By James Brooks
Alaska Beacon 

Legislative leaders say state cannot afford governor's dividend proposal

 

March 13, 2024



Leading Alaska legislators said there is 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 this fall under an unused formula in state law. That would result in a $1 billion deficit in the state budget and require spending from the state’s Constitutional Budget Reserve, but as a draft spending plan 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 Fairbanks Rep. Will Stapp, a member of the House Finance Committee. “I personally would not be in favor of tapping the state’s savings.”


Palmer Rep. DeLena Johnson, 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 account, and the majority caucus has 23 members.

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.

Sitka Sen. Bert Stedman, co-chair of the Senate Finance Committee, said that a “25% dividend” — so named because it would be paid for with one-quarter 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.

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.

A budget exchange between the two bodies is expected to take place in mid-April, leaving about a month for legislators to finish the spending plan before the end of the regular legislative session in mid-May.

The Alaska Beacon is an independent, donor-funded news organization. Alaskabeacon.com.

 

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