of Alaska recognized the need to substitute some other form of restraint. Thus, the constitutional provision establishing the fund places the principal of the fund beyond the legislature's appropriation power, which can be exercised only over earnings derived from the fund.

The legislature's subsequent decision to use its appropriation power over the earnings to distribute some of the earnings directly to Alaska residents was also unique. Undoubtedly, the legislature was aware that such action would be popular with its constituency. However, there is merit in the state's contention that there was an additional motive for choosing to distribute some of the earnings. The earnings alone have been substantial enough to engender concern over the unwarranted and "painless" growth of government. By distributing some of the fund's income directly to

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residents, the state could insure that future legislatures will face a spending limit. To exceed this limit, the legislature would have to "take back" some of the fund's income distributed to Alaskans. This would, in effect, simulate a legislative choice to enact a tax.

The mechanism established to effect this distribution of earnings is as follows: one-half of the fund's earnings are to be distributed in dividends of at least fifty dollars. 18 To be eligible, a person must be eighteen years of age and a resident of Alaska. AS 43.23.010(b). There is no "durational residency" requirement; a bona fide resident of Alaska is immediately eligible for a pro rata portion of his or her first dividend. AS 43.23.010(f). However, the number of dividends received by an eligible person is determined by length of residency, with one dividend allowed for each full year of residency since statehood (1959). AS 43.23.010(a). It is this connection between the length of residency and the number of dividends received which is at issue here. 19

On April 28, 1980, Ronald and Patricia Zobel, residents of Alaska since 1978, filed suit challenging this statute on the ground that it violates the equal protection clauses of both the United States and Alaska Constitutions. On June 27, 1980, the superior court issued its decision declaring the statute...

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