Dunleavy Idea Of A $3,500 PFD – Resulting In $1 Billion Deficit – Brings Kickback In Juneau

Legislative budgeters say Dunleavy’s proposed 2024 Permanent Fund dividend is a no-go

Juneau State Capitol Building (Wikipedia) 

The governor included a $3,500 payout in his initial budget proposal, but paying it would require spending from savings

BY: JAMES BROOKS - Alaska Beacon  - MARCH 6, 2024 5:58 AM     

Leading Alaska legislators said on Tuesday that there’s little appetite for spending from savings to pay a super-sized Permanent Fund dividend this year, likely killing a proposal from Gov. Mike Dunleavy.

In December, the governor proposed spending almost $2.3 billion on a dividend of roughly $3,500 per recipient under a formula in state law. That would result in a $1 billion deficit and require spending from the state’s Constitutional Budget Reserve, but as a draft budget takes shape in the House, top members of both the House and Senate said they’re unlikely to spend from the reserve this year.

“I don’t think it’s a wise thing to draw from savings,” said Rep. Will Stapp, R-Fairbanks and a member of the House Finance Committee. “I personally would not be in favor of tapping the state’s savings.”

Rep. DeLena Johnson, R-Palmer and co-chair of the House Finance Committee, said that at this time, she has not been having conversations with the House’s 16-member minority caucus about spending from the reserve. 

Minority support would be needed because 30 votes are needed in the House to spend from the reserve, and the majority caucus has 23 members. (Rep. David Eastman, R-Wasilla, is not a member of either caucus.)

When the budget leaves the House, Johnson said, she expects the dividend to be whatever can be afforded under a balanced budget.

“We are not awash in cash. Let me put it that way. So it’s based on revenue,” she said.

Sen. Bert Stedman, R-Sitka and co-chair of the Senate Finance Committee, said that a “25% dividend” — so named because it would be paid for with ¼ of the annual transfer from the Permanent Fund to the state treasury — could fit within a balanced budget alongside the Legislature’s just-passed education funding increase, though there wouldn’t be a lot of excess room, he said.

The 25% dividend would be worth about $1,360 per recipient and cost about $914 million, according to estimates published by the Legislative Finance Division last week.

Last year’s budget law allows a bonus on top of that amount, depending on the price of oil in the current fiscal year.

Officials from the Alaska Department of Revenue are expected to present an updated state revenue forecast to legislators on or about March 15, which will begin the process of finalizing the Legislature’s preferred budget.

The House will write the first draft of the state operating budget, and the Senate will have the first draft of the state’s annual construction and renovation budget, called the capital budget.

Disputes over the handling of last year’s budget bills created distrust between the House and Senate majorities, and to avoid a similar problem, the House and Senate intend to pass their budget bills on the same day, then hand-deliver copies to the other half of the Legislature, literally crossing in the hallways as they do so, Johnson said.

That is expected to take place in mid-April, leaving about a month for legislators to finalize the budget before the end of the regular legislative session in mid-May. 

THIS STORY IS FROM THE ALASKA BEACON: https://alaskabeacon.com/2024/03/06/legislative-budgeters-say-dunleavys-proposed-2024-permanent-fund-dividend-is-a-no-go/