House Permanent Fund resolution debates show deep dividend divisions
After a year of drawn-out dividend debates, the Alaska House of Representatives showed that deep divisions over the future of the Permanent Fund still exist among members.
On Friday, the House debated a non-binding resolution, aimed at supporting a sustainable future for the Permanent Fund with a PFD “for all future generations.”
Rep. Jonathan Kreiss-Tomkins, D-Sitka, said the resolution contains an implicit message: “Right now, the Permanent Fund dividend statutory formula is not sustainable.”
House minority leader Rep. Lance Pruitt, R-Anchorage, agreed that might be the message the House majority is trying to send. He said he would prefer to see a bill, rather than a resolution to make long-term fiscal decisions.
House Concurrent Resolution 13 would not have any force in law to stop the Legislature from approving a full statutory PFD but it does signal how difficult resolution on the dividend will be.
As written, HCR 13 also urges members to not violate the rules-based system established in 2018 that sets out limits on how much of Permanent Fund earnings can be used to pay for state services and the annual dividend.
Pruitt offered an amendment to the resolution that would have called for deeper cuts to state spending. “The greatest threat from the fund is what we’re still spending from it,” he said before later conceding, “Greatest threat may not be the right terminology.”
Members of the House majority stood in opposition to the amendment, arguing that billions of dollars have been cut from the budget in recent years and that paying a full PFD would require a virtually impossible level of further reductions.
“The idea that it’s the current levels of government spending that’s causing the problem, I think is just false,” said Rep. Andy Josephson, D-Anchorage.
Seeing the Permanent Fund grow is also a stated priority in the resolution. In 2019, the Legislature sent $4 billion to the constitutionally-protected Permanent Fund corpus.
One of the arguments from House majority members for the need to grow the Permanent Fund is watching the stock market tumble and the oil price drop with the impacts of the coronavirus.
“We could be heading for some very difficult times,” said Rep. Jennifer Johnston, R-Anchorage. Rep. Chuck Kopp, R-Anchorage, reiterated that, saying, “Our revenue stream is at a tipping point.”
A bigger Permanent Fund would mean more earnings could be drawn to pay for state services with an expected shortfall in oil revenue, a concept that wasn’t supported across the aisle.
Rep. Mark Neuman, R-Big Lake, said a tougher fiscal climate should see the state keep more cash fluid and on hand for emergencies.
“It almost strikes me like hoarding,” said Rep. Mike Prax, a Republican from North Pole. “If you will, the king hoarding money from the citizens.”
Meanwhile, the operating budget for the next fiscal year was passed out of the House Finance Committee on Friday, largely following the flat budget proposal from the governor. An amendment to see $10.5 million added to the University of Alaska’s budget to pay for higher salaries was rejected by the committee.
On the House floor, Pruitt’s amendment to the resolution did eventually pass after it was changed to call for a sustainable fiscal plan with “an effective spending cap.”
Sen. Cathy Giessel, R-Anchorage, the Senate President, told reporters on Friday that the majority caucus is also pushing a $6 billion spending cap to be put in statute.
As opposed to the governor, the Senate majority is not currently pushing to see a spending cap entered into the Alaska Constitution. If passed, the Legislature would review the cap in 3-5 years to see if it’s still appropriate, Giessel said.
HCR 13 is expected to be back on the House floor on Monday for a final vote.