House passes budget, leaving dividends at $525 for now

Alaska House members talk during a break in the debate on whether to draw from the Constitutional Budget Reserve in the Alaska State Capitol in Juneau on June 15, 2021. Kodiak Republican House Speaker Louise Stutes is seated in the center on the podium. (Photo by Andrew Kitchenman/KTOO and Alaska Public Media)
Alaska House members talk during a break in the debate on whether to draw from the Constitutional Budget Reserve in the Capitol in Juneau on Tuesday. Kodiak Republican House Speaker Louise Stutes is seated in the center below the state seal. (Andrew Kitchenman/KTOO and Alaska Public Media)

The Alaska House of Representatives voted to pass the state budget on Tuesday. But most of the Republican minority caucus voted against a provision that would have provided an $1,100 permanent fund dividend. So the PFD would be $525, though several Republicans said they wanted the amount to be larger.

A program that provides financial assistance for  electricity in high-cost areas won’t be funded. Neither will state-sponsored university scholarships. 

Those programs and most of the dividend funding depended on three-quarters of the House members agreeing to draw money from the Constitutional Budget Reserve. That failed by six votes.

Nome Democratic Rep. Neal Foster noted that past debates to sweep money into the Constitutional Budget Reserve affected residents of high-power-cost areas and university students. He said funding PFDs through the vote put all House members in a similar position. 

“You know, we should all be in the same boat,” Foster said. “Why is it that certain groups are subject to the sweep?”

Some minority-caucus Republicans said they had little input in how the budget was structured. And they said that it would be wrong to hold them responsible for voting against funding programs from the Constitutional Budget Reserve. They said they would support funding the program to offset high power costs later this year. 

Wasilla Republican Rep. Christopher Kurka argued for a larger dividend. He said government spending should be taken from the crumbs of the draw from Alaska Permanent Fund earnings, not from the dividend.

“This $1,100 amount, Madam Speaker, I believe is an insult to Alaskans, when the real PFD should be $3,500,” Kurka said.

Fairbanks Republican Rep. Bart LeBon was one of three minority-caucus members who voted in favor of drawing from the Constitutional Budget Reserve. He said having an $1,100 dividend allows for a sustainable draw from permanent fund earnings. And he said that would protect the permanent fund for future generations. 

“I voted for $1,100, not $500, so I’m disappointed that the gamesmanship has brought us here today,” he said. 

A separate vote to pass the budget passed along caucus lines, 21 to 18. 

Anchorage Democratic Rep. Ivy Spohnholz praised the budget. She noted that it includes more spending on capital projects. 

“I’m thrilled that we have a larger capital budget than we’ve seen in many years. I think it’s important … to address our deferred maintenance needs across the state and to get Alaskans back to work,” she said.

Wasilla Republican Rep. Cathy Tilton expressed disappointment that the budget didn’t devote more American Rescue Plan Act funding to private businesses. 

“If I had the opportunity, I would put more relief out to the private sector, so that the private sector could help to move our economy along,” she said.

Using the formula in a 1982 state law, dividends would have been roughly $3,500.  That would cost the state $1.5 billion more than a $1,100 dividend. Paying $2,350 dividends equalling half of the draw from permanent fund earnings, as Gov. Mike Dunleavy has proposed, would cost roughly $750 million more than a $1,100 dividend.

The Senate is set to debate the budget on Wednesday. The special session must end by Friday. Dunleavy has called the Legislature into a second special session that starts on Aug. 2. He could add items that aren’t funded this week onto the agenda for that session.

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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