Members of a state Senate panel remain skeptical regarding Gov. Mike Dunleavy’s plan to pay back three years of reduced Permanent Fund dividends.

Revenue Commissioner Bruce Tangeman told the Senate State Affairs Committee on Tuesday, however, that the plan will receive greater context when Dunleavy rolls out his amended budget next week.

“This is one part of a much larger discussion that, come Feb. 13, all the cards will be on the table. We’ll be able to have that larger discussion on what is the right course for the state of Alaska,” Tangeman said.

Dunleavy campaigned last year strongly on back paying three years’ worth of reduced dividends to all eligible Alaskans who are still in the state.

In 2016, former Gov. Bill Walker reduced the payout by nearly half with a budget veto. The Legislature followed the next two years with a reduced appropriation that Walker supported.

Last month, Dunleavy introduced a staggered payment plan as a way to pay back reduced Permanent Fund dividend payouts from each of the last three years.

Senate Bills 23 and 24 call for the following payment schedule:

• $1,061 from 2016 to be paid this year to all who received a dividend three years ago and remain eligible this year.
• $1,289 from 2017 to those who received a dividend two years ago and will be eligible in 2020.
• $1,328 from 2018 to Alaskans who received a dividend last year and will be eligible in 2021.

Committee members expressed several concerns, including how larger dividends in coming years could again lead to reduced future dividends. They also worried about a rapid depletion of the fund’s earnings, the pool used to pay dividends.

“Before I can support this approach, I’m going to have to take a look at the budget, what the ramifications are,” said committee member Sen. John Coghill, R-North Pole.

On Feb. 13 Dunleavy will introduce an amended budget proposal telling lawmakers how he plans to close a $1.6 billion budget gap and pay out large dividends. Tangeman told the committee the new budget will provide clarity.

“While the dividend was reduced, the size of government was not reduced significantly," Tangeman said. "When it comes to Gov. Dunleavy’s view on this, these go hand in hand."

“The dividend can be restored but it’s critical the size of government be brought into check and the state of Alaska begins living within their means," he added.

Those who no longer live in Alaska would not be eligible for back pay. Sen. Peter Micciche asked if that provision will survive legal review.

Tangeman said it was “vetted fully,” and would “stand up in court” were there any challenges.

Committee Chair Sen. Mike Shower, R-Wasilla, noted that his committee will be busy with crime bills and the governor’s constitutional amendments.

“Stand by,” he said. “This will take some time to not only get through these bills, but the others.”

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