Alaska Legislature

Alaska House votes for $1,100 dividend payment this year, but Senate and governor have yet to approve

JUNEAU — The Alaska House of Representatives has approved a funding bill that contains a 2021 Permanent Fund dividend of about $1,100 per recipient, but the bill still must be approved by the Senate and Gov. Mike Dunleavy.

That approval isn’t certain. Part of the dividend is funded from a savings account, and Dunleavy administration officials say that account has been drained.

“If we felt that way, we wouldn’t have taken funds from it. We have a different perspective on that,” said House Speaker Louise Stutes, R-Kodiak.

Even if the bill approved, it’s still not known when the dividend will reach Alaskans, though the payment is almost certain to be delayed beyond the normal October schedule.

The bill does not include a long-term change to the Permanent Fund dividend formula, an objective sought by Dunleavy and most members of the Legislature during the ongoing special session. Instead, the bill contains only a 2021 payment and assorted other spending.

As well as the dividend, the bill includes $54 million in tax credits for oil and gas companies and allows the state to accept more federal COVID-19 aid.

The final vote was 24-16, with all no votes coming from members of the House’s Republican minority. Two members of the minority voted to pass the bill, as did Rep. Sara Rasmussen, R-Anchorage, who is not a member of the minority or majority.

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Many Republicans and some Democrats and independents supported amendments calling for larger dividends, but each was defeated during debates and votes on Monday.

At current levels of state spending, Alaska is operating with a small surplus, but only if no dividend is paid.

The bill approved Thursday allocates $400.5 million of that surplus, plus another $330 million from the state’s Statutory Budget Reserve, toward the dividend. If there are 630,000 recipients, that works out to $1,160 per person. The 2020 dividend was $992 per person.

Dunleavy and many in the House’s Republican minority had called for paying a larger amount, using additional money from the Alaska Permanent Fund’s earnings reserve.

The $82 billion fund has had record-breaking gains over the past year and has sufficient assets to cover an additional withdrawal, but legislators are already at the legal limit for spending from the fund.

A law passed in 2018 limits withdrawals in a given calendar year, and a majority of the House opposed breaking that limit, despite Republican pleas that a larger payment would help individual Alaskans’ finances.

“This is the year to pay our people and help rural Alaska, help our subsistence users,” said Rep. Kevin McCabe, R-Big Lake.

But Rep. Ivy Spohnholz, D-Anchorage, responded that Permanent Fund investments now account for two-thirds of the state’s general-purpose revenue. Spending more now means less money invested in the fund, less earned later, and may mean budget cuts or new taxes.

“Paying a full dividend in 2021 comes at the expense of rural Alaska for years to come,” said Rep. Tiffany Zulkosky, D-Bethel.

The dividend legislation will now advance to the Senate.

Senate President Peter Micciche, R-Soldotna, said the Senate is almost certain to amend the bill, an act that would send it to a conference committee to craft a compromise.

Regardless of that final action, Dunleavy will have the final say. After Tuesday’s vote, his social media accounts were critical, saying, “Big government won — Alaskans lost. This is unacceptable and must be corrected immediately. Alaskans deserve better.”

Rep. Zack Fields, D-Anchorage, retorted that Dunleavy’s plan would result in the largest spending increase in state history, then continued by labeling Dunleavy a “hypocrite and demagogue.”

Earlier this year, Dunleavy vetoed a dividend passed by the state House and Senate. At the time, because of a failed legislative vote, it was thought that the dividend would be only $525 per person.

After a subsequent lawsuit and a legal interpretation from the Alaska Department of Law, the Legislature’s budget analysts now believe a $1,025 dividend would have been paid without the veto.

Using the same legal interpretation, Dunleavy administration officials told the Senate Finance Committee on Monday that they believe the Statutory Budget Reserve is no longer available for use in the dividend.

The Legislature’s attorneys disagree with that interpretation, and Micciche said he believes the entire Senate is likely to take a similar position.

“I believe they passed an $1,100 PFD, and we’re going to take the time to understand if there are issues with those funds and if they need to be corrected,” he said.