The Alaska Legislature is not scheduled to meet in an extraordinary session this autumn to discuss a long-term budget plan to the state.
Lawmakers had been discussing the possibility of holding a special session for spring however, in the final day of regular sessions as well as during the next few weeks, they veered off on the most important elements of a plan to keep state revenues and expenses in check over a period of several years.
Jeff Turner, Gov. Mike Dunleavy’s deputy director of communications told me via email that Dunleavy demanded to the Senate President and Speaker of the House to determine what kind of package of items that they could all agree on during a special fall session.
“At this moment the legislature has not demonstrated any real interest in getting together to tackle fiscal issues. So the governor isn’t going to summon them into a special session to cost both time and resources,” he wrote in an email.
“That’s not happening,” Senate President Gary Stevens R-Kodiak, told reporters on Wednesday when questioned about an extraordinary session.
“There’s currently no consensus at the moment. There are lots of plans and people have a lot of thoughts,” he said, saying that lawmakers will have examine what gets into the top of the pile when the regular session starts in January.
The ongoing disagreements over the components of a comprehensive plan for fiscal policy has House members in House currently preparing to move bills in isolation, not as a whole as suggested by House Speaker House Cathy Tilton, R-Wasilla.
“We’ve discovered the fact that we do not have enough numbers needed to reach an agreement on a complete plan that has many components. Perhaps we’ll focus on something that will take into consideration this (Permanent Dividend from Fund) issue such as HJR 7.” she added.
House Joint Resolution 7, that was drafted by the House Ways and Means Committee will provide a dividend in accordance with a formula established in the law.
Rep. Andy Josephson, from Anchorage, the state’s most experienced member in the House minority caucus on the House Finance Committee, said that he’s open to the concept for a guarantee in the constitution however, the biggest obstacle to changing the constitution going to be getting an agreement on the formula for payout.
The formula from the 1980s is already in place in state law, however legislators have resisted it since 2017and labelled it as inaccessible.
The Legislature has been unable to agree on a replacement, so the Legislature has decided to set the dividend in a fiat manner for the past seven years. The expected payout this year, due to begin in October, is approximately $1,300 per person.
It was the Alaska Senate voted to approve the new formula in spring, but the plan was modified to accommodate The House Ways and Means Committee as well. It was not able to pass through the House prior to the close of the session of the legislature.
Rep. DeLena J. Johnson, Co-chair of the House Finance Committee, said that the central question is whether lawmakers are willing to allow tax exemptions in order to pay greater dividends.
“I believe there’s a disagreementI’m assuming there’s a lot of disagreement in the Legislature on the question of whether there should be a tax that could pay for an PFD. This is the crux of the issue,” she said.
Prior to 2018, the only principal expenditure from the Alaska Permanent Fund was to pay the cash dividend that is paid annually to residents.
The following year, lawmakers started using the fund to pay for state services.
The annual transfer of funds from the Permanent Fund to the state Treasury -$3.5 billion this year $3.5 billion for this yearis the most general-purpose source of income to the State, and is more than the oil revenues.
The most recent dividend formulas are the transfer being split in a certain manner, leaving some cash to be used for dividends and the remainder to be used for services.
The Senate proposal, also known as 75-25 split, preserves 75percent of money transferred for services, while reserving 25 percent to pay dividends. Based on the majority of projections, it could be paid on a regular basis in the event that transfers are viable.
However, many lawmakers in the House favor the 50-50 split that could need significant new taxes or drastic cuts to services. People who support the 50-50 split say it offers a compromise that is between the 75-25 split as well as traditional method, and is comparable to 25-75 based on the current Permanent Fund values.
Services spending has risen in the last two years, and even accounts for inflation. Taxes were a topic of discussion in the last session of the legislative session, however lawmakers claim they’re still not entirely in an agreement on the subject.
In the initial two and two-and-a-half months of fiscal year, the prices of oil are higher than the projections of the state, and if they remain at that level this will increase lawmakers’ reluctance to increase tax rates, Johnson said.
“Honestly as we sit here, looking at close to $100/barrel oil, the idea of applying either an income tax or a sales tax Income tax I’m thinking the idea will have a difficult way to get momentum,” she said.
In past years, lawmakers have pointed to the low price of oil as an argument against tax increases.
Tilton added that those who are part of the Republican House majority will have to come up with a plan to take, and this could be looking at options that aid in reducing expenditure, like modifications of the Executive Budget Act.
The story first appeared in Alaska Beacon and is republished here with permission.
