Dunleavy introduces $2,350 PFD in slow start to special session

The special legislative session billed for months by Gov. Mike Dunleavy and many legislators as the end to Alaska’s years of fundamental fiscal policy battles has started like most regular sessions do: very casually.

Legislators spent the first week of the legislative session getting updates on the budget they passed less than two months ago in much the same fashion as they do shortly after they convene each January. However, the current special session is limited to 30 days, not the nearly four months lawmakers normally have to craft, debate and pass legislation, so the clock is truly ticking this time.

Once again distracting legislators from the larger, existential fiscal issues of the role of the Permanent Fund in state government, including the future of the Permanent Fund dividend, what services the state should offer and whether or not Alaska should reinstate its first broad-based tax in more than four decades, is the size of this year’s PFD after Dunleavy vetoed the approximately $525 per person appropriation in the budget passed late last June.

The fiscal year 2022 budget contained an appropriation for dividends of approximately $1,100 per eligible Alaskan but legislators failed to get three-quarter supermajority support from both chambers needed to draw from the dwindling Constitutional Budget Reserve Fund, which held just more than $1 billion as of July 31 and is the state’s primary savings account.

Without the CBR votes, the PFD was cut to $525 because of budget language written by the conference committee. Dunleavy, who is pitching a plan to use half of available Permanent Fund earnings for PFDs starting at approximately $2,350, called the $525 dividends “a joke” shortly after vetoing them.

Dunleavy submitted legislation to pay the larger dividend of $2,350 as well as fund popular scholarships and the state’s medical school partnership program with other western states known as WWAMI Aug. 19, the fourth day of the special session in Juneau.

The scholarship and WWAMI funds were caught up in the failed CBR vote due to a once uncontroversial budget procedure known as the “reverse sweep,” which restores funds for many state programs that automatically transfer to the CBR on July 1, the start of each fiscal year.

Because the governor called the special session, the Legislature can only work on the issues included in the governor’s proclamation.

“Alaskans are still in recovery mode from the economic impacts of the pandemic. With this in mind, and following recent encouraging conversations with legislators, my administration put forth a vehicle for the Legislature to fund the PFD and student scholarships — two critical programs that directly impact Alaskans. We recognize there may be other appropriations the Legislature will consider as we work collaboratively to finalize the (fiscal year) ‘22 budget in this special session; but I am committed to ensuring Alaskans get a fair share of their resource wealth,” Dunleavy said, while invoking a phrase popularized by advocates for higher oil production taxes who are largely his political foes, in a statement from his office.

Progress in the years of debates over the state’s fiscal policy has largely stalled since the Legislature passed Senate Bill 26 in 2018, which authorized a percent of market value draw on the Permanent Fund totaling about $3 billion per year and growing. It marked the first time the Fund had been used for anything other than paying dividends and operations at the Alaska Permanent Fund Corp.

Since then, the larger fiscal policy issues have spilled over into the annual budget process with legislators routinely leveraging budget items to gain support for their view on taxes or the dividend.

The special session Dunleavy called in June for legislators to discuss the future of the PFD was consumed with debates over the size of this year’s PFD that slowed the budget process to a crawl.

Elwood Brehmer can be reached at [email protected].

08/25/2021 - 10:04am