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Alaska Legislature

Alaska House votes for $1,600 dividend; bill now goes to the Senate

Rep. Andy Josephson, D-Anchorage, speaks in favor of House Bill 2003 on July 26, 2019. If accepted by the Senate and the governor, HB 2003 would pay a $1,600 Permanent Fund dividend. (James Brooks / ADN)

JUNEAU — The Alaska House of Representatives has approved legislation that would pay a $1,600 Permanent Fund dividend this year.

Advancing on a 22-12 largely along caucus lines (six lawmakers were excused absent), House Bill 2003 now goes to the Senate, which could consider it as early as Saturday.

Even if the Senate approves the amount, Gov. Mike Dunleavy remains firmly in support of a $3,000 dividend. In a conference call with reporters Thursday afternoon, the governor said he believes the state should pay a $3,000 Permanent Fund dividend this year, and if lawmakers want a lesser amount, they can consider changing the payout formula afterward.

A majority of the House of Representatives opposes that concept on budgetary grounds. Alaska’s state budget is funded more by the investments of the Alaska Permanent Fund than by tax dollars (including oil taxes), and at present levels of state spending, using the traditional formula would require breaking a Permanent Fund spending limit signed into law last year.

“This bill is a compromise,” said Rep. Jennifer Johnston, R-Anchorage.

Johnston is a member of the coalition of Republicans, Democrats and independents that controls the House.

As Johnston explained, the bill uses $172 million from the state’s Statutory Budget Reserve to boost the dividend amount while still remaining within last year’s spending limit. If lawmakers choose not to spend from that account, the dividend would be $1,336.

Any dividend projection will vary slightly from the final payout because the amount is affected by the number of people who apply.

Responding to Johnston, Rep. Tammie Wilson, R-North Pole, said, “I’d sure like to know who compromised with whom.”

Members of the Republican House minority, joined by Rep. Chris Tuck, D-Anchorage, and Republican Rep. Gabrielle LeDoux, R-Anchorage, have not budged from their position that the state should pay a $3,000 dividend.

Wilson said it’s not about the amount of the dividend: It’s about the fact that state law specifies a particular formula and that formula should be followed.

“It is not unreasonable,” said Rep. David Eastman, R-Wasilla, “to maintain the same calculation for the dividend that has been on the books for many, many years.”

Rep. Zack Fields, D-Anchorage, studies paperwork as he and the rest of the Alaska House of Representatives prepares to vote on House Bill 2003 on Friday, July 26, 2019. If approved by the Senate and governor, HB 2003 would pay a $1,600 Permanent Fund dividend this year. (James Brooks / ADN)
Rep. George Rauscher, R-Sutton, is welcomed back to the Alaska House of Representatives on Friday, July 26, 2019 by Rep. John Lincoln, D-Kotzebue (left). Rauscher has been absent from the House for medical reasons. (James Brooks / ADN)

Other lawmakers disagree. In a 2017 decision, the Alaska Supreme Court ruled, “The Legislature’s use of Permanent Fund income is subject to normal appropriation and veto budgetary processes.”

Most of the coalition House majority believes that ruling allows the Legislature to vary from the traditional formula, and because of last year’s cap on Permanent Fund spending, known as Senate Bill 26, they feel they need to do so.

Even after the governor vetoed $444 million from the state’s operating budget, state spending is expected to exceed the Permanent Fund cap if a traditional dividend is paid this year. Rather than violate the cap in the second year of its existence, the coalition majority favors reducing the dividend.

The House minority and the governor disagree. Many lawmakers believe the dividend represents Alaskans’ share of collectively owned subsurface mineral rights and is an obligation of the state rather than a simple payout.

“Alaskans aren’t wanting a welfare check. They want their share,” said Rep. Sarah Vance, R-Homer, following the vote.

Reps. Ben Carpenter, R-Nikiski; Sharon Jackson, R-Eagle River; Kelly Merrick, R-Eagle River; Mark Neuman, R-Big Lake; Sara Rasmussen, R-Anchorage; and Dave Talerico, R-Healy, were excused absent from Friday’s vote for personal reasons.

The portion of the Permanent Fund available for spending contains sufficient money to follow the traditional formula and fund the budget if lawmakers are willing to violate last year’s spending cap.

Wilson said that if lawmakers are unwilling to abide by the traditional formula, they should change it. The problem with that approach is that lawmakers are in a special session called by the governor, and under the Alaska Constitution, the governor sets the agenda of any special session he calls. In a phone call with reporters, Dunleavy said he is willing to consider a formula change only if lawmakers first approve a $3,000 dividend this year.

With the House minority and several members of the Alaska Senate also in favor of a $3,000 dividend, lawmakers do not have enough votes to call a special session of their own and address the formula.

That three-way impasse — between House, Senate and the governor — is beginning to raise the fear that there could be no Permanent Fund dividend this year.

Speaking Wednesday about a related piece of legislation, Rep. DeLena Johnson, R-Palmer, vocalized those concerns in front of her fellow lawmakers.

“I see this bill as the beginning of the PFD vacation, and who knows how long it will be?” she said.

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