Dunleavy repeats calls for closing budget gap, paying full dividends

Gov. Mike Dunleavy signs Senate Bill 2002, which funds the capital budget over the next year and maintains 54 separate accounts that fund specific programs like power cost equalization, Aug. 8, 2019. (Photo by Wesley Early/Alaska Public Media)
Gov. Mike Dunleavy signs Senate Bill 2002, which funds the capital budget over the next year, on Aug. 8, 2019. On Tuesday, Dunleavy said he’d like to get as close as possible in closing the remaining $1 billion-plus state budget gap next year. (Photo by Wesley Early/Alaska Public Media)

Gov. Mike Dunleavy said Tuesday that next year he’d like to close the more than $1 billion state budget gap.

“We’re going to do the best we can to get as close as possible to closing this gap,” he said.

Dunleavy said in February that he wanted to close the budget gap this year. And after issuing line-item vetoes in June, he said he planned to close the gap in two years.

The budget he signed into law relies on roughly $200 million in draws from state savings accounts. And Dunleavy supports paying out full permanent fund dividends under a 1982 state law, which would require another roughly $900 million.

Including Dunleavy’s vetoes, the budget cut state spending directly controlled by the Legislature by roughly $400 million. And it avoided more than $100 million in increases to worker pay and health costs, as well as inflation. These changes combined to cover nearly a third of the $1.6 billion budget gap headed into this year.

Dunleavy also said he’s optimistic the Legislature will add another roughly $1,400 per person for permanent fund dividends in a third special session this fall. That is the additional amount necessary to pay the full, roughly $3,000 dividend under the legal formula. He expressed this optimism a day after he acknowledged that majorities in both legislative chambers oppose full dividends. Paying the full amount would require the state to violate a law passed last year that limits how much should be drawn from permanent fund earnings.

“I believe that, now that the budget’s off the table (and) the vetoes are off the table now, that the singular focus could once again be on the PFD and providing for a full PFD as per the decades-old calculations,” he said.

Members of both legislative majorities have said legislators should consider the future of permanent fund earnings and dividends in a special session.

Dunleavy made the remarks in a call with reporters on Tuesday, a day after he announced his decisions on a bill setting dividends and reversing some of his line-item vetoes.

Dunleavy said he decided to release his budget decisions in a video rather than in a press conference. He cited his criticism of some media coverage of his administration in making the decision.

Andrew Kitchenman

State Government Reporter, Alaska Public Media & KTOO

State government plays an outsized role in the life of Alaskans. As the state continues to go through the painful process of deciding what its priorities are, I bring Alaskans to the scene of a government in transition.

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