HB 287 started out as an education early funding bill in the House, but when it arrived in the Senate, it had no funding mechanism. The House majority could not get enough votes to break into the Constitutional Budget Reserve to provide the funding, but it passed the legislation anyway and Democrats declared victory.
The Senate Finance Committee’s substitute language appeared to be an olive branch to the fragile Democrat-run House, which had a rough several days. Last week it voted to fund a $2,700 dividend, and then saw the Democratic majority caucus collapse into chaos over the decision.
That led to a do-over and passage of a $1,600 dividend by a narrow margin. Democrats and Republicans crossed caucus lines to vote both for the full dividend and for the compromise.
$1,600 is about $400 more than what was proposed by Gov Bill Walker, but the customary formula for calculating the dividend would have resulted in the $2,700 amount.
THE $5 BILLION DRAW FROM SAVINGS
By taking $5 billion from the Permanent Fund Earnings Reserve Account (the spendable portion of the $64 billion Permanent Fund), the Senate Finance Committee proposes guaranteeing schools two years of funding. $1.25 billion would be the education and pupil transportation budget for the fiscal year starting in June.
“Early funding for education will give Alaska’s education community the certainty it needs,” said Anna MacKinnon (R-Eagle River), co-chair of the Senate Finance Committee. “The Senate wants to end the gridlock and avoid a situation where districts are forced to send out pink slip notices to teachers because they don’t know the funding level from the state.”
“We can take positive, meaningful action this year to move our state forward—like forward-funding education—if we stabilize Alaska’s revenue,” said Sen. Lyman Hoffman (D-Bethel), co-chair of the Senate Finance Committee. “A responsible draw from the Permanent Fund’s earnings, committing a percentage to government and a percentage to ensure dividends, provides the stabilization we’re looking for.”
The draft plan has a contingency for funding the 2020 education budget. It would require passage of SB 26 — the restructuring of the Permanent Fund to create a “structured draw,” that would be sustainable into the future. That legislation, which originated in the Governor’s Office, has been through several iterations and has passed both the House and Senate, but has not left Conference Committee.
Now, at least the Permanent Fund dividend is not an item that could be leveraged during Conference, since the House and Senate numbers agree.