JUNEAU — The Alaska Legislature has approved a $1,100 Permanent Fund dividend to be paid to Alaskans this year.
The Alaska Senate voted 12-7 to approve House Bill 3003, containing that amount, two hours before adjourning from the Legislature’s third special session this year.
The bill has already been approved by the House and now goes to Gov. Mike Dunleavy for signature.
In a written statement, Dunleavy said he will not veto the dividend, even though he believes it is insufficient.
“On one hand, a veto of this half measure would seem appropriate, but at this stage of the game that would aid and abet those that don’t care about individual Alaskans, small businesses and the economy. As a result, I will not veto this partial PFD, but will call the legislature back into session Oct. 1 to get the rest of this year’s PFD and to solve the state’s financial problems with a complete fiscal plan,” he said.
Dunleavy vetoed a prior $525 dividend earlier this year that had passed the House and Senate, and his administration disagrees with lawmakers about both the size of the dividend and the source of its funding.
The Alaska Department of Revenue said dividends can be paid about 30 days after final approval of the amount.
Though lawmakers passed a dividend for this year, they did not change the formula for future payments, nor did they finalize a fiscal plan to pay for a new formula. Dunleavy had urged the Legislature to act on both issues, which were also on the special session’s agenda.
A formula-change bill failed to advance Tuesday afternoon in the Senate, with lawmakers setting it aside for further discussion.
To allow discussion of “an act or acts relating to a fiscal plan,” Dunleavy is calling the Legislature into a fourth special session, starting at 10 a.m. Oct. 1 in Juneau.
For this year’s dividend, Dunleavy had proposed a $2,350 payment, funded with money from the earnings reserve of the Permanent Fund. He also proposed a long-term change to the formula and sought to enshrine it in the state constitution.
A majority of the House and half of the Senate opposed both ideas.
Paying for the governor’s proposed dividend, plus already-budgeted state services, would have required the Legislature to break a 2018 limit on spending from the earnings reserve.
With the Permanent Fund at a record-breaking $82 billion and Alaska’s economy still suffering from the COVID-19 pandemic, Dunleavy said that it makes sense to break the limit.
Some lawmakers agreed with that approach.
“It is reasonable and prudent to do a draw like this at this time,” said Senate Majority Leader Shelley Hughes, R-Palmer.
But many lawmakers said they were concerned about the opportunity cost: Money that remains in the reserve is reinvested, earning more money for the state in the long run.
Instead of following the governor’s proposal, the House two weeks ago approved a $1,100 PFD, paid for with $400.5 million in surplus state revenue and $330 million from the state’s Statutory Budget Reserve.
The Senate Finance Committee failed to advance that idea to a vote of the full Senate until Tuesday, the last day of the Legislature’s ongoing special session and the last day to act.
On Tuesday morning, as the Senate prepared to consider the House’s idea, Speaker of the House Louise Stutes, R-Kodiak, said the House would not meet that day.
That left the Senate with one choice.
Because any change to the House’s amount would have required the House’s agreement — something no longer possible before the end of the special session — the Senate was forced to either approve the $1,100 figure or leave the special session with a $0 dividend.
“We are not playing chicken with another movable body; we are playing chicken with a wall,” said Sen. Scott Kawasaki, D-Fairbanks.
Senators initially voted 10-9 in favor of the governor’s $2,350 amount, but Kawasaki changed his vote, saying that his preferred choice was no longer an option.
Sen. Mike Shower, R-Wasilla, proposed an even larger $3,800 amount, but that figure — which also would have required House approval — failed 8-11.
He was among a group of senators frustrated by their choices.
“It’s $1,100 or nothing. That’s the option we were put into, and it feels like a setup to me,” he said.
Earlier action by the Senate Finance Committee, which favors the smaller dividend, could have allowed time for negotiations on a larger amount.
That didn’t happen, infuriating senators who aren’t on the committee and favored a larger payment.
“It was set up that way, and I feel like it was on purpose,” Shower said.
Stutes rejected that claim.
“I have no way of controlling what the Senate does. They have their own process. We got the bill to them about two weeks ago. So to consider it a setup, I think, is a little bit overstated,” she said.