Alaska dividend fight could complicate capital budget work
JUNEAU, Alaska (AP) — The fight over the dividend Alaskans receive from the state’s oil-wealth fund could hamper efforts to finalize a state infrastructure budget as the end of the special session looms.
Major provisions in the capital budget draft that advanced from the House Finance Committee Tuesday would require support from three-quarters of the House — or at least 30 of the House’s 40 members.
House Minority Leader Lance Pruitt said he cannot see any of his 15 Republican members lending their support without funding for an Alaska Permanent Fund dividend settled.
“If there’s a dividend in it, I think you’d find we can get out of here,” the Anchorage Republican said. Pruitt said his GOP caucus has been consistent in pushing for a full dividend for residents after several years of capped payouts.
Lawmakers have been unable to come to agreement on the size of dividend that should be paid this year. House Speaker Bryce Edgmon said the expectation is for a future special session on the dividend, calling that “a critical piece that’s missing at this point.”
The current special session expires Friday. The dividend and capital budget are the remaining unresolved items.
Legislative leaders said they are committed to paying residents a dividend this year, even if this special session ends without agreement on the amount.
Senate Finance Committee co-Chair Bert Stedman said legislators will not duck “our responsibility to come out with a dividend for the public. That’s not going to happen.”
How soon a decision can be reached is unclear. The director of the state Permanent Fund Dividend Division, Anne Weske, said officials there will need to request funds for checks from the Alaska Permanent Fund Corp. by early September.
Annual dividends are paid to hundreds of thousands of qualified residents from Alaska Permanent Fund earnings. The fund itself is a sort of nest egg, seeded with oil money and grown through investments. Its total value is about $65 billion. That includes the earnings reserve, valued at $19 billion at the end of April.
Lawmakers have struggled not only with the size of this year’s payout but also with possible changes to the dividend calculation, which is based on an average of fund income over five years. A full payout would equate to checks estimated around $3,000.
Republican Gov. Mike Dunleavy has maintained the answer is simple: Pay a full dividend according to the formula and do not change the formula without a vote of the people. Dividends have been capped the last three years amid an ongoing budget deficit.
Dunleavy has said the Legislature’s work isn’t finished until it approves a full dividend. If lawmakers don’t complete their work, Dunleavy has said he would call them into another special session, his spokesman, Matt Shuckerow, said Tuesday.
Lawmakers also can call themselves into a special session.
There are legislators who agree with Dunleavy’s position on the dividend and those who say the formula is unsustainable and at odds with another law seeking to limit what can be withdrawn from fund earnings for dividends and government expenses. Lawmakers last year started using fund earnings to help pay for government.
The Legislature has created a working group to provide recommendations on future use of fund earnings in hopes of breaking the logjam. Sen. Bill Wielechowski, an Anchorage Democrat, said he considered it unlikely such a group could get lawmakers to change their minds.
Stedman, a Sitka Republican and member of the working group, said he hopes the group delves into the history of the fund and dividend program to lay the groundwork for discussions on a potential formula rewrite.