Hold on Permanent Fund bills highlights split in Alaska Senate majority

JUNEAU — Two major deficit-reduction bills are being held up in the state Senate by Wasilla Republican Sen. Mike Dunleavy — a development that hints at internal divisions in Dunleavy's Republican-led majority over resolving the state's huge budget gap.

Dunleavy's colleagues in the Senate Finance Committee were scheduled to hold a hearing on the two bills Wednesday afternoon. But the committee's co-chairs, Sens. Anna MacKinnon, R-Eagle River, and Lyman Hoffman, D-Bethel, had to cancel the meeting when Dunleavy decided not to advance the legislation Tuesday night.

Dunleavy's move came during a hearing Tuesday of the Senate State Affairs Committee, which he chairs.

One of the two measures, Senate Bill 21, is sponsored by Sen. Bert Stedman, R-Sitka. The other, Senate Bill 26, was introduced at the request of Gov. Bill Walker.

Each would use the investment earnings of the $57 billion Alaska Permanent Fund to help pay for government services and take at least $1 billion out of the state's $3 billion deficit — with declines in the amount reserved for residents' annual dividend checks.

A similar proposal from Walker passed the Senate 14-5 last year. Among its opponents was Dunleavy and another Republican on the Senate majority's right flank, the now-retired Republican Bill Stoltze of Chugiak — who, like Dunleavy, represented a district that includes portions of the deeply conservative Mat-Su.

Dunleavy's opposition persists this year, even as Senate majority's leaders have announced their support for a restructured Permanent Fund.


Dunleavy has sponsored new legislation to restore the portion of PFDs Walker, citing the state budget crisis, vetoed last year. The bill has drawn endorsements from three of Dunleavy's GOP colleagues, including Stoltze's replacement, Shelley Hughes of Palmer.

Dunleavy has also launched an online "save your PFD" campaign. And he's unveiled his own plan for the fund that reduces the deficit and leaves the current dividend formula in place, though it relies on $1.1 billion in budget cuts he hasn't identified.

Now, instead of discussing Stedman's and Walker's legislation at the next meeting of the State Affairs Committee on Thursday, Dunleavy is planning to give his colleagues a presentation on his own plan.

Randy Hoffbeck, state revenue commissioner, said the administration still expects Dunleavy to advance the legislation next week, or the week after.

"Nobody's in panic mode," he said.

But others are taking note of Dunleavy's pace. Asked about the outlook for his own legislation, Stedman, in an interview in his Capitol office, pointed to a painting hanging on the wall depicting the Battle of Little Bighorn — site of Gen. Custer's Last Stand.

Stedman uses the painting as a sort of scoreboard for the legislative session, labeling different figures in the scene — in various states of triumph or despair — with different bill numbers.

"You've just got to check the battle scene," Stedman said. "God-dang Senate Bill 21 got moved to a wounded Indian."

In a brief interview Wednesday, Dunleavy explained the delay by saying SB 21 and 26 were still under review.

"These are major pieces of legislation. It would be a major departure from what has happened over the decades," he said. "We're going to take the time that we need to scrutinize these bills effectively and then we'll make a decision on what's going to happen."

Dunleavy's approach, however, seemed to defy leaders of his own caucus who scheduled the Wednesday finance committee meeting on the two bills.

"That's the finance committee trying to put a little pepper on it," said Sen. John Coghill, R-North Pole. He was suggesting that the finance committee leaders, by scheduling the meeting, were trying to coax Dunleavy into releasing the legislation.

Finance committee co-chairs are part of the Senate leadership; Dunleavy, as chair of the State Affairs Committee, is not.

Coghill, a State Affairs Committee member, said he's ready to vote on the bills, adding Dunleavy has made his plans "a little bit of a mystery."

Sen. Tom Begich, D-Anchorage, meanwhile, described Dunleavy's approach as troubling.

Last year, the House's Republican-led majority splintered over the course of the session, contributing to lawmakers' inability to agree on major deficit-reduction measures even though they remained in Juneau for three extra months.

Now, it's the Senate's majority that appears to be cracking, Begich said.


If the divisions are emerging one month into this year's legislative session, the caucus may have even more trouble in the session's stressful closing days, when it tries to negotiate a final deficit-reduction and budget deal with the House's majority coalition, Begich said.

"It makes it much more difficult for there to be a resolution," Begich said in an interview.

Begich also noted another public clash between two Senate majority members last week — one involving two Anchorage Republicans. One was Sen. Cathy Giessel, who's signed on to Dunleavy's bill to restore last year's vetoed portion of the PFD, and the other was Sen. Natasha von Imhof, who has not.

At a meeting of the Senate Health and Social Services Committee, von Imhof voted against an amendment Giessel was pushing for — prompting a sharp retort from Giessel.

"You know, there's a reason Sen. von Imhof is on the finance committee. She has expertise in that area. There's a reason that I'm on the health committee. I'm a clinician," said Giessel, a nurse practitioner, as von Imhof stared at her desk.

Begich, who's also on the committee, described it as "highly unusual" for such a dispute to play out in public view.

"Clearly, these people don't get along that well," he said.

Nathaniel Herz

Anchorage-based independent journalist Nathaniel Herz has been a reporter in Alaska for nearly a decade, with stints at the Anchorage Daily News and Alaska Public Media. Read his newsletter, Northern Journal, at natherz.substack.com