With less than two weeks left in the legislative session, momentum seems to be waning in some circles of leadership to pass a long-term plan for use of the Permanent Fund’s earnings for government.


“You’ve done the litmus test of what the voting appetite is in the bodies and my assumption is that it struggles on both sides but it may or may not pass but that’s yet to be determined,” Senate Rules Chair Charlie Huggins, R-Wasilla, told reporters Monday.


When asked whether a statutory plan for use of the permanent fund was a must-have this session, Sen. Huggins replied, “Well, it is for the governor. Not for me, no.”


Legally, the Legislature is only required to pass a budget this session — and it could approve a one-time draw from the earnings reserve with a simple majority vote. That type of a draw would still have a negative impact on the amount of the Permanent Fund Dividend, also paid from the reserve.


Senator Lesil McGuire, R-Anchorage, sponsor of Senate Bill 114 to utilize the permanent fund as an endowment, says discussions happening in certain circles of lawmakers have had her concerned.




Two things happened today that made me check the lunar cycle. One: sb 114 is officially dead and the legislature will…


Posted by Lesil L. McGuire on Friday, April 1, 2016




 


“You have uncovered, and others have uncovered, that there is a divide,” McGuire told KTVA. “There’s a divide both in the House and in the Senate around the two camps,” said McGuire. One of those camps — says McGuire — is to use savings alone to bail the state out of its budget problem this year.


On Friday, McGuire posted on Facebook that SB 114 was “officially dead.”


“The legislature will draw money out of its declining savings accounts to fund its budget for the year,” McGuire wrote in an April Fools post, noting “sadly the part about sb 114 (sic) is true.”


McGuire said she wrote the post to make the public aware of what she was learning about discussions happening in certain groups of both bodies.


“You might see that a bill’s noticed for public hearing and so forth but that may not reflect another layer of decision making that’s going on,” said McGuire, who says she started getting more intelligence about ongoing strategic meetings. “There seemed to be a reluctance to make a permanent structural change. That people felt like we were nearing the end of session, that there just wasn’t the time to coalesce around a percentage of market value approach,” she said, referring to SB 114.


McGuire says public opposition to the post have given her new hope.


“I feel optimistic at this point that there’s renewed pressure on the idea of not leaving juneau without a permanent plan.”


Senate President Kevin Meyer said the bill is not dead in his mind.


“You want to put some kind of bill in place, some kind of plan in place long-term so that every year you have this money from the earnings reserve that you can use to fund government, but at the same time have some money left over to pay a dividend,” said Meyer in an interview Monday.


House Speaker Mike Chenault said he agrees a plan to use the fund as an endowment is the responsible thing to do. But says that if there aren’t enough votes to support it, the House may approve a one-time draw from the earnings. The Legislature can also draw from the state’s constitutional budget reserve to fund the budget, but that requires a three-fourths vote, which would undoubtedly mean leveraging with minority members. Chenault said he’s working with Rep. Tuck to hear what the minority’s must-haves are for that sort of a draw.


In a letter to lawmakers last month, Gov. Walker listed a plan for use of the Permanent Fund’s earnings and a broad-based tax as must-haves this session. He’s told reporters he will call a special session if the Legislature doesn’t pass both.


In a statement Monday, Walker reiterated his position.


“It is absolutely critical that we pass a complete fiscal plan this year, including new revenue. Continuing to draw down on our savings is not a responsible plan. My administration will continue to work with lawmakers to answer their questions and find a sustainable solution to our $4 billion budget deficit this session,” said Walker.


Sen. Huggins says he’s wary of passing all parts of the governor’s plan this year.


“So the governor says he wants all the items this year, a Permanent Fund fix and taxes, but he wants to do the budget reductions over multiple years — that’s not a congruent equation. You know, you sort of lose your incentive for cutting the budget, if you’ve fixed the hole in the budget,” said Huggins.


Sen. Olson echoed Sen. Huggins wariness, saying “To do something, just to get something done because we’re in a crisis doesn’t, does not justify good judgement in trying to go ahead and make sure that the unintended consequences do not affect the next generation of people that are out there.”


Olson says his constituents want an income tax passed along with any changes to the Permanent Fund Dividend program.