Gov. Dunleavy vetoes funding for the Permanent Fund dividend with $200 million in other budget cuts

JUNEAU, Alaska (KTUU) - Gov. Mike Dunleavy announced on Thursday that he had vetoed funding for the $525 Permanent Fund dividend currently approved by the Legislature, calling it “a joke.”

Dozens of other vetoes adding up to just over $200 million in cuts to the budget were announced by the governor during a live press conference from Anchorage.

One line-item veto would see $3.4 million cut to a program designed to set up a compact with the state’s tribes, budget documents state that negotiations with tribes are ongoing.

Sen. Tom Begich, D-Anchorage, was particularly concerned about $8 million cut to the mental health budget. He said that risked a 1994 settlement with the Alaska Mental Health Trust Authority and could prompt a lawsuit against the state.

Maintenance at rural schools and trail improvement projects at various Alaska State Parks were vetoed, too. Another veto would see per diem payments for legislators cut.

Just over $300,000 appropriated to help residents in rural Alaska get Real IDs was cut, the governor also halted a $4 billion transfer to the constitutionally protected part of the Permanent Fund.

Dunleavy said a transfer like that needed to be part of a comprehensive fiscal plan debate scheduled for later in the year along with funding for the 2021 dividend. Those debates are set to include changing the Permanent Fund dividend formula and potentially putting it in the Alaska Constitution.

“We have to make the Permanent Fund permanent,” Dunleavy said.

The governor has advocated for a 50-50 dividend plan that would pay out a PFD this year worth roughly $2,350, but he has not proposed a solution for how that should be paid for in the long-term. Dunleavy said there would be an updated revenue forecast presented soon would show the annual billion-dollar fiscal gap created through his plan is not as large.

After tumultuous debate, the Legislature approved a dividend worth $1,100. It was set to be $525, contingent on a three-quarter vote passing during another special session, but now legislators will need to try again.

Some lawmakers have said an $1,100 dividend is the maximum the state can pay without overdrawing the Permanent Fund, which now funds over two-thirds of state government.

“When you add them all up and average them out, $1,100 is around the historic average,” said Rep. Ivy Spohnholz, D-Anchorage. “It’s also a dividend that we can afford.”

Three quarters of the House and Senate would need to vote together to overturn any of the governor’s vetoes. That would need to happen within five days of when the Legislature convenes its next session.

Editor’s note: This story has been updated with additional information.

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