News-Miner opinion: When Gov. Mike Dunleavy red-lined from the budget the $525 Permanent Fund dividend, lawmakers’ per diem and about $200 million in programs and infrastructure projects his actions did not stir the same furor as his hundreds of millions in spending cuts during the first two years of his administration.
His vetos this year, however, set the stage for a likely contentious special session next month, when lawmakers are expected to work toward a longterm fiscal plan and come to an agreement on how the Permanent Fund’s annual earnings are shared between government and Alaskans.
The governor offered Senate Joint Resolution 6, a bedrock structural change to the Permanent Fund. It would, among other things, enshrine in the state constitution a 50-50 split of the annual draw of the fund’s Earnings Reserve Account to use for dividends or government.
Dunleavy’s proposed constitutional amendment also would roll the $14 billion fund Earnings Reserve into the fund’s corpus and deposit the Power Cost Equalization endowment fund’s $1 billion into the corpus.
A statutory calculation was adopted by the Legislature in the early 1980s. It set in place a roughly 50-50 division of the fund’s earnings for dividends and government. Former Gov. Bill Walker in 2016 vetoed about half the $1.4 billion appropriated by the Legislature for dividends. He was sued, but the Alaska Supreme Court sided with him, saying the dividend was a legislative appropriation subject to gubernatorial veto.
The Legislature ignored the formula over the next four years, cutting dividends by simple majority votes.
While some lawmakers are adamant the Permanent Fund dividend should be taken out of the hands of politicians, others insist Alaska cannot afford Dunleavy’s suggested enshrinement of a 50-50 split, which this year would set dividends close to $2,350 for each Alaskan. Dunleavy’s idea for the even division got short shrift from lawmakers, and how it would be funded remains unclear.
The Legislature, instead, settled on an $1,100 dividend, but more than half that amount depended on a three-quarters vote by both chambers in order to use Constitutional Budget Reserve funds. Lacking that in the House, the PFD amount was pegged at $525, the smallest since 1986 and an amount Dunleavy says is “a joke.”
The Permanent Fund’s constitutionally protected corpus now is valued at $60.7 million; its Earnings Reserve Account contained $12.2 million in uncommitted funds as of April 30, and can be accessed by simple a majority vote of the Alaska Legislature and the approval of the governor. Those earnings underwrite about two-thirds of state government. Unless oil prices shoot through the roof, that is unlikely to change. In fact, the earnings likely will be used to fund even more government in the future unless other funding sources are tapped.
The Permanent Fund dividend has hogged the political spotlight in Alaska, year after year delaying, diverting or destroying work on pressing issues. Because there is no agreement on its future, the state has no long-term fiscal plan, something Alaskans have been seeking for years. Because there is no fiscal plan, each year’s budget is crafted in an acrimonious crap shoot.
While there have been myriad plans offered in the past — with some of them interesting, some of them not so much — none has gained traction despite often bitter fighting.
The upcoming special session, likely in August, is an opportunity to take a giant step forward in deciding the dividend’s future and establishing a longtime fiscal plan.
Alaskans can only hope lawmakers do not again waste the opportunity.