Four bills concerning the Alaska Permanent Fund were released earlier this week during the first round of pre-filed legislation. One pertains to a constitutional amendment enshrining the fund in the state constitution. Another adds individuals eligible for the dividend to donate a portion to tribal governments. And two proposals, contingent on passing as a package deal, would restore the $666,350 Gov. Bill Walker (I-Alaska) vetoed from the Permanent Fund Dividend fund transfer back in June.
None would have a directly positive impact on the deficit.
Restoring the Full Amount of Last Year’s Dividend Check
Senator Mike Dunleavy (R-Wasilla) filed Senate Bill 1, which would appropriate $666,350 from the (ERA), alongside Senate Bill 2, which would send eligible recipients of the 2016 dividend a supplemental check restoring the dividend total to $2,052 — the original figure, before Walker capped it at $1,022.
The move is a rejection of Walker’s proposed budget, which relies on using $2.5 billion from the Permanent Fund earnings reserve account (ERA) to lower the current state deficit from $3 billion down to $900 million in FY18. This would also lower the annual dividend checks to $1,000 this year and next.
“Upon review, it would appear Governor Walker is relying heavily upon the use of the Permanent Fund to balance his budget instead of looking for reductions to government spending,” Dunleavy said in a press release last month. “The people of Alaska should be greatly concerned by a transfer of funds of this magnitude, especially in conjunction with such minimal proposed reductions in state spending.”
Incoming Senate Majority president Pete Kelly (R-Fairbanks) responded to Walker’s budget proposal by saying that his caucus intended to cut an additional $750 million from general fund spending over the next three years. However, those unspecified cuts, even if applied in full, represent just a quarter of the budget shortfall. The Permanent Fund remains the only pot deep enough to provide a temporary refuge from insolvency, but it also continues to be the biggest third rail in Alaska state politics.
So far, Senate Majority members have offered a repeal and replace approach to Walker’s budget proposal, but haven’t quite gotten around to the “replace” part. Meanwhile, already implemented cuts have been costly, with an industry-wide drop in jobs of 1.6 percent last year. Private employment has dropped by 1.9 percent and state and local government jobs by 4.6 percent. The unemployment rate is now at 6.8 percent, well above the national rate of 4.6 percent.
Alaska is in a recession. The resulting quagmire: The State has never needed use of the ERA to fund government services more, while, at the exact same time, Alaskans flush with pink slips have never needed their PFD more.
Dunleavy is a member of Senate Finance and chair of Senate State Affairs — two probable stops for SB1 and SB2. He should have sufficient clout to pass both bills through the upper chamber without great difficulty. Freshman Representative David Eastman (R-Wasilla) has filed companion bills in the House (HB21 and HB22). Eastman is part of the minority and will have a tougher row to hoe.
Constitutional Amendment to Restrict Principle Fund from Government Spending
Sen. Bill Wielechowski (D-Anchorage) is reintroducing a proposed constitutional amendment to enshrine the PFD in the Alaska State Constitution. Senate Joint Resolution 1 would amend Article IX to establish the ERA as a separate account in the Permanent Fund and delete the current language stipulating that income from the principle of the fund be directly deposited into the general fund.
Income available for distribution under this subsection equals twenty-one percent of the net income of the fund for the last five fiscal years, including the fiscal year just ended, but may not exceed net income of the fund for the fiscal year just ended plus the balance in the earning reserve account. On the last day of each fiscal year, fifty percent of the income available for distribution, calculated under this subsection, or the balance in the account, whichever is less, shall be transferred from the earnings reserve account for use in a program of dividend payments to State residents…. Money remaining in the earnings reserve account after the transfer may be deposited in the general fund unless otherwise provided by law.
“Enshrining something in the constitution would go a long way towards easing people’s concerns that there will be a day when they don’t get a dividend check,” Wielechowski said of the proposal last year.
Subsequent to Walker’s announcement of his PFD veto, Wielechowski attempted to challenge the move in court. He argued that state statute and an amendment passed in 1976 (which created the Permanent Fund) “were to prevent the governor from being able to veto any portion of the transfer between the Alaska Permanent Fund Corporation and the dividend fund from which PFDs are distributed.”
“The wording is crystal clear from a legal perspective that the transfer of money ‘shall’ happen,” he explained in an August press release. “‘Shall’ is not up for debate, or subject to any Governor’s veto.”
As Craig Tuten reported last month, a Superior Court judge found no illegality of the governor’s veto and dismissed the suit.
Wielechowski is in the senate minority and the bill, as was the case last session, has little chance of seeing daylight.
Including Tribal Governments in Dividend Contributions
Senator Gary Stevens (R-Kodiak) pre-filed a measure that would add federally recognized tribal governments to a list of recipients eligible to receive contributions from dividend checks.
Senate Bill 8 would allow Alaskans eligible for the annual dividend the option of dedicating a portion of their check to a tribal government, putting them alongside charitable organizations, educational organizations, and community foundations. Each tribal government wishing to take part in the program would be required to post a $250 application fee and seven percent of all contributions tallied would go towards administrative costs.
The proposal wouldn’t be difficult to implement, as it’s just bringing tribal governments into the fold of the existing Pick.Click.Give infrastructure. This is the rare bird where a bill pertaining to the PFD could easily see unanimous votes in both bodies and a flashy press conference for the bill signing.
The next round of pre-filed legislation will be released on Friday. In the 29th Legislature, 40 separate bills focused on the Permanent Fund were introduced. Expect many, many more in the coming days and weeks (and, likely, months).