Alaska legislators scrutinize Dunleavy’s proposed $2,350 PFD

The Alaska Capitol on Wednesday, June 2, 2021. (Nat Herz/Alaska Public Media)

State legislators are raising questions about whether the state can afford $2,350 permanent fund dividends this year, as pitched by Gov. Mike Dunleavy.

Dunleavy added proposed legislation on Thursday to the special session agenda that would pay for $2,350 PFDs, as well as other programs. If that hadn’t happened, there was a chance Alaskans wouldn’t receive a dividend at all for the first time in 40 years. 

State budget director Neil Steininger said Dunleavy still wants the Legislature to pass the constitutional amendments he’s proposed that would enshrine the PFD in the state constitution and lower the state’s spending limit. 

“This appropriation bill isn’t … the agenda in and of itself,” he said. “This appropriation bill is there to support the discussions and the decisions that need to be made on those bigger policy issues.”

Steininger testified on the measure, House Bill 3003, to the House Finance Committee on Friday. 

RELATED: Dunleavy adds proposed $2,350 PFD to special session agenda

Dunleavy has proposed drawing $3 billion more than planned from the permanent fund to cover costs for the next few years, as part of a broader compromise. Half of that money would pay for this year’s dividend. 

Committee member Rep. Bryce Edgmon said he’s concerned the PFD amount the governor proposed would commit the state to pay more than it can sustain. Edgmon is a Dillingham independent who caucuses with the mostly Democratic majority. 

“I’m very concerned about overdrawing the permanent fund because — speaking of compromising — we’ll be compromising the future,” he said. “And if there’s a downturn anywhere near what we experienced in 2008, 2009 — certainly back in the late ‘80s — where the bottom essentially falls out, that overdraw this year could be magnified many times over.”

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Speaker Louise Stutes, R-Kodiak, expressed optimism that the Legislature would be able to work toward a compromise on solving the long-term budget gap between what the state spends and what it raises. She praised Dunleavy’s decision to add funding for this year’s PFD to the agenda for the Legislature’s third special session.

“I’m grateful to the governor for putting on an appropriation bill, which allows us to do this,” she said. “I’m excited about a good, solid compromise, where we can all feel good and get things rolling.”

She said the PFD bill would go through the normal committee process, in which it could be amended. She said one potential path for this year’s dividend would be to choose an amount that would not draw more than planned from permanent fund earnings. 

If the Legislature later reaches a broader compromise on a long-term budget plan, Stutes said, it could pass another bill that would add to this year’s dividend. 

The House Finance Committee planned to consider amendments to the bill on Sunday. 

Committee Co-Chair Neal Foster, a Nome Democrat, said the committee is working under a constrained timeline because some lawmakers won’t be available beginning in roughly a week. 

Neither legislative chamber voted on Dunleavy’s vetoes of line items in the budget by the deadline on Friday. But vetoed items would be funded under House Bill 3004, introduced by the House Special Committee on Ways and Means. That committee is meeting on Monday to discuss the conclusions of a working group of lawmakers who met since mid-July to discuss a long-term budget plan.

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