PFD debate recycles, draws new ideas and national scrutiny
As lawmakers continue to debate the size of this year’s Permanent Fund Dividend, and as Gov. Mike Dunleavy waits for enough legislative support for a payout that aligns with a decades-old statute, leading legislators have floated one idea worth $3,000 to eligible Alaskans.
First, pay $1,600, then hold another special session to award $1,400, but that payment would be linked to a new, some say more affordable, calculation that would also repeal the current law.
Supporters say it would allow Dunleavy to meet his longstanding campaign promise while addressing what many lawmakers have publicly stated: the state needs a formula change.
Dunleavy told KTVA he’s not ready to sign off on that idea just yet.
“I have to see the law, meaning their completed work on the law,” he said. “For me to say upfront that I would agree to something that I have not seen in terms of a bill, it doesn’t make a lot of sense, and I think people understand that. If the Legislature wants to try and change the statute, I need to take a look at it before I can comment whether I’m going to support that or not. I have to see the final product.”
House Speaker Bryce Edgmon, I-Dillingham, said as long as there are not 21 votes in the House nor 11 votes in the Senate — both needed for a simple majority — Dunleavy needs to consider alternatives.
“The governor seems at this point unwilling to accommodate that request,” he said, “and we have told him repeatedly that the votes are not there in the House and Senate to pass a $3,000 PFD outright at this point and come back later on and try to change the statute in a separate manner.”
The House and Senate are still trying to agree on the dividend size.
On Friday, the House passed House Bill 2003, which would pay up to a $1,605 dividend. The Senate Finance Committee, however, amended a different House bill adding a $3,000 dividend on a 5-4 vote, cycling the debate back to the Senate floor for a vote possibly as early as Sunday.
In January, Dunleavy introduced a constitutional amendment to enshrine the traditional formula, but that hasn’t gathered enough support and there is a higher bar than the standard majority vote. Instead it requires two-thirds of the House (27 votes) and the Senate (14 votes) each.
At the very least, Dunleavy has long said he wants Alaskans to have some voice in a change, and he’s maintained that position.
“I think the people of Alaska also want to have a say in this,” he said, “and if there was a way as part of any changes the people of Alaska could have any say I think the people of Alaska could get around something like that. So again, we’re going to have to take a look at what comes out of this discussion.”
Dunleavy also said a $3,000 payment represents a “reset government for the people of Alaska” by following a statute that dates to the early 1980s.
“[Alaskans] believe that the laws should be followed. They have to follow the laws and they expect us as politicians to follow the laws. Follow the laws, but at the same time you can have a discussion as to what you want to change in the law or what you want the Permanent Fund to look like going out in the future.
Dunleavy says giving Alaskans a voice now could keep more changes coming through a future prospective referendum. “Engage the people of Alaska because, as I've always said, they will become engaged.”
The dividend dispute is getting noticed in the New York financial sector.
Late Thursday, Moody’s Investors lowered the state’s outlook from stable to negative. This could later lead to a credit rating downgrade, and that makes it more expensive for the state to finance various projects.
The report noted the on-going battle over the dividend, which has not followed the statutory formula for the last three years by paying lower amounts.
The report said:
“A new focus on distributing increased shares of Permanent Fund earnings to residents, combined with political paralysis or other factors that prevent a return to budget balance, may make the current fiscal approach unsustainable over time, particularly in the event of financial market downturns or the inability to sufficiently contain spending growth.”
Moody’s analyst Ted Hampton said the words “political paralysis” are not aimed at either the Legislature or the Dunleavy administration, stressing Moody’s “looks at government as a whole.”
Hampton said the dividend impasse is interfering with the state’s ability to pursue long-term, structural balance.
“Now because of what you might call paralysis, impasse, or various parties digging in their heels, however you want to phrase it, there’s less clarity on the fiscal path forward for the state Alaska and I think that brings some heightened level of risk, risk for examples that fiscal reserves will be depleted.”
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