Gov. Dunleavy’s per diem veto over PFD situation raises concerns for Legislature

Gov. Mike Dunleavy talks during a news conference on Thursday, July 6, 2021. Dunleavy said he would veto a $4 billion transfer from the permanent fund's earnings reserve to the constitutionally protected part of the fund. (Screen capture of the news conference)
Gov. Mike Dunleavy talks during a news conference on July 1. Dunleavy said he vetoed legislative per diem funding because the Legislature hasn’t taken action to resolve permanent fund dividends. (Screen capture of the news conference)

Gov. Mike Dunleavy vetoed the money that would pay for lawmakers’ daily expenses during the legislative session. Voices in the Legislature — and a prominent critic of the governor — are concerned about the short- and long-term impacts it will have on lawmakers. 

The Legislature passed a budget that included roughly $2 million to pay for the daily food and housing needs of lawmakers and their families attending the session. But Dunleavy said it doesn’t make sense for legislators to receive the money until they’ve resolved the future of permanent fund dividends. 

In the budget year that ended in June, the payments, know as per diems, equalled $293 per day. The rate is based on what the federal government pays its employees when they’re traveling in Alaska. 

The day after he vetoed the money, Dunleavy, a Republican, said he knew the veto would not be appreciated by some legislators. 

“Every day a legislator is in session, they get close to $300 to pay for expenses,” he said during a July 1 news conference. “I certainly understand that those expenses have to be offset. But we’ve had two special sessions in which thousands of dollars was collected by members of the Legislature and, at the same time, the permanent fund and the permanent fund dividend was not dealt with.”

Dunleavy has proposed changing the PFD formula through an amendment to the state constitution. It would be based on half of the amount the state draws annually from the permanent fund. This year, that amount would be roughly $2,350. 

The amendment also would limit the annual draw. And it would protect the money in the permanent fund’s earnings reserve by combining it with the rest of the fund, which is already protected. 

Committees in both the House of Representatives and the Senate held hearings on the amendment during the special session. But neither chamber has held a vote on it. 

Anchorage Democratic Rep. Matt Claman chaired one of those hearings.

Claman is concerned that the governor is trying to pressure the Legislature to take his position on dividends at a time when Alaskans need to know more about all of the effects of Dunleavy’s PFD proposal. Claman said the tactic won’t increase cooperation.

“I feel that if the governor’s trying to apply that pressure to say, ‘I’m going to take away the funds that provide expenses so the Legislature can work—.’ I mean, that doesn’t seem like it’s likely to accelerate the process because some legislators may not be able to come to Juneau at all without the per diem,” he said.

Claman said the per diems are essential to drawing a diverse range of Alaskans to run for the Legislature. Without the funding, he fears it would limit the number of people who could afford to become legislators. 

“For me, this really comes back to: Are we trying to make the Legislature something that people from all walks of Alaska could serve in?” he said.

Annual legislative salaries have been set at $50,400 since 2009. The per diems at the current rate can reach as high as roughly $35,000 for a 121-day session.

Claman said it’s incorrect to say the Legislature hasn’t taken action on the dividend. Most of this year’s dividend lost its funding when it failed to receive enough votes. And Dunleavy vetoed the money that was left, saying Alaskans viewed it as “a joke.” 

“The Legislature did address the dividend,” Claman said. “We appropriated $1,100 for the dividend. And then … the three-quarters required did not fund that fully and then the governor vetoed it. So the Legislature actually approved a dividend.”

Several Republican legislators did not return calls for this story on Friday. 

Anchorage lawyer Scott Kendall served as chief of staff to Dunleavy’s predecessor, former Gov. Bill Walker. Kendall said he never had and would never advise a governor to veto money that legislators use to cover their expenses.

Kendall said Dunleavy has a history of attacking other branches of government — including vetoing court system funding due to his opposition to court rulings on abortion. That veto became one of the grounds for recall in the campaign to remove Dunleavy from office. Kendall has advised the recall campaign.

“I’m not concerned about future governors doing this,” Kendall said. “I think most people respect the norms and have the common sense not to engage in a back and forth between branches of government.”

Kendall said that if Dunleavy maintains the veto, the Legislature could eliminate appropriations for some of the costs of the governor’s office. 

Kendall adds that Dunleavy’s dividend proposal would require spending that would lead to an annual deficit of at least $1 billion. And he said that since proposing budget cuts two years ago that prompted a public outcry, Dunleavy hasn’t proposed policy changes to close the deficit. 

A special session is scheduled to begin on Aug. 2.

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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