Alaska lawmakers reject $3,000 dividend during weekend debate over the state’s budget

A page in the Alaska House of Representatives hands out copies of a budget bill over 100 pages long on Friday, April 30, 2021. (Peter Segall / Juneau Empire via AP, Pool)

Early in a marathon day of floor sessions on Saturday, the Alaska House of Representatives rejected a proposal to pay permanent fund dividends of more than $3,000 this year.

Big Lake Republican Rep. Kevin McCabe proposed the budget amendment to pay dividends based on the formula in a 1982 state law, at an estimated cost of more than $2 billion.

“This is simple: We either follow the law — we’re going to vote for a full PFD,” he said. “Or we’re not going to vote for a full PFD.”

Anchorage Republican Rep. Sara Rasmussen tried to show what it would take to balance the state budget with full dividends without overdrawing from the permanent fund’s earnings reserve. A state law limits annual draws to roughly 5% of the fund’s value, to prevent fund earnings from being depleted.

Rasmussen, who doesn’t belong to either caucus, proposed an amendment that would cut spending on state agencies by an amount equal to the cost of full PFDs. She said this “would put our money where our mouth is.” She noted that oil revenue has declined, but the demand for services hasn’t.

“But the reality is, Alaskans across the state are still asking for services,” she said. “The Mat-Su is still asking for troopers. Anchorage is asking for K-12 education. Fairbanks wants the University of Alaska funded. Kenai Peninsula wants their roads plowed… Coastal Alaska wants their ferries. Rural Alaska wants affordable heat.”

Rasmussen withdrew her proposal, saying it would cause legal problems.

Sitka Democratic Rep. Jonathan Kreiss-Tomkins said he appreciated Rasmussen’s proposal. He noted the House passed a plan to balance the budget in the long term in 2017.

“When you spend down the permanent fund unsustainably, everybody loses,” he said. “If you like dividends, you lose. You’re not going to be able to pay dividends in the future. If you care about ferries [or] the Silvertip maintenance station on the Kenai, or whatever your priority is: You lose. You lose. Everybody loses when we start spending down the permanent fund.”

But Palmer Republican Rep. DeLena Johnson said that the state should follow the PFD law.

“As we go through this budget, it doesn’t say the permanent fund dividend is paid last,” she said. “It says that we shall pay the permanent fund dividend.”

She said it’s a matter of priorities.

“We’ve chosen to fund this and fund this, and then if we have a little left over, we pay a PFD — not a full PFD — but a PFD,” she said.

She said that the public’s support for dividends keeps the Legislature honest.

The full-PFD amendment failed by an evenly split 20 to 20.

Most minority-caucus Republicans voted for it, along with Nome Democratic Rep. Neal Foster; Utqiavik independent Rep. Josiah Patkotak; and Anchorage Democratic Rep. Liz Snyder. Rasmussen also voted for it. But 18 members of the mostly Democratic majority caucus voted against it, as did minority-caucus Fairbanks Republicans Rep. Steve Thompson and LeBon.

Lawmakers did pass an amendment to the budget on Saturday that will require the Legislature to open the Capitol building to the public on or before May 19. The session must end by that date, according to the state constitution.

Wasilla Republican Rep. David Eastman proposed the amendment, tying funding for the Legislature itself to the building opening.

Since March of last year, COVID-19 safety policies have restricted access to the Capitol to lawmakers; legislative staff members; some state officials; and news reporters. Eastman said that’s indefensible.

“I fear that we do ourselves a disservice when we allow a policy like this to endure now for more than a year,” he said. “And I think we subconsciously allow ourselves to believe that this building is for us.”

Dillingham independent Rep. Bryce Edgmon opposed the amendment. He said public health experts still advise lawmakers to adhere to federal Centers for Disease Control and Prevention guidelines. He noted that fully vaccinated people could still carry and spread the coronavirus.

“The moment we get a green light from the CDC and the medical professionals, we would do everything we could to return the building to a normal state,” he said.

The amendment passed 21 to 19 with majority-caucus Republican Kelly Merrick of Eagle River voting in favor along with Patkotak, Rasmussen and the 18 minority-caucus Republicans.

The House was nearly evenly split on every amendment considered over more than 12 hours of on-and-off floor sessions on Saturday.

Five amendments from minority-caucus Republicans passed, while 12 were defeated.

Another Eastman amendment provoked a debate on oil royalty payments to the permanent fund. The amendment would have transferred $199 million dollars from the Constitutional Budget Reserve — a savings account that’s been drawn down from more than $10 billion to less than $1 billion. The money would go to the permanent fund’s constitutionally protected principal. The amendment failed, 20-20.

In addition to the amendments voted on during Saturday’s session, the House also rejected two amendments on Friday.

One of those, proposed by Nikiski Republican Rep. Ben Carpenter, would have transferred $1 billion in permanent fund earnings to offset the state’s liability for public employee pensions. It failed, 18 – 22.

By the end of the day Saturday, there were 71 budget amendments submitted. It’s not clear how many of the 52 remaining amendments will be debated.

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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