Alaska’s regular legislative session ends without final budget or PFD amount

A group of lawmakers sit at desks in a big room. Each of them is behind a Plexiglass shield.
Members of the Alaska House of Representatives prepare for a floor session on Wednesday, Feb. 24, 2021. (Peter Segall / Juneau Empire via AP, Pool)

Alaska lawmakers’ regular session ended Wednesday. But they have a lot of work left to do on the state budget, and they still need to finalize the size of this year’s Permanent Fund dividend. 

Under a version of the state budget approved by the Senate Wednesday, Alaskans would get PFD checks of about $2,300. Not everyone agrees on that amount. Critics say it’s way too much money to draw from the fund’s earnings reserve.  

A 30-day special session to address those issues is scheduled to start 10 a.m. Thursday. 

‘People’s lives we’re talking about’

Palmer Republican Sen. Shelley Hughes voted for an amendment Wednesday for $2,300 PFDs. 

The dividend benefits every Alaskan, she said, and she wants it added to the state constitution, ensuring it’s paid before other state expenses.

“Then we could settle this once and for all and we will know what we need in order to pay for government, once we take the first call for the PFD,” said Hughes.

Sen. Mike Shower, R-Wasilla, said a $2,300 PFD is a step in the right direction, but lawmakers should look beyond the numbers.

“How do you balance the budget?” he said. “Well, there’s more than that. There’s people’s lives that we’re talking about. And their ability to survive and thrive and have a good quality of life.”

But a $2,300 dividend would require drawing $1.5 billion more than planned from the Permanent Fund’s earnings reserve.  

‘Sick and tired of kicking the can down the road’

Sen. Lyman Hoffman, D-Bethel, voted no on the amendment, as well as on one that would have paid dividends over $3,000. He said he supports larger dividends, but paying them when the budget isn’t balanced puts off resolving the issue. 

“So today, I’m a big supporter of the dividend,” Hoffman said. “I’m a big supporter of trying to resolve the problem. And I’m sick and tired of kicking the can down the road.”

Sen. Bert Stedman, R-Sitka, warned against drawing down the earnings reserve. He said paying a smaller dividend of $1,000 this year would allow the Permanent Fund to grow to benefit future generations. 

“They’ll have very nice, handsome dividends, our grandchildren,” Stedman said. “I don’t want them to look back in the history books of my ancestors that helped, you know, lived in Alaska at the time they put it together. And me liquidating it.”

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More work to do in special session

Gov. Mike Dunleavy has put two items on the agenda of the special session that starts Thursday: Finishing work on the budget, and considering a constitutional amendment enshrining the PFD in Alaska’s constitution. 

Lawmakers have been deeply divided for six years over how to pay for dividends and how large they should be. 

A $2,300 dividend would be the highest in the 40-year history of the program, without adjusting for inflation. With inflation, it would be the highest since 2008.

Sen. Bill Wielechowski, D-Anchorage, said the budget problem is due to low oil taxes, and described the message state government’s is sending to the oil industry.

“Go ahead, take the resources — don’t have to compensate us. Pay the lowest taxes in the world. And instead we’re going to take it from the people. And that is unfair. The people need to understand that,” said Wielechowski. “They need to know that this is a tax on them. This is unfair.”

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Shower said a statewide sales tax could contribute to closing the budget gap.

But Natasha von Imhof, R-Anchorage, said it doesn’t make sense to tax one group of Alaskans to pay for larger dividends. 

“I cannot be the senator that taxes hard-working Alaskans and takes money from their paycheck only to deposit it in the personal checking account of their neighbor,” she said.

Flurry of bills approved at last minute

Other amendments that passed the Senate include $13 million dollars for a trail from Fairbanks to Seward, and allowance of COVID-19 business grants to pay for pandemic recovery costs. The Senate rejected adding language from the House’s budget bill intended to block state Medicaid funding for abortions. The Alaska Supreme Court has ruled that similar laws unconstitutionally singled out the procedure

Since the House and Senate didn’t agree on each other’s versions of the budget, there will be a conference committee to work out the differences, with three members from each chamber. It could set smaller PFDs than what passed in the Senate. 

The Senate conference members are Fairbanks Republican Click Bishop, Golovin Democrat Donny Olson and Stedman. House members are Nome Democrat Neal Foster, Anchorage Republican Kelly Merrick and Fairbanks Republican Steve Thompson.

In addition to work on the budget, lawmakers ended the session with a flurry of other activity: Fifteen bills head to Gov. Dunleavy’s desk for signing or a veto.

They include a bill allowing people to share ownership of a dairy-producing animal and to pay co-owners for raw milk and/or raw milk dairy products. It would remain illegal to sell raw milk to those without ownership shares of the animal. 

Another bill expands the rights of people in assisted-living homes. Providers will be required to allow them visitors, and to provide internet access and meals consistent with their cultural preferences. 

Work on bills that only passed one chamber will resume during the next regular session in January 2022.