It Means What it Says
Alaska's constitution puts a pretty tight limit on how and why the state can borrow money. The legislature can OK bonds for capital projects, veterans' home loans, and revenue bonds. Oh, and the first two of those take a vote of the people.
Three years ago, getting low on cash, the legislature narrowly passed a neat idea to borrow money so the state could pay off oil tax credits we already owed drillers. (We'd stopped issuing any more by that point.) There were several cool things in the bill, like a reverse auction for the credits, so it made good financial sense for the state. But it had a gigant-o problem: there's no way it was constitutional.
Some folks argued it was basically just refinancing our debts—a very narrow exception the constitution allows. But the credits weren't state bonds that had already gone to the voters, so they didn't qualify.
Others said since the state can do lease-purchase agreements (kind of like renting-to-own) for buildings without a vote of the people, this would be fine too. But with oil tax credits there's no 'thing'—like a building—a creditor could take back in lieu of payment, so it's not even close to the same.
And then there were folks who said borrowing to pay off oil credits would be 'revenue bonds.' A port or airport might issue those, paid back by the money the dock or runway brings in. (Alaska even once borrowed against yearly payments we got in a lawsuit settlement and used the cash to build schools, and that passed muster!) But when people asked what the 'revenue' would be in this case, the answer was: annual appropriations from the general fund. So, the state budget.
The framers of Alaska's constitution put in limited exceptions to a set of very tight borrowing rules. They did not write them to allow any and all borrowing future legislatures wanted to do. The Commissioner of Revenue when the bill passed even allowed that under his theory, the state could bond (without a vote of the people) to cover the operating budget deficit each year. Nuts.
Still, the bill did pass. Then-Governor Walker signed it. A citizen activist sued, and this morning, the Alaska Supreme Court slapped down the whole unconstitutional scheme. I guess that's why the framers put a separate, independent judicial branch in place.
