As the Alaska Legislature gathered for its third special session of the year, Gov. Mike Dunleavy said Aug. 16 that Alaskans are running out of patience for lawmakers to address the state’s long term financial outlook, including how to solve structural budget deficits, options to protect the Permanent Fund and annual dividend payments, and potential new revenues and spending reductions.
While legislators are expected to deal with how to increase revenues for the state, the governor said he did not think this was necessary, and any revenue increases must include constitutional spending limits. His main priority, however, is to address the PFD payments to Alaskans and to install a constitutional spending limit for government.
Earlier this year, Dunleavy vetoed the paltry $525 dividend that the Legislature approved, which means there is currently no dividend payment slated for 2021. If the Legislature had followed Alaska law, the statutory dividend would be roughly $3,700 this year.
For 34 years, the amount of each payment was based upon a five-year average of the Permanent Fund’s performance. In 2016, then Gov. Bill Walker abandoned the longstanding statutory PFD, and the Legislature has since engaged in an annual debate about how much they should provide for the PFD payments. Last year’s dividend payment was just $992 – the eighth smallest over a 39-year period.
The Permanent Fund has seen extraordinary growth over the past year, growing by more than $18 billion.
Despite campaigning on the promise of restoring a full statutory dividend, Dunleavy has been met with strong opposition from the majority of legislators and is now willing to accept a compromise. The governor has proposed a $2,350 PFD for 2021 if the Legislature will agree to give Alaskans a chance to vote on protecting the PFD with a constitutional amendment that would guarantee the government can’t spend more from the Permanent Fund than what is given to Alaskans through the annual PFD payments.
“The question is, is there going to be the political will,” Dunleavy said during his Aug. 16 press conference. “Everyone wants to put this to bed.”
Dunleavy said he looks forward to seeing what legislators come up with but said Alaskans “expect us in Juneau to get this resolved.”
The governor’s proposal, HJR 7 and SJR 6, would protect PFD funds within the state’s constitution and ensure what he says is a “fair and equitable annual PFD.” Also before the Legislature is Dunleavy’s proposed constitutional amendment to establish a state spending cap (HJR 6, SJR 5).
Dunleavy wants to use $3 billion from the now $82.4 billion Permanent Fund Reserve to help bridge funding gaps while also paying out a dividend to all eligible Alaskans.
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The Permanent Fund has seen extraordinary growth over the past year, growing by more than $18 billion. Some of that money, the governor said, should be used to help Alaskans during a time of great need.
He took issue with legislators who want to turn the PFD payments into an annual appropriations debate which legislators argue over each year. That approach, he said, presumes that the government can make better decisions that ordinary Alaskans about how to use their PFD money.
“Alaskans have individual issues that they deal with on their own,” he said.
When asked if he’d be willing to call legislators back into a fourth special session if they fail to deal with the PFD, he said “I’m not planning on a special session, because I’m hoping everything gets done over the next 30 days.”