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This year’s PFD still uncertain in the final week of third special session

Legislators across the aisle agree the long-term future of the dividend wont be resolved by Tuesday
Alaska State Capitol in Juneau, Alaska.
Alaska State Capitol in Juneau, Alaska.(KTUU)
Published: Sep. 8, 2021 at 7:28 PM AKDT
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JUNEAU, Alaska (KTUU) - The size of this year’s Permanent Fund dividend has still not been resolved as legislators enter the final week of the third special session.

The House of Representatives passed a $1,100 dividend in late August, but a funding source that would pay for over 40% of that dividend is contentious.

Gov. Mike Dunleavy said that account has been drained due to a failed procedural vote in June. Some legislative leaders argue that account should be kept full after a recent Superior Court decision.

House Bill 3003 is the appropriations bill that contains this year’s dividend along with almost three dozen supplemental budget items proposed by the governor. It is currently before the Senate Finance Committee.

One option for the Senate is to change the dividend’s contentious funding source to the Constitutional Budget Reserve, another state savings account. Three quarters of the Legislature would need to support drawing from it.

If that funding source is not changed, some lawmakers say a trip to the courts may be needed to resolve the dispute.

Taking more from the Permanent Fund to pay for the dividend is also possible, but that would violate a sustainable draw structure set out in Alaska statute. Some in the Legislature say a larger dividend is needed, particularly this year, while others argue overdrawing the fund is a dangerous precedent to set.

The Senate Finance Committee is due to hear amendments to the bill on Friday or Saturday before it heads to the Senate floor. If the Senate makes changes to it, the House will need to approve them or those differences will need to be resolved through negotiations so a single bill can pass through the Legislature.

The 30-day special session must end on Tuesday.

Senate debates could include increasing the dividend to the 50-50 model proposed by the governor. That model would see Alaskans receive a roughly $2,350 dividend in 2021.

Members of the largely Democratic House majority say they could vote for a dividend of that size, but only if it comes with a comprehensive fiscal plan that includes new revenues.

The Senate passed a 50-50 dividend earlier in the year before it shrank to $1,100 during budget negotiations with the House. Dunleavy vetoed funding for that dividend after it dropped to $525 due to the failure of that same procedural vote that drained some state accounts.

Jeff Turner, a spokesperson for the governor’s office, said it’s “premature” to talk about whether Dunleavy would veto the dividend again if it isn’t increased. He said the contentious funding source could also still be changed.

The dividend is typically paid in early October. The Permanent Fund Dividend Division says it is reasonable to assume that it will take 30 days for Alaskans to receive their checks once a dividend is approved by the Legislature and the governor.

Sitka Republican Sen. Bert Stedman chairs the Senate Finance Committee. He echoed concerns in the Capitol that Alaskans may not receive a dividend this year if an agreement is not reached.

Stedman hopes the Senate passes HB3003 with only a few changes from the House version of the bill.

“Ideally, maybe no changes at all, but I think that’s unlikely,” he said. “We’ll work through the process.”

The Senate Judiciary Committee passed a bill onto the Senate Finance Committee that would rewrite the dividend formula to the 50-50 model following recommendations from a bipartisan working group. Implementing that new formula would be contingent on the Legislature passing new revenues.

The House Ways and Means Committee has also been holding hearings on a long-term fiscal plan. Rep. Ivy Spohnholz, D-Anchorage, chairs the committee which is hearing bills on proposed spending caps, revenue options, dividend formula changes and ideas on how to shrink budget growth.

Spohnholz said “substantial progress” in passing a fiscal plan would need support for new revenues from the governor. Dunleavy has said he would only sign off on new revenues if they come alongside a constitutional dividend package that goes before voters.

Dunleavy said in a radio interview last week that he is considering whether he would call the Legislature back into another special session to resolve the long-term future of the dividend. Some legislators are questioning how productive that would be.

“If the governor is going to call us in for a fourth special session, he really needs to come to the table and start bargaining and negotiating,” Spohnholz said.

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