TRANSFERS $10 BILLION TO PERMANENT FUND CORPUS
The House and Senate conference committee finalized its negotiations over the State’s Operating Budget today, spending $4.3 billion on statewide programs and operations.
The budget includes an appropriation for next year’s (FY 2021) education budget, but the FY 2020 education budget is still likely heading to court over a disagreement about the constitutionality of “promissory note appropriating” without actually setting aside the funds.
The operating budget does not include a Permanent Fund dividend. That is being argued in a separate bill in order to avoid forcing the Dunleavy Administration to send out layoff notices due to a delay of the budget.
The Legislature intends to vote on the operating budget bill on Monday.
On Sunday, the House will take up HB 1005, the bill that would set the amount of the Permanent Fund dividend for this year. Its sponsor, Rep. Tammie Wilson, says she will now back a $3,000 dividend, after arguing for a $1,600 dividend for the past few weeks.
HB 1005 has been languishing as the sides debate whether the Legislature should stick to the statutory formula that would pay $3,000, or pick another number, such as $1,600, as the House Democrat-led majority proposed with Wilson’s bill.
The Senate has its own version of a Permanent Fund dividend bill, SB 1002, which it will take up Monday as well.
The operating budget reduction from last year’s budget came shy of the $200 million hoped for by the Senate. After negotiating with the Democrats in the House, the final reduction is closer to $190 million. The agreement transfers more than $10 billion from the Earnings Reserve Account of the Permanent Fund into the corpus of the fund, where it’s protected from future spending.
The budget agreement now must be voted on by both the House and Senate as a whole, and it appears the Legislature intends to do so before special session ends in 7 days. Otherwise, the governor will call the Legislature into special session in Wasilla, his home turf.
Statements were released by the Senate Republican Majority:
“This budget delivers solid results for Alaska families and businesses,” said Senate President Cathy Giessel. “We managed to reverse government spending back 15 years – that’s a huge achievement.”
“This budget delivers significant reductions to government spending, keeps Alaskans safe, and protects the Permanent Fund for our kids and grandkids,” said Sen. Bert Stedman, co-chair of the Senate Finance Committee. “Locking up $10 billion plus into the Permanent Fund’s constitutionally protected vault will keep it out of reach of future Legislatures. It will ensure our descendants always benefit from the resource wealth accumulated over the past 40 years.”
“The people of Alaska sent us here to make the hard decisions for the long-term benefit of all Alaskans, and that’s exactly what we intend to do,” said Sen. Natasha von Imhof, co-chair of the Senate Finance Committee. “We locked away $10 billion into the Permanent Fund’s principal, taking more than half the earnings off the table, forcing all state spending to be in line with our annual revenues and protecting our savings accounts for emergencies.”
The spending bill will be transmitted to the governor, who has said that expenditures cannot exceed revenues.
For this budget, which has a $600 million surplus, there is still as much as a $1.3 billion budget gap because the $3,000 Permanent Fund dividend has not been added to it.
If Gov. Dunleavy does what he said he plans to do, he’ll make serious vetoes in order to balance the budget and pay the dividend.