Permanent Fund Working Group considers options as special session seems less likely
The 2019 PFD check may have already been distributed but the Alaska Legislature is still grappling with what happens next to the dividend.
Outside the Anchorage Legislative Information Office, some lawmakers said it was doubtful that a third special session would occur to appropriate the $1,300 necessary to craft a full PFD for 2019.
The governor has said a full cadre of lawmakers should be seated before the session is called. That would mean Senate Republicans would need to confirm Anchorage Republican Rep. Josh Revak to the late-Sen. Chris Birch’s vacant seat and House Republicans would then need to replace Revak.
“I’d be more surprised if there was one than if there was not one,” said Sitka Republican Sen. Bert Stedman on the possibility of a third special session. He said many senators are currently busy hunting, working or away on vacation.
Stedman said he didn’t really know Revak but he seemed like a “reasonable fellow.”
Anchorage Democratic Sen. Wielechowski sounded similarly dubious about the possibility of a special session this year on the PFD. “It doesn’t seem likely that we’ll have a special session before the regular session,” he said.
Eagle River Republican Sen. Lora Reinbold said she would vote for Revak and she was more optimistic about the possibility of a PFD-focused session. She conceded that “timing is tight” before the Legislature next convenes for its regular session in January.
When the vote and interview with Revak will occur is still being worked out, said Senate President Cathy Giessel, R-Anchorage.
Protests for a full dividend took place in the autumn sunshine with dozens of people chanting: “Protect the PFD, in the constitution.”
Disability advocate Barbara Williams said shrinking the dividend hurts Alaskans. “Hands off our money, get your hands out of the kitty,” she said.
Inside the Anchorage LIO, the Permanent Fund Working Group held its seventh meeting on Monday morning since forming in June. The purpose was to hear different scenarios for the future of the Permanent Fund from the nonpartisan Legislative Finance Division.
The presentation to lawmakers was stark. “All of these scenarios have a deficit, some are worse than others,” said North Pole Republican Sen. Click Bishop.
Using the traditional statutory formula sees deficits rising above $1.7 billion in fiscal year 2025 and the state’s main savings account drained by 2021. The PFD is projected to grow to roughly $3,500 per person in 2022 and stay relatively stable for the next few years after that.
The value of the Permanent Fund itself would drop over the same time.
For Stedman that is unacceptable, he has advocated for protecting the Permanent Fund for future generations and believes there are ways to deliver a PFD and continue paying recurring expense obligations.
Some of the other options modeled were based on defining “the split” of the Percentage of Market Value draw, the amount taken from Permanent Fund earnings that pays for the dividend and state services.
With a 50% draw for government and a 50% draw for the dividend, there is still projected to be a $1 billion deficit in 2025 and the Constitutional Budget Reserve would still be drained. The dividend would be roughly $1,000 less than if the statutory formula is followed.
Palmer Republican Sen. Shelley Hughes spoke about a recent shift in her thinking to support that model from previously advocating for a full PFD. “The historic draw is too large, it erodes the fund,” she said before calling a 50-50 model for state services and the dividend as a grand compromise.
A formula that delivers a smaller dividend would mean smaller deficits and the possibility of the CBR still being intact a decade from now.
“It’s incredibly unfriendly math that the state faces,” said Sitka Democratic Rep. Jonathan Kreiss-Tomkins, before saying that he appreciated Hughes advocating for compromise.
Wielechowski, a long-time advocate for a full dividend, also seemed open to hearing the options for compromise. He said he could support a different formula in theory, as long it was put in the Alaska Constitution.
Like the governor, for Reinbold, the focus for lawmakers should be reducing government spending to bridge the fiscal gap. “The biggest threat to the PFD is the operating budget,” she said.
Whatever the choices, the math and decisions for the Legislature are difficult. Bishop, a co-chair of the Permanent Fund working group, says members will now work to deliver a white paper with several scenarios for other lawmakers to consider.
Stedman says it will be a useful document, allowing the public to follow along during debates on the future of the PFD and Permanent Fund over the winter.