House lawmakers offer dividend bills in hopes of breaking special session deadlock

JUNEAU — Members of the Alaska House of Representatives are proposing to pay a $3,000 Permanent Fund dividend this year in an arrangement they hope could break a deadlock in the Alaska Legislature’s week-old special session.

The proposal offered by members of the coalition House majority has a catch: It only happens if lawmakers agree to change the dividend formula going forward, making dividends smaller and reserving more money for government services. The idea would have to be approved by the House, Senate and Gov. Mike Dunleavy before becoming law. The governor has consistently said that any change to the formula must be put to voters for approval.

“This bill is tied together. You don’t get a full dividend without changing the formula,” said Rep. Tammie Wilson, R-North Pole, who wrote the legislation. “One does not happen without the other.”

The amount of the dividend, the state budget, education funding, and anti-crime legislation must be resolved before lawmakers can go home. If work is not done by June 15, the scheduled end of the special session, the governor has indicated he will call another.

The majority’s plan wasn’t the only one proposed Wednesday. Rep. David Eastman, R-Wasilla, also is proposing legislation for a $3,000 dividend. In other bills, he is proposing back payments covering the difference between the traditional formula and what was actually paid from 2016 to 2018. Because of the way the Legislature is structured, the proposal from members of the majority is more likely to see serious consideration.

According to its text, Wilson’s bill would allocate $500 million from the state’s Constitutional Budget Reserve and $1.4 billion from the earnings reserve of the Alaska Permanent Fund for dividends this year. If the same number of people receive a dividend this year as last year, that’s enough for a $3,077 dividend.

“We say $3,000, but it’s actually whatever the statute is,” Wilson said, explaining that the amount is not precise.

Under the bill, that amount would be paid only if lawmakers approve legislation that halves future dividends by amending the traditional formula that has been in place — mostly untouched — since 1982.

Wilson said it’s a different approach than one considered by the Alaska Senate earlier this year.

“It would make it an approximately $1,500 dividend and it would keep growing from there,” Wilson said of dividends from 2020 onward.

Public testimony on the idea has been scheduled for 9 a.m. Thursday morning in the House Finance Committee. Members of the public can contact their local legislative information office for more information about commenting, or call 907-465-4648 to comment by phone.

On Thursday morning, Wilson said public testimony would be held open throughout the day, with another round scheduled at 5 p.m., and Alaskans can email testimony to housefinance@akleg.gov.

Senate President Cathy Giessel, R-Anchorage, said the bill “sort of threads the needle” in the Legislature’s ongoing dispute over the dividend.

“Tomorrow will be interesting. I’ll be watching,” she said of the 9 a.m. House Finance Committee meeting.

Gov. Mike Dunleavy has been steadfast in his support of a dividend paid using the 1982 formula, which has been ignored by lawmakers since 2016 because of mounting deficits.

"We believe the people of Alaska should get what’s coming to them under statute,” he said on April 9.

Many lawmakers agree with the governor but also believe that statute requires unsustainably large levels of spending. Legislators have rejected most of the cuts and revenue shifts proposed by the governor to eliminate the state’s deficit while still paying a traditional dividend.

This year, a traditional dividend would result in a $1.2 billion deficit and require spending from savings to cover the gap. If nothing changes, that gap will eventually require unsustainable levels of spending from the Alaska Permanent Fund.

The Alaska Senate has deadlocked on possible solutions, with its predominantly Republican majority split down the middle. That has left the House to take the lead in the special session.

Speaker of the House Bryce Edgmon, I-Dillingham, said Wednesday that the proposal advanced by Wilson has not yet been considered by the full House majority coalition, but the idea has been discussed in concept for several weeks.

“Our caucus will be discussing it more fully coming up,” he said, and he hopes both the Senate and the governor will weigh in as well.

“We’re putting forward what is essentially a creative solution,” he said. “We’re hoping it at least merits consideration by the Senate and the governor.”

From the House Republican minority, Eastman’s competing concept also calls for a traditional dividend. Unlike Wilson’s proposal, Eastman’s does not require a change to the formula going forward.

In addition, Eastman has proposed paying Alaskans the difference between the traditional formula and what was actually issued to Alaskans in 2016, 2017 and 2018. The back payments would be spread across three years, with Alaskans receiving a bonus dividend of more than $1,000 atop the traditional $3,000 dividend this year.

Such a system was proposed by the governor earlier this year but has not gained traction in either the House or Senate.