Alaska Senate Minority Leader Tom Begich (left) and Senate President Peter Micciche talk as they await action in the House on the state budget June 28. The Legislature finished its budget work later that day, and then three days later Gov. Mike Dunleavy vetoed multiple items in the spending plan, including this fall's Permanent Fund dividend - which Dunleavy wants to be larger than lawmakers approved - adding to the work list when the Legislature gathers for another special session on state finances Aug. 2.
Legislators are scheduled to return to Juneau next month and will try again to settle on an amount for this fall's Permanent Fund dividend after the governor vetoed the $525 PFD appropriated by lawmakers.
The Legislature's budget writers had negotiated an $1,100 dividend, but the amount was tied to other items in the budget, and proponents of a bigger PFD objected to the amount and to the linking maneuver, denying their votes for sections of the spending bill that would have pulled additional funds from savings to pay the dividend.
The failure to achieve a three-quarters majority vote in the House and Senate for the provisions brought down the dividend to $525.
Gov. Mike Dunleavy, who has advocated for at least a $2,300 dividend this year and in future years, called the $525 dividend "a joke."
The governor already had called the Legislature into special session to start Aug. 2 to work on his proposals for a long-term state fiscal plan when he announced his PFD veto and other budget cuts on July 1. The amount of the dividend, which is usually paid to Alaskans the first week of October, likely will dominate the special session.
Citing the Permanent Fund's record-setting investment earnings this past fiscal year, the governor said the fund can afford a larger drawdown to pay bigger dividends this year. Dunleavy also wants to put the dividend into the state constitution, dedicating half of the fund's annual earnings withdrawal to the payment.
Though there is support for cementing the PFD in the constitution, along with education and public health, many legislators, including the House majority caucus and Senate Finance Committee leadership, object to supposed one-time withdrawals of additional money from the state's largest savings account to boost the amount of the PFD.
They argue that the state needs to adhere to the 2018 law that limits annual withdrawals to 5% of the fund's total value, rather than risk taking out too much even in good investment years and reducing the fund's long-term earnings potential.
The legislature could manage an $1,100 PFD this year by drawing on other savings with a three-quarters majority vote in the House and Senate, and by using federal pandemic relief aid to cover state spending on public services, freeing up dollars for the larger dividend. But anything much bigger would require taking additional money out of the Permanent Fund, according to numbers from legislators and their fiscal analysts.
The dividend has become a time-consuming preoccupation for lawmakers, particularly as the state has come to rely on earnings from the fund to help pay for public services as oil revenues have shrunk from what they were a decade ago.
Alaska has used different savings accounts for more than half of the past 30 years to pay for public services as declining oil production and revenues, particularly in years of low oil prices, have fallen short of covering the budget.
The House last week agreed to form a working group, with members from all four legislative caucuses - the House and Senate majorities and minorities - to make recommendations on a long-term fiscal plan.
"Alaskans should rest assured that we will continue our efforts to provide a healthy dividend and the services they deserve," House Speaker Louise Stutes, of Kodiak, said on July 1.
The Comprehensive Fiscal Plan Working Group was scheduled to hold its first organizational meeting Wednesday, less than four weeks before lawmakers return to Juneau for their third special session this year.
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