Alaska Legislature remains gridlocked over PFDs, with time running out in regular session

State lawmakers have just five days remaining in this legislative session, and there’s still no deal between the House and Senate on an operating budget for the upcoming fiscal year. They might need a special session to come up with a budget deal, but there’s still no clear path forward for a compromise.

Alaska Public Media’s Legislative reporter Lex Treinen has been following the action — or inaction — over the budget. He said the sticking point continues to be the size of Permanent Fund dividend checks.

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The following transcript has been lightly edited for clarity

Lex Treinen: The big gulf right now is — you guessed it — the size of the Permanent Fund dividend. The Republican-dominated House Majority is pushing for a PFD of about $2,700. The Senate, meanwhile, says that sort of payout is unsustainable since it would require dipping into the state’s budget reserve, basically the state’s savings account. They’re proposing a $1,300 PFD and boosting education funding by about $175 million. And that version of the budget wouldn’t require using the state’s budget reserve, if oil prices stay where they are. 

Casey Grove: What’s the problem with dipping into the budget reserve? 

LT: There’s a few. First, the Constitutional Budget Reserve, or CBR, is really supposed to be an emergency fund if the price of oil tanks, for example. The price of oil has been sort of average lately, and Senate leaders say it’s irresponsible to pull from the reserve without a real need.

Second, there’s not a whole lot of money left in the CBR. Right now, it’s just about $2 billion. Budget experts say that’s not enough money for the state to weather a financial storm. They say that it really should be double that amount.

Finally, there’s the issue of politics. Dipping into the reserve requires a three-quarters vote in the Legislature. That’s just not achievable in either body. In fact, the House already passed their version of an operating budget, but because they couldn’t get the votes they needed to dip into the CBR, their version of the budget doesn’t even have anything for a PFD. 

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CG: That’s …weird. The body that has been pushing for a big PFD doesn’t even fund one in its budget?

LT: Yep. Behind the scenes, I’ve heard legislators call this version of the budget “a joke.” There’s no way the Senate will get behind a budget with no PFD.  

CG: So are the two bodies negotiating right now? I mean, how does the Legislature get out of this and pass a budget before the end of the session next week?

LT: Well that really is the question. Both sides have been doing some low-key finger-pointing in the last couple days, though they say they’re still hoping for a deal. The Senate Majority held a press conference on Thursday where they laid out what they called a compromise deal. It would pay out the House’s larger PFD only if the price of oil rises and after they add some money back into the CBR.

But Senate President Gary Stevens, a Kodiak Republican, hadn’t met with the House Majority before making the new budget proposal.

“We are continuing to work and negotiate with the House as often as we can. They canceled our meeting yesterday. Unfortunately, we had a hard time getting together today because of the long session,” he said.

Still, he said, the Majority would still be working to find a path toward compromise.

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CG: So are there any ways to get through the impasse? 

LT: I think there are two most likely outcomes. 

One is that the Senate and House majorities come up with some sort of deal that would involve paying out a higher PFD that maybe dips into the budget reserve but at a lower level than what the House wants. Right now, it’s hard to picture that happening, since the Senate Majority has been crystal clear they want a balanced budget.

The other option is that the House Majority splinters and votes with the Minority to approve the Senate’s operating budget. That’s called concurrence. That also seems unlikely, but as we approach the end of the session, legislators might be feeling more pressure to find a way to avoid a special session, which becomes more likely every day.

CG: And then the budget needs to be approved by the governor. What has he said?

LT: The Republican Gov. Mike Dunleavy, has asked for an even higher PFD of nearly $4,000. But he hasn’t said what exactly he would do this year if the House and Senate agree to a budget with a lower PFD. I talked to his spokesperson, and he told me the governor would wait to make any decisions until he’s seen the budget.