Alaska House calls for $1,100 dividend; dispute over funds
JUNEAU, Alaska (AP) — The Alaska House passed legislation Tuesday calling for an $1,100 dividend to residents but there are different interpretations as to whether much of the money that would be used for the checks is available.
The bill, which passed 24-16, calls for spending $730.5 million, with $330 million of that from the statutory budget reserve fund, for a dividend this year.
That’s where a recent court decision and failed votes earlier this year come into play.
The fund was long considered among the accounts subject to being swept into the constitutional budget reserve to repay it for money that has been used from it. Lawmakers can reverse the sweep and restore funds to their original accounts. But earlier this year, they failed to secure the votes to do so.
Megan Wallace, director of Legislative Legal Services, told a Senate committee Monday a recent court decision suggests the statutory reserve is not subject to the sweep.
Gov. Mike Dunleavy’s office contends otherwise.
“The fund has been swept,” Dunleavy spokesperson Jeff Turner said by email. He said the Legislature can change that with a three-quarter majority vote.
The dividend would be about $585 if the statutory budget reserve funds were deemed swept, according to the Legislative Finance Division director.
The bill, which also dealt with other budget items, including oil tax credits, still must go to the Senate for consideration. Senate President Peter Micciche, a Soldotna Republican, said the Senate will take time to ensure “that we are on solid legal ground.”
He said he believes the House passed an $1,100 dividend.
It’s not clear what size check the Senate might yet support. But Micciche said the bill will likely end up in a conference committee, with House and Senate negotiators hashing out differences.
Genevieve Wojtusik, legislative liaison with the Department of Revenue, has said that Alaskans can expect a check 30 days after the Legislature finalizes an amount. Checks are typically paid in the fall.
The statutory budget reserve is referenced in a footnote in a decision by Superior Court Judge Josie Garton that barred the state from sweeping the nearly $1.2 billion Power Cost Equalization Endowment Fund into the constitutional budget reserve. That lawsuit was brought by a coalition that included the Alaska Federation of Natives and electric cooperatives. The Dunleavy administration did not appeal the decision.
Wallace noted the Alaska Supreme Court has not weighed in and told senators “caution is warranted,” because while the decision “pretty clearly seems to suggest” the statutory budget reserve is not subject to being swept, the administration has not changed its position.
House Speaker Louise Stutes, a Kodiak Republican, told reporters lawmakers are “not looking for a lawsuit” and believe based on the court case the reserve is a “legitimate funding source” that can be used for the dividends.
Two minority Republicans – Reps. Steve Thompson and Bart LeBon of Fairbanks – and Rep. Sara Rasmussen, an Anchorage Republican who is not with a caucus, voted with the majority on the budget.
Rep. Adam Wool, a Fairbanks Democrat, said an $1,100 dividend represented what the state can afford. He said it wouldn’t require taking more from the earnings of the state’s oil-wealth fund, the Alaska Permanent Fund. Lawmakers have sought to limit what can be drawn from earnings each year for government and checks, though they can breach that limit if they choose to do so.
Members of the House’s bipartisan majority have said they would be open to doing that if there was agreement on a long-term fiscal plan. Some legislators say they’re worried that if the limit is exceeded, it will be easier to do so in the future and cite the experience drawing down reserves in recent years as the state has struggled with deficits.
There has been no agreement on a fiscal plan yet. House majority and minority members traded barbs Tuesday over where things stand.
This year’s draw amount went into the general fund, said Alexei Painter, director of the Legislative Finance Division.
The bill that passed Tuesday calls for using the statutory budget reserve and general funds for the dividend. Some members of the House’s Republican minority said the dividend, as proposed, would not truly be a permanent fund dividend.
“What we have here is basically income redistribution,” said Rep. Tom McKay, an Anchorage Republican.
Proposed amendments for larger dividends failed in the House, including a roughly $2,350 dividend, in line with what Dunleavy had proposed.
Dunleavy said Tuesday he wanted to see how the bill plays out in the legislative process.
He said the pandemic has been disruptive economically and the state has a chance to use earnings from the permanent fund to help.
He said he wants legislators to talk with their constituents and “really get an idea how truly disruptive this pandemic has been to people’s lives and truly how absurd it appears to people looking at Juneau right now as to why they can’t come up with decisions that are going to help” residents.
The Republican governor has proposed an amendment to the state Constitution that would restructure the permanent fund, limit what can be withdrawn from it and evenly split the withdrawals between payouts to residents and government costs.
Some legislative leaders have said they do not see that proposal as having sufficient support.
A working group of lawmakers recommended guaranteeing a payout of some kind in the Constitution, but as part of a larger package that includes new revenues, budget cuts and changes to a government spending cap.
Micciche said he would like to see other bills moving during the special session, which can last up to 30 days. That limit would be hit Sept. 14.