Alaska Legislature meets for 3rd special session amid uncertainty over PFDs, budget gap

A man in a tie and jacket speaks at a podium.
Gov. Mike Dunleavy speaks at a news conference in the Capitol on Monday, Aug. 16, 2021. Dunleavy talked about what he would like the Legislature to pass during the third special session this year. (Andrew Kitchenman/KTOO and Alaska Public Media)

The Alaska Legislature met in Juneau on Monday for its third special session this year. 

Legislators are considering ways to reach a long-term plan to close the gap between what the state spends and what it raises. 

And Gov. Mike Dunleavy is also repeating his call that the Legislature pass constitutional amendments to put the Permanent Fund dividend in the state constitution and to lower the limit on how much the state government can spend each year. 

Dunleavy said at a news conference Monday that he doesn’t think new taxes are necessary. He’s proposed making an unplanned draw from the Permanent Fund to cover deficits for the next few years. He noted the fund’s value has increased by $17 billion in the last 14 months. 

“You take a piece of the windfall, and you spread it across a few years and you’re able to smooth this out, and we can get through this without any large statewide taxes,” he said. “People are talking about income taxes, even sales taxes — you don’t need that.”

A group of people, some in face masks, sit behind desks and in leather chairs in room.
The Alaska House of Representatives meets for the first day of the Legislature’s third special session this year in the Capitol on Monday. (Andrew Kitchenman/KTOO and Alaska Public Media)

House Speaker Louise Stutes said she doesn’t expect there to be enough votes to pass an amendment enshrining the PFD in the state constitution, based on her conversations with other legislators. Stutes is a Kodiak Republican who caucuses with a mostly Democratic majority.

Stutes said the governor is asking the Legislature to put a higher PFD in the constitution without providing details on how he would pay for it. 

“To say we’re going to put out a PFD that creates almost a billion-dollar hole in the budget, and we’ll worry about that billion-dollar hole later: That is no fiscal plan,” she said. 

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Opponents of making unplanned draws from Permanent Fund earnings are concerned that the state would spend down the earnings until there is nothing left.

Stutes wrote Dunleavy and Senate President Peter Micciche, R-Soldotna, letters expressing grave concern that Dunleavy hasn’t put funding for this year’s PFD, college scholarships and medical education on the special session agenda. 

A working group has been meeting since the last special session, focused on a long-term budget plan. 

The eight-member group said in its final report that some form of added revenue is needed along with additional cuts, but the group couldn’t agree on details. 

They agreed that the state should “work towards” a plan that would set PFDs at a higher level than recent years. But they disagreed on whether that should happen immediately or over time.

Working group member Sen. Jesse Kiehl, D-Juneau, said the group made a lot of progress. 

“As part of the collaboration — working together — I signed off on a range of cuts, right? That was hard for me. But I can get there,” he said. “Other members who hate the very notion of  taxes signed off on a report that recommended a dollar range of new taxes.”

The report doesn’t use the word “taxes.” It talks about new revenue, but doesn’t say what that would be. The group recommended working toward additional revenue of between $500 million and $775 million. And it recommended working toward spending reductions of between $25 million and $200 million. 

The House has adjourned until Wednesday. The Senate adjourned until Thursday. 

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Andrew Kitchenman is the state government and politics reporter for Alaska Public Media and KTOO in Juneau. Reach him at akitchenman@alaskapublic.org.