JUNEAU – The Alaska Legislature entered its fourth special session on October 4 with low expectations and little hope that lawmakers can end their annual struggle over the Permanent Fund dividend.
For the past six years, lawmakers have debated the size of Alaska Trust Fund payments, turning the issue into an annual battle that has absorbed lawmakers’ attention and repeatedly brought Alaska to the forefront. edge of government shutdown.
Gov. Mike Dunleavy called this session, asking lawmakers to pass a constitutional amendment that would guarantee future dividends and pay them under a new formula.
“At the end of the day, if there was a time to settle this issue, it’s now,” said Dunleavy.
But that seems unlikely.
“I don’t think the session will be very productive,” Senate Minority Leader Tom Begich, D-Anchorage said.
It takes 27 votes in the House and 14 in the Senate to send a constitutional amendment to voters in the November 2022 election.
Right now, lawmakers say there aren’t enough votes to pass the governor’s proposal or any of the alternative amendments proposed by lawmakers themselves.
This is because most of these amendments call for larger dividends and require additional funds.
Lawmakers could spend too much money from the Alaska Permanent Fund, exceeding a limit set in 2018. They could cut state services, freeing up more income for the dividend. They could pass tax increases or install new taxes that generate additional income for the dividend.
Senate Speaker Peter Micciche R-Soldotna is part of a group of lawmakers who have promoted an “all-in” idea that uses multiple options simultaneously.
He frequently compares the situation to a machine with a variety of control levers, each representing a different option. When it comes to a constitutional amendment, he said, there is no way to move the levers so as to get 14 votes in the Senate.
At State House, Rep. Andy Josephson, D-Anchorage, said “politics are almost insurmountable.”
A bipartite and bicameral working group made progress this summer. He agreed on what the state should expect in terms of revenues and expenses over the next few years, the cost of a proposed dividend, and the options available to pay it. But because the House and Senate are divided on the best options, no idea has the necessary votes.
“I really don’t think anything is going to come out of this session because we’ve had a lot with us here over the past seven months,” said representative Mike Cronk, R-Tok.
Any constitutional amendment would not be implemented until after next year’s election, so the governor has proposed to increase this year’s dividend to what it would be according to his proposal.
If Dunleavy’s proposed formula were in place this year, that would translate to a dividend of $ 2,350 instead of the $ 1,114 that Alaskans will receive from this month. This increase would cost approximately $ 791 million.
The new taxes would take at least a year to implement, revenue ministry officials have already testified, and the budget cuts would also take time to implement. This leaves excessive spending from the Permanent Fund.
Revenues from the Alaska Permanent Fund are now the primary source of state service revenue, accounting for about two-thirds of the state budget. Spending more of the fund today means less money invested and lower returns in the future, which has prompted lawmakers to reject overspending.
Dunleavy says the fund gained a record $ 16 billion in the last fiscal year. He says larger dividends will help the state’s economy, which continues to suffer from the COVID-19 pandemic.
“You never hear that when it comes to removing the PFD and severely cutting it off the hands of children and the elderly, it has a detrimental effect, especially in today’s environment. , with supply chain disruptions, inflation, uncertainty, people whose hours have been cut, ”Dunleavy said.
On the budget, he said lawmakers should see that maintaining a “no overspending” stance has political consequences.
“If they can’t see that, maybe to some extent, it’s the root of the inability to make a decision,” Dunleavy said.
Democratic lawmakers say Dunleavy’s reluctance to consider new revenue without a statewide vote is contributing to the problem.
“You know, then the legislature would really like him to engage in a vigorous conversation during this fourth special session,” said Rep. Ivy Spohnholz, D-Anchorage.
Dunleavy said if a revenue bill were included in a set of laws to deal with the dividend issue, he would reserve judgment until he saw it.
“I would look at the components as part of a complete solution. And if there is a viable, coherent and long-term sustainable solution, I would take this package very seriously. But again, he’s not sitting in front of me right now. So I have to see what it looks like, ”he said.
As an alternative to a constitutional amendment, lawmakers could pass a new law. This would require 21 votes in the House and 11 in the Senate, but there is no guarantee that future lawmakers will follow this new formula.
In 2017, the Alaska Supreme Court ruled that the formula in place at the time – in use since the 1980s – was “subject to normal budgetary appropriation and veto processes.”
In other words, the governor and the legislature could choose to follow it or not. A new formula in state law would face the same problems.
“I can tell you that a law is not going to engender the confidence of the Alaskans. They won’t buy it, ”Dunleavy said.
In the State Senate, lawmakers proposed a change of formula at the end of the third special session.
This bill proposed to gradually increase the dividend over several years, reaching Dunleavy’s preferred level if the state raises $ 700 million in additional revenue.
This bill was debated but was not adopted by the Senate until the end of the third extraordinary session. Micciche said that with adjustments this could be a first step towards a possible solution.
“I think once people are comfortable with (the bill) then I think you have a higher likelihood of the level of support it would take for a constitutional amendment,” he said. -he declares.
“Right now, I don’t know if you have 11 votes to get the PFD under the constitution. Once people get comfortable with the recalculation it becomes much more likely, ”Micciche said.
