How much money to provide in Alaska Permanent Fund dividends and what to do about ongoing state revenue shortfalls will be top issues of the 32nd Legislature, according to members of the Interior delegation.
“Almost any type of revenue source under the sun is being talked about right now,” incoming Sen. Robert Myers, R-North Pole, said during an interview on Sunday. “I think it’s too early to say what is going to go anywhere.”
These discussions are tied in with negotiations over who will lead the Alaska House of Representatives and the Alaska Senate, which convene Tuesday. The two legislative bodies have yet to announce who will be the speaker of the House and Senate president.
Additionally factoring into discussions now is the COVID-19 pandemic, Myers said. Some lawmakers are concerned about an emerging new variant of the virus that is more contagious. They are proposing to focus on the budget, recess, and reconvene later in the year to take up other legislation.
The governor set budget talks in motion last month with his proposals to provide $4,958 worth of permanent fund payouts to Alaskans in 2021. He is also calling for an advisory vote that would require half of any money spent from permanent fund earnings to be paid to Alaskans in dividends. Dunleavy further wants Alaska to enact a government spending cap and to require a vote of the people to pass new taxes.
“There’s too many moving pieces going on to get a final solution on any of them,” Myers said. “We are going to have to start taking them one at a time. I want to start with the PFD.”
The senator-elect said he supports the governor’s proposals.
Rep. Grier Hopkins, D-Fairbanks, said he wants to avoid “raiding the permanent fund” and put in place a budget that “doesn’t spend wildly and doesn’t cut irresponsibly.”
“We have to put the long-term future of the state as our No. 1 priority,” Hopkins said. “We are all going to have to put policy priorities aside to work on a fiscal plan that is sustainable and responsible going forward . That is just going to be the fact of life for this coming session.”
Rep. Adam Wool, D-Fairbanks, has filed legislation lining out his position, a reduced dividend and a 2.5% state income tax, with the first $10,000 exempt, to sustain the state government. He said a family of four with an income of $100,000 would face a $2,000 state income tax bill and collectively would receive $4,000 in dividends.
Rep. Bart LeBon, R-Fairbanks, said the unique thing about this year’s budget discussions is that one of the accounts, the Constitutional Budget Reserve, that the state has relied on to balance spending has dried up.
“We’re going to be balancing the needs and wants of Alaska in this budget cycle like never before,” LeBon said “There is going to be a very spirited conversation about what level of state government we can afford.”
“You have the recognition by many of us down here that you can cut state spending, but the scorched Earth approach of cutting $1 billion is probably not a wise move,” the lawmaker said.
On the permanent fund, LeBon said, “You can only draw aggressively from that so much before you impair the public endowment of the permanent fund.”
North Pole Republican Rep. Mike Prax said he will be opposing any new taxes. He also opposes reducing the statutory dividend. His idea of basic government services is very minimal, he said.
“If you are thinking about new revenue, you are thinking of taking from some and giving to others,” Prax said.
Myers said he supports the governor’s dividend proposals but is concerned about spending too much of the permanent fund Earnings Reserve Account.
“I go back and forth on that one,” he said. “I am not a big fan of the ERA overdraw.”
Sen. Scott Kawasaki, D-Fairbanks, said he was still studying the issues and has a binder with new information to read.
Rep. Steve Thompson, R-Fairbanks, and Rep.-elect Mike Cronk, R-Tok, could not be reached in time for this story on Sunday.
Contact staff writer Amanda Bohman at 459-7545. Follow her on Twitter: @FDNMborough.