The Alaska House of Representatives approved a funding bill on Tuesday that is intended to pay $1,100 permanent fund dividends this year.
But it’s not a done deal.
The bill still has to pass the Senate, and the amount could be much lower, since Gov. Mike Dunleavy’s administration has said one of the accounts to be used to pay dividends in the bill is empty.
The Legislature has passed the deadline for on-time PFD payments, meaning this year’s dividend will be later than usual.
The Permanent Fund Dividend Division said lawmakers had to agree to a PFD amount by Tuesday for dividends to go out in early October. The division said PFDs would be paid roughly 30 days after the amount is set.
House members who supported the bill on Tuesday, House Bill 3003, said it was needed to ensure there is a PFD this year at an amount that protects permanent fund earnings from being drawn down. They point to the state spending other savings accounts — including the Constitutional Budget Reserve — down from nearly $18 billion in early 2014 to roughly $1 billion by mid-2020.
“We had so much money in the Constitutional Budget Reserve — we had so much saved up,” said Rep. Calvin Schrage, an Anchorage independent.
He later added: “We will not allow the earnings reserve to be used as that next pool of money.”
But members of the Republican minority caucus opposed the bill, saying that the state should pay either the full dividend under the formula in a 1982 law, which would equal roughly $3,800, or the $2,350 level proposed by Dunleavy as part of his plan to put the PFD in the constitution. The state hasn’t followed the 1982 formula since 2015, after oil prices fell.
“There’s a lot wrong with this unbalanced budget and I can’t vote for it at this time,” said Rep. George Rauscher, R-Sutton.
The Legislature passed a law in 2018 intended to limit the annual draw from the total value of the permanent fund and its earnings reserve. But it hasn’t been able to agree on changing the PFD formula, due to differences over whether the budget should be balanced using taxes, cuts to government services or smaller dividends.
On Tuesday, each side criticized the other for their positions during the third special session, which is more than halfway over. The majority said minority members have not supported policy changes that would balance the budget in the long term, while the minority focused on how the majority hasn’t held hearings on Dunleavy’s proposals.
The House bill approved Tuesday now goes to the Senate, which is next scheduled to meet on Wednesday. But even if the Senate approves the PFD amount in the bill, it’s not certain what Alaskans will be paid in dividends.
The $1,100 is funded from two sources: $400 million from the general fund that pays for the rest of the budget and $330 million from an account known as the Statutory Budget Reserve, or SBR.
Dunleavy’s administration considers the SBR account to be empty. That’s because it says three-quarters of both legislative chambers had to vote to maintain the money in the account. And that vote failed in both chambers in June.
So the PFD would be roughly $600 if the SBR money isn’t available. And Dunleavy vetoed a somewhat smaller PFD amount in an earlier bill, saying that the amount was an insult to Alaskans.
Supporters of the bill have noted that Superior Court Judge Josie Garton identified the SBR in a recent ruling as being one of the accounts that is separate from those subject to the three-quarter votes. It’s not clear if there could be a legal battle over paying the roughly $500 worth of dividends in the SBR.
The bill the House passed on Tuesday also was written to pay $114 million in oil and gas tax credits. But $60 million of that wasn’t funded, since it also required three-quarters of the House members to support it. And that vote failed, receiving only 21 in favor.
Committees are scheduled to hear other bills this week. The special session must end by Sept. 14.