As legislators meet in special session this week, Gov. Mike Dunleavy continues to push his plan for much larger Permanent Fund dividends, saying “cash is the ultimate program” to help Alaskans.
“Cash in the form of the Permanent Fund dividend … is really the answer to helping Alaskans and our private economy,” the governor said in a prepared statement Monday, the day lawmakers went back to work in Juneau.
While promoting his plan to pay dividends almost double the average of the past 10 years without any new revenues to cover the state spending deficit, Dunleavy continues to push for withdrawing an additional $3 billion from Permanent Fund earnings to pay the bills.
The governor calls the $3 billion a “bridge” to the time Alaska can pay its own way for public services and dividends. However, legislative fiscal analysts and Finance Committee leaders argue that the governor’s plan is shortsighted, forcing the state into large deficits or deep budget cuts.
Though the governor said the state does not need new revenues, the eight-member, bipartisan fiscal policy working group of House and Senate members on Monday recommended the state most certainly needs new revenues to maintain services, deal with unfunded construction and maintenance needs, and pay a dividend.
The Permanent Fund was worth $81 billion at the start of the state fiscal year on July 1, providing more than $3 billion this year for the state general fund to pay for public services and dividends. It could be worth more than $95 billion by the end of the decade, according to the fund’s projections, so long as earnings meet expectations and lawmakers do not take out additional withdrawals beyond the annual limit in state law.
While advocating for taking more money out of the Permanent Fund this year, Dunleavy is continuing his opposition to taxes and failing to show exactly where he would cut state spending to balance the budget.
Only after legislators consider his proposal to put the larger dividend into the state constitution would he be willing to “look at other things that need to be looked at,” Dunleavy said this week.
Sitka Sen. Bert Stedman, co-chair of the Senate Finance Committee, said he sees that approach as an attempt to try to “leverage” the dividend above all else.
After years of budget deficits and borrowing from depleted state savings, a comprehensive fiscal policy for Alaska “must be negotiated and agreed to as whole,” and not taken up piecemeal, according to the legislative fiscal policy working group report.
Dunleavy’s statements this week appear to contradict testimony the state Revenue commissioner gave two weeks ago to legislators. In presenting a list of potential new revenue options, including a state sales tax, Commissioner Lucinda Mahoney said the governor would support the revenue measures “as long as there was support from the Legislature.”
The Legislature’s fiscal policy working group did not recommend specific revenue measures but said the Legislature should consider raising additional annual revenues of $500 million to $750 million, about 10% to 15% of the state general fund budget, and work toward additional budget cuts ranging from $25 million to $200 million, stretched out over multiple years.
The Legislature, Dunleavy and past governors already have cut annual state spending by several hundred million dollars in recent years.
Unless the Legislature and governor can agree on fiscal answers for at least this year, there will be no dividend this fall for the first time since the program started in 1982.
Legislative leaders tried to pass an $1,100 PFD in May, but failed to win enough votes for the super-majority required, mostly falling short among House Republicans. That left a dividend of $525, which the governor vetoed to zero, calling $525 a “joke” and telling legislators to come back to work and approve a larger payment.
In addition to battling over the amount of the dividend, lawmakers have until Friday if they want to vote on overriding any of Dunleavy’s budget vetoes.
The governor on June 30 vetoed partial or all of the funding from the Legislature’s version of the budget for the state ferry system, public broadcasting, pre-kindergarten programs, social workers and nurses at the Department of Health and Social services, school maintenance projects, legal aid for low-income Alaskans, and several other programs.
It requires a three-quarters majority vote of the Legislature to override a veto, an exceedingly high hurdle in the divided House and Senate. Though the special session can run 30 days, a veto override vote must be held in the first five days.
The first item on the governor’s agenda for the special session is to win legislative approval for a constitutional amendment that would dedicate half of the annual withdrawal of Permanent Fund earnings to dividends, which would result in a payment to individual Alaskans of almost $2,400 this fall.
It takes a two-thirds vote in both the House and the Senate to place a constitutional amendment on the ballot for voters to decide.
House Speaker Louise Stutes told reporters she didn’t currently see enough support in the Legislature for a constitutional amendment for the dividend.
Stutes sent Dunleavy a letter Monday, admonishing him for holding this year’s dividend and “other essential programs hostage while we work toward a solution,” calling the governor’s tactics “unconscionable and counterproductive to compromise.”
The Associated Press contributed to this report.
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