Alaska House passes budget; PFD amount unsettled

A white woman with a black mask
State Rep. Louise Stutes, R-Kodiak, leaves the House floor after being sworn in during the first day of the 32nd Legislative Session on Tuesday, Jan. 19, 2021 in Juneau, Alaska. Stutes was elected House speaker on Thursday, Feb. 11, 2021. (Rashah McChesney/KTOO)

The Alaska House passed a version of the state operating budget Monday that leaves for later debate over how much to pay residents from the state’s oil-wealth fund for this year’s dividend.

Time to resolve that debate is running out in the current legislative session, set to end on May 19 unless lawmakers vote to give themselves an extra 10 days.

Legislative leaders have said a Permanent Fund dividend will be paid, though it has been unclear whether an amount would be included as part of the budget or handled separately.

The House, as part of its drawn-out budget debate, earlier this month failed to come to agreement on a dividend and money for a dividend isn’t included in the version of the budget that passed the chamber Monday, when it resumed debate on the spending package after a roughly week-long delay.

The budget next goes to the Senate. Differences between House and Senate versions of the budget generally are resolved by negotiators as part of a conference committee.

The process is playing out later than usual: often the House, which traditionally has first dibs on rewriting the governor’s budget proposal, passes its version of the budget in March. But it took the House a month to organize after the session started in January, and the coalition in charge has the bare minimum needed for a majority, 21 members, so if one of its members is gone, it complicates its efforts to advance priority legislation.

Another factor has been funds from a federal relief aid package that the state is expecting. Guidance on use of the funds was released Monday. Jeff Turner, a spokesperson for Gov. Mike Dunleavy, said it will take time to review the material “and determine the best path forward.”

Dunleavy last month proposed an initial outline for the $1 billion expected. The House version of the budget proposed spending 70%; both proposals came before the guidelines were issued.

Senate leaders have had different ideas about how to spend the relief aid and Rep. Neal Foster, co-chair of the House Finance Committee, said he was comfortable resolving the issue in conference committee.

Turner by email said there were “ongoing discussions” with lawmakers about how to pass the budget by May 19, and whether a special session would be needed to advance Dunleavy’s fiscal plan and “resolve the ongoing debate about the future of the Alaska Permanent Fund and the annual” dividend.

Dunleavy has proposed a series of constitutional amendments, dealing with issues like dividends, taxes and spending, and has supported paying a dividend in line with a decades-old formula until the formula is changed. He also has proposed a formula change.

The existing formula was last used in 2015 amid a budget deficit. In 2018, lawmakers began using Permanent Fund earnings, typically used to pay dividends, to also help pay for state government. They also sought to limit what could be withdrawn from earnings for government expenses and dividends, creating tension that has yet to be resolved.

Senate President Peter Micciche said resolution on the dividend is critical. What shape any new formula might take, however, is unclear.