Vote to draw from state savings account to pay for capital projects falls short

Rep. John Lincoln, D-Kotzebue, speaks about an amendment to the capital budget bill that would pay full, roughly $3,000 permanent fund dividends. The amendment failed on the House floor in the Capitol in Juneau, June 12, 2019. (Photo by Andrew Kitchenman/KTOO and Alaska Public Media)

The Alaska House passed the capital budget Wednesday. But a crucial vote to draw money from the Constitutional Budget Reserve, a state savings account, failed to get the 30 votes needed to pass.

With large differences remaining over permanent fund dividends, that means the special session will likely end Thursday or Friday with more work left to do.

Much of the debate on the capital budget bill, Senate Bill 19, focused on a proposed amendment to pay full PFDs of roughly $3,000.

The amendment was defeated, with 21 votes against it and 15 in favor.

Supporters of paying full dividends say failing to follow the formula set in a 1982 law would violate the trust of the public.

Homer Republican Rep. Sarah Vance supported the amendment. She said dividends help families like hers cover daily costs.

“It has brought heat to our home,” she said. “The first thing we do that week of the check is that we immediately go to Costco and buy the food that will get us through for the winter. We buy the children clothes and we pay on past bills — the $1,000  emergency visit for when my little boy cut his finger and I couldn’t get the bleeding to stop.”

Opponents say the full dividend would violate a law passed last year to limit draws from permanent fund earnings. And that the cost of more than $1 billion would lower the permanent fund forever.

Kotzebue Democratic Rep. John Lincoln said covering the cost of higher dividends will hurt some residents more than others. He noted that Gov. Mike Dunleavy proposed shifting oil property taxes from municipalities to the state to balance the budget.

“There’s some times where — when we’re talking about North Slope oil revenue and all the revenue coming to the state — I feel like we should all be wearing fancy wigs and speaking with a British accent because I feel like I’m participating in a little bit of a … colonizing force,” he said. “I hear a lot of comments about being able to pay a full dividend on the backs of massive transfers of wealth from the North Slope and other communities.”

Thirteen Republican representatives who are in the minority caucus voted against drawing money from state savings to pay for the capital budget. They were unwilling to vote for the draw without the full PFDs. While 23 House members voted for it, 30 members are needed to pass draw from the Constitutional Budget Reserve.

Dunleavy could immediately call the Legislature into a second special session to deal with dividends and the capital budget.