The last terrible idea of the 2021 Alaska legislative session

It took 121 days, but the Alaska Senate found a way to make the dysfunction of this year’s Legislature even worse. In the waning hours of the regular session, senators voted on dozens of floor amendments totaling billions of dollars in changes from the last iteration of the state budget that Alaskans were able to weigh in on. The wholesale revision and horse-trading on the floor was itself a mockery of a process that residents should be able to witness and comment on, but the worst idea of the evening came last: An unlawful overdraw of the state’s last savings account, hobbling the state’s fiscal future to pay a fatter Permanent Fund dividend check.

Sen. Mike Shower of Wasilla, a self-avowed fiscal conservative, led the charge to raid the Permanent Fund’s earnings, successfully advocating for a $2,300 PFD check that — in defiance of all rationality — will overdraw the legal limit by a massive $1.5 billion. In doing so, he not only forfeited his right to the “fiscal conservative” claim, he tried to obfuscate the severity of the savings grab.

He did so by handing legislators a hastily-prepared chart that showed the gap could be covered in future years — if legislators suddenly decide that seven years of dithering away the state’s savings was enough, and move enthusiastically to pass multiple taxes: a substantial increase in oil taxes, to the tune of $300 million per year, and a 2% sales tax, which Sen. Shower claimed would bring in $600 million per year. In this fantastic scenario, the remaining $600 million gap was covered via a set of rosy assumptions about the state’s existing revenue streams. That apparently didn’t bother a majority of senators, who voted 12-8 to pass the budget amendment Shower authored (co-sponsored by Sens. Shelley Hughes, Mia Costello and Senate President Peter Micchiche. The sponsors are fiscal conservatives all, or so their campaign literature would have you believe).

Speaking of campaign literature, Alaskans surely remember the analogy these senators ran their campaigns on the last time they were up for reelection: If our state were a household, they said, we’d be finding ways to cut expenses. Tighten our belts. Live within our means.

It sounded great. So relatable.

Imagine our state as a household. The primary wage earner has been working a single part-time job for the past six years, but paying our mortgage and dining out by spending our now-depleted savings. Rather than lowering our monthly spending or looking for second job to make ends meet (the Legislature promises these will happen next year, as it’s promised for half a decade now), this plan would have us raid the last source of money — the kids’ college fund — not just to pay our overdue bills, but also to buy the big-screen TV we’ve had our eye on. It’s the height of short-term thinking and irresponsible budgeting, spending money today that could generate new money for Alaskans in perpetuity, all to send out bigger checks right now. These senators would never risk their own families’ livelihoods this way — why are they so cavalier about dipping into our state’s signature fiscal accomplishment, one that has the word “permanent” in its very name?

The audacity of the Permanent Fund overdraw is matched only by Sen. Shower’s debut of $900 million in notional new taxes on the Senate floor in the last hour of the session, after 121 days in which he could have introduced bills to institute either or both of those tax changes. Major revenue changes, as Sen. Shower and others reminded us last fall in opposing the oil tax hike initiative, were intended by Alaska’s constitutional framers to be debated at length, in public, transparently.


Justifying a $1.5 billion overdraw from the Permanent Fund with a few glossy pages of optimistic revenue assumptions is inexcusable, and Alaskans shouldn’t buy it. It’s like the weather forecast in the dead of winter, where the promise of warmer temperatures is always one day away: We know better than to trust it — especially when, unlike the weather, it hinges on legislators’ sudden willingness to make the hard fiscal choices they’ve now avoided for the better part of a decade by spending $16 billion of our savings.

The fact of the matter is, Alaska’s budget gap isn’t especially difficult to close this year if legislators abide by the legal limit on draws from Permanent Fund earnings. If lawmakers set the PFD amount at a sustainable level, around $1,000 — as the Senate Finance Committee approved before the floor shenanigans — and keep a tight lid on any “Christmas tree” additions to the operating and capital budget, no illegal overdraw would be necessary. The $1.5 billion Sen. Shower and others want to pour into a one-time check could remain in the Permanent Fund, providing close to $100 million every year for Alaskans, and more every successive year thanks to interest and investment gains.

Alaskans who don’t follow the budget process closely may wonder why this year’s proposed spend is substantially different than other years in which legislators have spent from savings. The answer lies in the source of the funds and the amount. The Permanent Fund is the last bastion of Alaska’s savings, and was established, according to former Gov. Jay Hammond, to provide “money wells” that could fund state services once the oil wells started running dry. It was not established to provide a government annuity for residents, much less one that took funding precedence over needs such as education and public safety. And if we let legislators spend past the legal limit established on draws from the Permanent Fund even once, it’s easy to see how things will go afterward. It’s a very short step from “just this once” to “just one more time.” After all, just look at the smoking craters where the $16 billion in Alaska’s statutory and constitutional budget reserves used to be.

If there’s any silver lining to this budget charade, it is that the Senate’s clown-car effort diverged so much from the House’s version that a conference committee is necessary to resolve the differences, which means the massive Permanent Fund overdraw can still be reversed. If the members of that committee have any regard for Alaska’s fiscal future, they must reverse the Senate’s disastrous, illegal overspending of the Permanent Fund.

Anchorage Daily News editorial board

Editorial opinions are by the editorial board, which welcomes responses from readers. Board members are ADN President Ryan Binkley, Publisher Andy Pennington and Opinion Editor Tom Hewitt. The board operates independently from the ADN newsroom. To submit feedback, a letter or longer commentary for consideration, email commentary@adn.com.