This year’s Alaska Permanent Fund Dividends would be $1,100 under budget compromise

Members of the conference committee on the state budget bills review documents on Sunday in the Capitol. The bills would fund the budget that begins on July 1. The members seated on the left of the center table include Reps. Bart LeBon, R-Fairbanks; Kelly Merrick, R-Eagle River; and Neal Foster, D-Nome. Seated on the right are Sens. Bert Stedman, R-Sitka; Click Bishop, R-Fairbanks; and Donny Olson, D-Golovin. Legislative budget analyst Alexei Painter is in the center. (Andrew Kitchenman/KTOO and Alaska Public Media)

This year’s permanent fund dividend would be $1,100 under a compromise budget proposal the Alaska Legislature will vote on this week. 

A conference committee composed of senators and House members agreed to a budget, setting the dividend at less than half the $2,350 amount Gov. Mike Dunleavy proposed and the Senate passed during regular session.

The compromise keeps the annual draw from permanent fund earnings within a limit set in a 2018 law

Fairbanks Republican Rep. Bart LeBon voted for the $1,100 dividend amount. He said he was concerned drawing more than planned to pay a larger dividend would threaten the long-term health of the permanent fund.

“Protection of the permanent fund itself is a high priority in my thinking and this accomplishes that,” he said. 

The committee passed an amendment ensuring dividend funds mostly come from the Constitutional Budget Reserve, or CBR. It would require a three-quarters vote of support from both chambers. The amendment also made more than $30 million for Matanuska-Susitna Borough projects dependent on the same vote. 

Sen. Bert Stedman said the amendment could build support for the vote. 

“It certainly encourages some folks to seriously consider what vote they’re going to, what position they’re going to take on the CBR,” he said. 

The CBR vote preserves funds for dozens of programs which pay for everything from offsetting the cost of electricity in rural areas to university scholarships. But members of the Republican House minority — including several Mat-Su lawmakers — have withheld their votes in the past two years in order to pay higher dividends.

If the CBR vote fails, dividends would be just $525 — the lowest in the program’s history, when adjusted for inflation.

Stedman said the compromise budget allows for a similar $1,100 dividend next year, without overdrawing permanent fund earnings.

Members of both chambers will vote on the changes later this week. Committee members have expressed hope the budget passes before Thursday, when state workers are scheduled to receive layoff notices due to the current funding stalemate.

The compromise budget would transfer $4 billion from the permanent fund’s earnings reserve — which isn’t protected from legislative spending — to the constitutionally protected principal.

It also reduces funding for all abortions paid by Medicaid. Alaska courts have found previous legislative attempts to end abortion funding violated provisions of the state constitution.

Dunleavy criticized the dividend amount in a post on social media Sunday. He said it provides proof the dividend should be protected in the state constitution, something he has proposed to do through a constitutional amendment.

Legislators have already raised questions about how he would pay for higher dividends.

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