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Alaska House votes down full oil-wealth fund dividend

June 13, 2019
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Alaska state Sen. Click Bishop, right, speaks to reporters as Rep. Jennifer Johnston listens in Juneau, Alaska Wednesday, June 12, 2019. Bishop and Johnston are leading a working group tasked with making recommendations on the future use of earnings from the state's oil-wealth fund, the Alaska Permanent Fund. (AP Photo/Becky Bohrer)

JUNEAU, Alaska (AP) — The Alaska House on Wednesday rejected a proposal to pay residents full dividend checks of around $3,000 this year from the state’s oil-wealth fund, setting the stage for another special session and a potential showdown with Gov. Mike Dunleavy.

The dividend was one of the biggest issues heading into the regular session in January and remains unresolved as the end of this special session looms. Lawmakers have struggled to agree on the size of this year’s check and on the future shape of the program.

Wednesday’s vote was 15 in favor and 21 against. Last week, the Senate by one vote failed to approve a full dividend, and it later failed to revive the bill for another vote.

Legislative leaders have insisted there will be an Alaska Permanent Fund dividend paid this fall; what size it will be is unclear.

Dunleavy, a Republican, campaigned last year on paying a full dividend in accordance with a longstanding formula that has not been followed the last three years amid an ongoing budget deficit. He has shown no signs of backing down.

The House dividend vote came on the 149th day that lawmakers have been in session, in the form of a potential amendment to the state’s infrastructure budget. The budget itself passed but without key funding provisions that required three-fourths support.

House Minority Leader Lance Pruitt had said he couldn’t see members of his caucus, who supported a full dividend, helping reach that three-quarters threshold without funding for a dividend settled.

This sets up a conference committee with the Senate to try to broker agreement on the capital budget.

House Speaker Bryce Edgmon, in a Facebook post, accused minority Republicans of holding hostage millions of dollars in spending unless “the largest Permanent Fund Dividend in the history of our state” is paid.

During the dividend debate, nearly all members present spoke.

Supporters discussed the dividend’s economic importance to Alaskans and the need to follow the existing calculation.

Pruitt said he thinks changes in the calculation are needed. But the Anchorage Republican said he saw paying a full dividend as a way to build trust with the public, whose support will be needed as changes are weighed.

Others questioned the cost of paying a full dividend and said they’ve heard from constituents willing to give up at least part of their dividends to support state services.

“People are stopping me and they’re saying, ‘Take it all if you need to. Just maintain our services,’ ” said Rep. Louise Stutes, a Republican in the bipartisan House majority coalition. “And I respond to them, ‘Look, we don’t need to take it all. Let’s just set it up so you know that you can depend on it and your children can depend on it and your grandchildren can depend on it.’ ”

The Alaska Permanent Fund is a nest egg of sorts, seeded with oil money and grown through investments. Dividends traditionally have been paid with fund earnings, which lawmakers last year began using to help pay for government costs. Lawmakers turned to fund earnings after going through billions of dollars in savings as they grappled with how best to address the deficit and amid disagreement over taxes and further budget cuts.

They also sought to limit what can be taken from fund earnings for dividends and government. The draw for the upcoming fiscal year would be $2.9 billion. The cost of a full dividend is estimated at $1.9 billion.

Meanwhile, a group of House and Senate members plan to meet over the next few weeks in hopes of making recommendations about the use of permanent fund earnings.

Fairbanks Republican Sen. Click Bishop, one of the group’s leaders, said 21 days is the target for the group to do its work.

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