House Judiciary Committee on Wednesday heard alternative plans to the governor’s proposal to put the Permanent Fund dividend matter before voters.
Sen. Natasha von Imhof presented her plan, which is a competing concept to Gov. Mike Dunleavy’s, and would take $6.7 billion from the Alaska Permanent Fund, create a new fund, and pay dividends to the public that would start at about $500. According to her analysis, it would not require a broad-based tax.
When she got pushback on the fact that the smaller dividend is, in fact a tax on the people, she explained that it’s not a tax, it’s just “less free money.”
The dividend from the new fund would be up to 5 percent of the new fund’s market value, the same as used through the SB 26 formula to establish the maximum allowable draw from the Permanent Fund. It would operate as a mini-fund dedicated to dividends only, leaving the corpus of the Permanent Fund untouched and the spendable portion of the Permanent Fund just for government.
Von Imhof sits on Senate Finance, which has so far ignored Gov. Mike Dunleavy’s plan to essentially return to the 50-50 dividend calculation from the available portion of the Permanent Fund, which is a statute that has been ignored since 2016, by putting the formula in the Alaska Constitution; this would require a vote of the people. His plan, Senate Joint Resolution 6, was part of his call for the special session. Critics say it would also require a tax and they want him to propose a full fiscal plan to make the numbers work.
House Judiciary also heard Rep. Adam Wool’s proposal for a 2.5% income tax and a dividend of about $1,000. That plan, along with von Imhof’s, appears to have little broad-based support in the Legislature.
Meanwhile, the first Senate Finance hearing on the governor’s plan, SJR 6, is scheduled for Friday at 1:30 pm.
Special session ends on June 18 and with one week to go, there is no operating budget, no capital budget, no mental health budget, and no Permanent Fund dividend. “Pink slips” indicating a possible government shutdown, would go out one week from today, on June 17.
House Bill 69, the operating budget, had $4.43 billion in state unrestricted funds when it was passed by the Senate for Fiscal Year 2022. The capital budget has $274.6 million, leveraging $1.9 billion in federal funds for roads, bridges, and other infrastructure.
The Permanent Fund’s Earning Reserve Account — the fund’s spendable portion — has more than $11 billion that is unencumbered, and the Legislature could transfer some of that into the constitutionally protected corpus of the Fund, to put it off-limits for spending, thus allowing the fund to grow faster. SB 26 limits the amount that can be used from the earnings reserve fund for government and the dividend.
The Legislature faces a challenge with the public because the Permanent Fund corpus balance is nearly $82 billion, just $18 billion short of what many legislators have said would be needed to never have to talk about broad-based taxes again.
To further the public perception challenge, at the beginning of the year, when the Permanent Fund was at $73 billion, the corporation’s own forecast said it would not reach $80 billion until 2030. Yet six months later it has blown past $80 billion.
Sources say that while the committee hearings have lightly dotted the special session calendar, the full House and full Senate are expected to meet on Monday, but conference committee work is the hold-up.