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Dunleavy proposes economic plan in response to COVID-19, including supplemental PFD and $1 billion relief fund

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Alaska Gov. Mike Dunleavy on Friday proposed a broad plan to cope with the economic effects of the coronavirus pandemic.

“Immediate and far-reaching economic relief is needed right now,” the governor said in a phone call with news media.

The governor renewed his call for a supplemental Permanent Fund dividend payment of $1,306. That is equivalent to the difference between the 2019 dividend and the amount called for under the traditional dividend formula in state law. Paying the supplemental dividend would cost $815 million.

The supplemental dividend and other elements of the governor’s plan are being submitted as amendments to the state operating budget and require legislative approval.

Many details about the plan weren’t immediately clear. The governor didn’t take questions during his announcement.

The core of the governor’s proposal is $1 billion for the state’s disaster relief fund. That money (and the supplemental dividend) would come from the earnings reserve of the Alaska Permanent Fund.

“There’s nowhere else with $1 billion at this point,” said Office of Management and Budget Director Neil Steininger.

With oil prices plunging, the state’s projected expenses far exceed its revenue, and the Constitutional Budget Reserve — the state’s principal savings account — does not contain enough money to make ends meet.

Documents from the Alaska Office of Management and Budget do not state what the money would be used for, which irked some lawmakers.

While legislators are willing to work with the governor, they’re not willing to provide money without knowing what it is to be used for, said Rep. Chuck Kopp, R-Anchorage. He said the governor has failed to provide a financing plan required by law during emergencies.

“All he wants is money in a briefcase and for us to not ask questions,” Kopp said.

Steininger said the reason for the lack of detail is straightforward: Alaska is dealing with something new and needs flexibility.

“Because it’s new territory, we’re still trying to figure it out,” he said.

Some legislators were also skeptical about the supplemental dividend, which would be paid in April.

Rep. Jennifer Johnston, R-Anchorage and co-chair of the House Finance Committee, said it is “very unlikely” that the Legislature will support the proposal to give Alaskans a supplemental Permanent Fund payment, which the governor has endorsed since last year.

Included in the text of the governor’s plan is a proposal to split the 2020 dividend into two payments, one made during the summer and another made during the fall.

Sen. Bert Stedman, R-Sitka, said some lawmakers want to see whether the federal government distributes checks to individual Alaskans before they decide on a supplemental dividend.

“I want to be careful that we don’t have a political action just for political expediency and headlines and duplicate what the federal government is doing,” he said.

Senate Minority Leader Tom Begich, D-Anchorage, praised the governor for the state’s medical response to the coronavirus but said the dividend proposal is wrongheaded because it interjects a touchy political issue into the discussion.

Mouhcine Guettabi, an economist with the University of Alaska Anchorage, said that without intervention, there will be significant consequences to the economies of Anchorage and Alaska as a whole.

Spending from the Permanent Fund would reduce its value in the long term, he said, but “there are tremendous short-term consequences from these closures, and we haven’t even started talking about the fact that the tourism season is going to look nothing like what we thought.”

In addition to the dividend and billion-dollar disaster fund, Dunleavy said he will sign an executive order affecting home loans and rentals under the Alaska Housing Finance Corp. The corporation will suspend foreclosures and evictions on its home loans for 60 days, and it will suspend evictions from its rentals when the eviction is caused by a failure to pay rent because of the economic slump.

The governor also said he reached an understanding with Alaska’s “lending community” to offer “bridge loans” to businesses affected by state and local coronavirus health measures. Details were not immediately available.

Bill Popp, director of the Anchorage Economic Development Corporation, testified before the Alaska House Finance Committee on Friday about the pandemic’s economic effects.

He said the governor’s stimulus package “has a lot of elements that could be of help," including the loan program.

Getting money into the hands of businesses, allowing them to keep workers, is critical, Popp said.

In his announcement, the governor said he will authorize additional spending to hire state workers and buy medical equipment. It was not immediately clear whether that spending would come from the billion-dollar disaster fund.

The governor said additional elements of his economic plan will be announced later.

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