JUNEAU – Two weeks after their third special session of 2021, members of the Alaska Legislature say they don’t know when this year’s Permanent Fund dividend will be paid, don’t know how much it will be and don’t know if they can come up with a formula for future payments.
The dividend is normally paid in October, but that almost certainly won’t happen this year.
“If the legislature wants a traditional distribution in October, we will have to find out by August 31,” said Genevieve Wojutsik, an employee of the Alaska Department of Revenue, speaking on behalf of the Permanent Fund Dividend division. .
It is virtually impossible for the legislature to meet this deadline.
Earlier this year, Gov. Mike Dunleavy vetoed a dividend that was passed by the House and Senate, and although the governor asked lawmakers to find a replacement, they were unable to do it.
Dunleavy and some lawmakers don’t even agree on how much of the dividend is vetoed. The governor’s office said at the time that it was $ 525, but after a subsequent court ruling, legislative budget officials said it was $ 1,025.
The 2020 dividend was $ 992. Currently, there is no dividend for 2021.
The Alaska House is so divided that it has not held a full meeting since August 20, and the Alaska Senate has been blocked by discord between rank and file members and its committee leaders finances.
While lawmakers are still optimistic about resolving their disagreements, there is a growing chance that this year will be the first year since 1982 without a permanent fund dividend.
“It’s a distinct possibility, that’s what I said,” said House Speaker Louise Stutes, R-Kodiak.
“This is not the direction the majority of the House would like to take,” she said.
How much should I spend from the Permanent Fund?
There is no dividend amount at this time because lawmakers disagree on whether to spend additional money from the Alaska Permanent Fund.
The investment income of the Permanent Fund represents two thirds of the unrestricted income of the State during the current financial year. Oil, long the main source of government revenue, only accounts for about a quarter, after years of low prices and declining production.
In 2018, lawmakers voted to cap the amount of money that could be spent each year from the Permanent Fund and implemented a regular transfer from the fund to the treasury.
With this transfer, oil and other taxes, Alaska has a small surplus after paying for all budgeted utilities. But this does not take into account the dividend of the Permanent Fund.
Members of the predominantly Democratic coalition that controls State House have offered to spend $ 400 million of the surplus, plus an additional $ 330 million from a state savings account, on a dividend from about $ 1,100 per person.
Members of the House’s Republican minority had previously proposed breaking the 2018 cap in order to pay a larger dividend, as has the governor.
The fund won almost 30% in value over the past 12 months and now stands at over $ 82 billion.
Minority members and the governor say the gain means the fund can bear additional expenses.
Members of the majority and some members of the minority disagree. They say these gains must be saved and reinvested so that the state has more money to spend in the future.
To complicate matters, Dunleavy spokesman Jeff Turner said the governor’s administration believes the House majority’s preferred savings account has been emptied and is not available for spending.
Members of the House majority said a recent court ruling could imply the opposite, and a trial could be in sight if the disagreement persists.
In the Senate, the main members of the powerful Senate finance committee also oppose the use of additional funds from the Permanent Fund.
Their position is important because any dividend proposal must be approved by their committee before receiving a vote from the entire Senate.
Senator Bert Stedman, R-Sitka and co-chair of the committee, said that a larger dividend requires additional income to pay it, and he has not seen a serious income proposition to date.
Future dividends are also a factor
In the House and Senate, the dispute over this year’s amount is embroiled in negotiations over a formula that could be used to set dividends in 2023 and beyond.
In May, Dunleavy proposed a new formula that would constitutionally guarantee the payment of dividends, if voters approve the change in the 2022 general election.
The formula alone creates a significant deficit and lawmakers have so far been reluctant to push it forward. The new formulas proposed by individual lawmakers have not made any headway either.
An eight-member bipartite and bicameral legislative task force concluded earlier this month that the legislature should work towards a formula similar to that proposed by the governor, but only under certain conditions.
Senator Shelley Hughes, R-Palmer and task force member, said she sees “five components” to the fix: a dividend amount for 2021, some sort of new income metrics, a change to the existing spending cap state, a sort of constitutional amendment on the dividend, and a change to the existing formula in state law.
Senatorial Minority Leader Tom Begich, D-Anchorage, and Rep. Geran Tarr, D-Anchorage, plan to introduce new tax legislation in an effort to satisfy one of the five elements.
Begich proposes to eliminate a corporate tax exemption that applies to large companies like Hilcorp, he said.
Tarr is considering proposing a statewide sales tax and reduced petroleum tax credit, which would have the effect of increasing petroleum taxes.
But because the House has not reached a quorum for over a week, it has not been able to formally introduce its bill.
Stedman noted that the Democrats’ proposed legislation could meet resistance from Republican lawmakers, but other lawmakers have said that if there is genuine interest in advancing on the dividend, that resistance will be minimal.
Lawmakers on both sides of the political aisle have said it would help if Dunleavy introduced his own tax bill. Right now, Hughes said, Republicans are at political risk if they support a tax bill, but it eventually fails.
Also, said Senator Jesse Kiehl, member of the task force, D-Juneau, it would be a sign that the governor cannot veto a particular law.
“It builds confidence,” he said.
There is no guarantee that Dunleavy’s support would help matters. Lawmakers have previously said that if the governor introduces a bill allowing a dividend to be taken into account in 2021, it would allow progress on future payments.
So far, this has not happened.
With the special session almost halfway through, lawmakers generally agree that no new formula will be completed soon.
Some suggest the job can be finished next year, when the Legislative Assembly meets in January for its regular session. Others say a fourth special session, later this fall, may be needed.