‘There is a path forward’: Legislative working group writes PFD, fiscal plan framework

JUNEAU, Alaska (KTUU) - A legislative working group released its recommendations on Monday for how to forge a comprehensive fiscal plan and end the Permanent Fund dividend debates. Legislators across the aisle say that framework is significant.

The eight-member group, formed as part of a deal to avert a state government shutdown, worked between special sessions. Its recommendations were released shortly before the Legislature convened on Monday:

They call for the Legislature to work toward a 50-50 PFD proposal, where 50% of a now-annual draw from the Permanent Fund would go to the dividend, and said that there should be constitutional certainty for the dividend.
The group says unspecified new revenues, and likely a broad-based tax, will be needed to raise between $500-$775 million per year, at least temporarily.
The recommendations call for up to $200 million in budget “efficiencies” over multiple years.
They say the Permanent Fund should be turned into a single, constitutionally protected fund with a maximum 5% annual draw for the dividend and state services.

Sitka Democratic Rep. Jonathan Kreiss-Tomkins was a co-facilitator of the working group. He said work behind the scenes was hard over six weeks, but it was productive.

“The number of eight of eight unanimous recommendations on major policy issues facing the state, I think, is exciting and important,” Kreiss-Tomkins added.

Sen. Shelley Hughes, R-Palmer, was similarly supportive of the group’s progress after being initially skeptical that it would be productive.

“It’s pretty phenomenal to have as diverse of a group as we had in this group to come up with something,” she said.

The framework came together as a comprehensive plan. Some elements, like new revenues, were only supported if they came with a larger dividend than has been paid in recent years.

The idea is that there would be a “transition” period to paying a 50-50 dividend. That could see the annual PFD amount increase over years or a one-time draw from the Permanent Fund to act as bridge while new revenues are implemented.

The recommendations do not go into details on what new revenues should look like. That was partly due to time constraints and also to allow the other 52 members of the Legislature to have their input.

Hughes said there was support for the idea of increasing revenue received from oil companies and that there was a “lukewarm” response to the governor’s idea of expanding legal gaming in Alaska. Members were split on whether to endorse a statewide sales tax.

“We didn’t come to consensus on that, that was pretty much four to four,” Hughes said.

A question now is how to craft a package that can pass, and it may take more than one session to be finalized. A constitutional amendment needs two-thirds of the Legislature to support it and then support from a majority of Alaska voters.

There are concerns for what is not on the special session agenda.

House Speaker Louise Stutes, a Kodiak Republican, wrote a letter to the governor on Monday asking that the 2021 Permanent Fund dividend be added to the session’s agenda.

Legislators are currently unable to pass a dividend for this year which is a deliberate “phased approach” from the governor. The idea is that when “significant progress” is made to pass a fiscal plan, Dunleavy can add the 2021 dividend to the agenda.

The governor vetoed funding for this year’s PFD on June 30. Unless new funding is approved, Alaskans will not receive a dividend in October. A separate three-quarter vote is needed to keep dozens of state accounts full and programs funded, but it also isn’t on the agenda.

“Holding the PFD and other essential programs hostage while we work towards a solution is unconscionable and counterproductive to compromise,” the letter from Stutes reads.

Sen. Tom Begich, D-Anchorage, met with the governor on Monday afternoon and echoed those calls from Stutes. He tried to allay fears that legislators may immediately adjourn after passing a dividend and restoring spending vetoed by the governor.

“I don’t think that would reflect well on the Legislature if that’s all we did,” Begich said.

Bills are in circulation to raise taxes on Alaska motorists and to tighten a spending cap to constrain budget growth. Begich said if an appropriations bill is added to the agenda that there could be progress to forging a fiscal plan, but it will require support from all four legislative caucuses and the governor.

“Much to the surprise of many skeptics, there is a path forward,” Begich added about the working group’s framework. “And it’s up to us if we’re going to walk down that path.”