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Alaska House passes budget that leaves dividend unresolved

June 10, 2019
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Alaska state Rep Cathy Tilton, right, listens as Rep. Lance Pruitt, center, uses a phone on the House floor before the start of the House floor session on Sunday, June 9, 2019, in Juneau, Alaska. A budget compromise reached by House and Senate negotiators was up for debate Sunday. (AP Photo/Becky Bohrer)
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Alaska state Rep Cathy Tilton, right, listens as Rep. Lance Pruitt, center, uses a phone on the House floor before the start of the House floor session on Sunday, June 9, 2019, in Juneau, Alaska. A budget compromise reached by House and Senate negotiators was up for debate Sunday. (AP Photo/Becky Bohrer)

JUNEAU, Alaska (AP) — The Alaska House approved a state operating budget compromise Sunday that leaves unresolved the size of the check paid to residents from the state’s oil-wealth fund.

Whether agreement on this year’s Alaska Permanent Fund dividend can be reached by the end of the special session remains to be seen. Special sessions are limited to 30 days. That threshold would be reached on Friday.

Senate President Cathy Giessel said she expects a vote Monday by her members on whether to resurrect a bill that proposes paying out a full dividend this year, with checks estimated to be about $3,000 to qualified residents at a cost of $1.9 billion. The Anchorage Republican said she’s not sure how that vote will turn out.

Meanwhile, the House on Sunday approved creating a House-Senate working group to provide policy recommendations on future use of permanent fund earnings. The resolution, which now goes to the Senate, includes no set timeline for delivery of any recommendations. But House Speaker Bryce Edgmon told reporters he thinks there’s a will to get longer-term issues regarding the permanent fund resolved this year, during a non-election year.

“As we all know, there’s nothing virtually more complicated than dealing with the permanent fund dividend in Alaskan politics. There really isn’t,” he said.

Dividends traditionally have been paid using fund earnings, which lawmakers last year also began using to help cover government expenses amid an ongoing budget deficit.

Republican Rep. Chuck Kopp, a leader in the bipartisan House majority coalition, said the working group would help devise a plan that fairly addresses paying a sustainable dividend and protecting the permanent fund. He said the discussion can’t be distilled into “political one-liners.”

“We have to be willing to tell people the truth,” he said in an interview.

Rep. DeLena Johnson, a minority Republican who voted against the resolution, said she knows what her constituents want, “and this working group is not going to change that.”

“I think this is just punting,” she said.

House and Senate negotiators on Saturday agreed to separate the dividend from the budget in an effort to speed the budget’s passage. Disagreement over the dividend snarled prior efforts to finalize an operating budget with the start of the new fiscal year looming on July 1.

The Senate is expected to vote on the budget compromise Monday.

Republican Gov. Mike Dunleavy, in a statement, said he’s thankful for progress that’s been made. But he said the Legislature’s job isn’t done until it approves a full dividend.

Dunleavy has maintained that a long-standing dividend calculation that has not been followed the last three years should be followed and should not be changed without a vote of the people.

Some agree with Dunleavy’s position, while others see a full payout as irresponsible. Some have expressed willingness to pay a full dividend this year if changes are made to the calculation going forward.

The Senate last week voted down a full dividend, with a prominent supporter of a full payout, Republican Sen. Mike Shower, absent. Shower has cited work obligations for his absence. The bill had 10 votes in favor, but it needed at least 11 to pass.

Edgmon, a Dillingham independent, said there will be a dividend this year.

“I’m confident it’s going to be as large as we can possibly make it, but it’s got to be a permanent fund dividend that’s a product of compromise between the House and the Senate,” he said Friday.

The budget proposal would transfer billions of dollars from permanent fund earnings, which can be spent, to the fund’s principal, which has constitutional protections.

Supporters of the move cast it as a way to prevent the money from being carelessly spent. But during Saturday’s budget hearing, Sen. Donny Olson, a Golovin Democrat, worried about whisking too much money away and ensuring there is sufficient money available in case it’s needed for state services.

Senate Finance Committee co-chair Sen. Bert Stedman, a Sitka Republican, said the move would still allow “ample funds” for “whatever dividend amount we so choose this year” and enough for next year’s dividend regardless of the amount. He said the fund has “huge earning capacities.” The total fund, including the earnings reserve, was valued at $65 billion at the end of April.

As for the budget overall, while it rejects some of the deep cuts proposed by Dunleavy, it still includes reductions to areas like the university system, Medicaid and the state ferry system.

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