On Tuesday, Alaska legislators will gavel into session in Juneau for the first time in 2021, with a host of pressing issues to deal with during the next few months. With COVID-19 driving unemployment rates to unprecedented highs for Alaska, continuing weakness in oil revenue and vastly diminished savings, legislators will be hard pressed to finish their work in the allotted 90 day statutory session — or even the 121-day constitutional limit. And with so much needing to be done, it’s more important than ever for Alaskans to keep government on track and accountable. Here are a few items that will have a major impact on what gets done in Juneau, and when:
Before the House or Senate get down to business, they need to decide who their leaders are, and that’s accomplished by the formation of a majority caucus. Sounds simple, right? Not this year. Although Republicans have a numerical advantage in both chambers, there are effectively two Alaska Republican Parties now: the old-guard GOP and the hardline big-Permanent-Fund-dividend faction. That makes it more understandable that, as in 2019, neither chamber has managed to decide who’s in charge. In 2019, the House was in a similar position, and it took until Gov. Mike Dunleavy unveiled his austerity budget nearly a month into the session for a bipartisan majority caucus to form.
Will we have to wait a month for legislators to get their acts together this year? Not likely. It’s probable that both chambers will be led by bipartisan coalitions. There’s precedent for a bipartisan majority, and although the PFD hardliners from the Mat-Su and Kenai Peninsula regions are largely unwilling to budge on their agenda, Democrats and more traditional GOP members are more apt to seek compromise. And the more legislators are willing to join up with the majority, the stronger it will be. It’s highly unlikely that the majority caucuses will be large enough to make veto overrides possible (on budget matters, it takes a three-quarter vote of both the House and Senate), but a majority group with two-thirds of the body’s members would have a much easier time governing than one where every member needed to be present and voting together to achieve a bare majority.
The multibillion-dollar question
How big will the PFD be, and how long will it take for legislators to come to terms on its size? For the past several years, it’s been the question that defined the legislative session (and sometimes stretched it well into the summer). After years of cost-cutting, the dividend – if allocated via the hardliners’ insistence on the original 1982 statute – would be the largest item in the state budget, costing more in state savings than education or health care. Over the course of several decades, Alaska’s grand experiment of the PFD has morphed into a form of universal basic income, a far cry from its original intent. But the loss of nearly all of Alaska’s savings may have made it easier for a smaller majority to determine this year’s PFD amount. In past years, draws out of the Constitutional Budget Reserve to fund government required a three-quarter vote by legislators. But this year, the CBR is nearly drained, so money to fund PFDs and state services (beyond what incoming revenue covers) is likely to be almost completely from the Permanent Fund’s earnings. And that doesn’t require a three-fourths threshold to pass. If the governor’s proposed budget for this year is approved, however, it would open Pandora’s box. Rather than simply allocate dividend funds according to either of the statutory formulas, Gov. Dunleavy’s plan would include a massive one-time payment, resulting in a $6.2 billion draw from the Permanent Fund. That’s nearly 40% of all Permanent Fund money that isn’t constitutionally protected. In no uncertain terms, a draw that big would mortgage Alaska’s future and shortchange future generations.
It’s possible that this year, we’ll see the PFD question answered earlier in the session — but it’s probably not likely. The fact of the matter is, the PFD is now treated by all sides as the most important chess piece on the board politically, so each faction in Juneau, both in the Legislature and the governor’s office, will try to use it for leverage.
Is this how it should be? No. The Legislature should sit down to hammer out a long-term solution to the PFD allocation and the use of some of the fund’s earnings to provide a sustainable sum that would help pay for state services. But that’s not likely to happen unless Alaskans start clamoring for it – and so far, those speaking loudest have been beating the drum for big checks, not a realistic long-term fiscal solution.
Which Dunleavy will show up?
In Alaska, only the Legislature can spend money, requiring the branches of our government to work together. But the governor has a strong trump card he can play in the form of his line-item veto, which is unlikely to be overridden by legislators. Will 2021 be a repeat of 2019, when Dunleavy played hardball and vetoed hundreds of millions of dollars from the Legislature’s budget, an action that galvanized a recall effort against him? Or will it be more like 2020, when he took a less confrontational tack and backed off from the austerity measures he championed his first year in office? The relationship between the Legislature and the governor has been fraught at best over the past two years, and that needs to be repaired if Alaska is to have any chance at a long-term fiscal solution. Perhaps it’s naive, but let’s hope stubbornness over the PFD can take a backseat to statesmanship.
Complicating matters is the COVID-19 pandemic, which has created new political fault lines and delayed Alaska’s economic recovery. Whatever else Gov. Dunleavy and legislators do, they must deal with the pandemic and the harm it has visited upon Alaskans, taking what measures they can to help the state recover as swiftly and completely as possible. Although vaccines are being administered now and Alaska is ahead of the curve so far on per-capita vaccination, it will be months before the state achieves a level of immunization that allows for a return to something resembling pre-pandemic life. That makes it imperative for Alaskans to continue to keep social circles small, wear masks in public and practice good hygiene at all times. The state has enough troubles to overcome this year without adding another deadly wave of COVID-19 cases (and associated restrictions on business and public life) to an already brutal toll.