The Alaska State Senate passed Senate Bill 107 on Monday, which would drastically reduce the Permanent Fund dividends that Alaskans are set to receive this fall, in order to make more funds available for state spending. The amount for the dividend is $1,300 in SB 107.
Sponsored by Senate Finance Committee, SB 107 uses a “75-25” split, with 75% of the available Permanent Fund earnings going to pay for state government, and 25% leftovers appropriated for the PFDs.
The differences must now be ironed out with the House, which has proposed a $2,700 PFD, costing the budget some $1.7 billion and leave a budget shortfall of up to $800 million, which could be borrowed from the Constitutional Budget Reserve, if enough members of the House and Senate vote to allow it.
The House PFD formula is known as the “50-50 Plan,” because it splits available earnings from oil revenues half and half between the people of Alaska and the state government.
Senate leadership opposes the House’s plan, and the House majority opposes the 75-25 split. The governor has proposed a full statutory PFD of $3,400, which would eat up about $2.2 billion of the budget, but which follows the existing statutory formula.
The bill passed with 12 votes in favor, seven against, including four members of the majority joining with the three-member minority, made up of Senators Robert Myers, Shelley Hughes, and Mike Shower, in voting against. Sen. Scott Kawasaki was absent.
SB 107 does contain a clause that would allow a 50-50 dividend if the state gets $1.3 billion in new revenue (which would likely have to come through a tax on oil or on people) and if the Department of Revenue shows a balance of no less than $3.5 billion in the Constitution Budget Reserve, which is an account the Legislature can borrow from to balance the budget. The current balance in that account is $2.59 billion.
Sen. Myers tried to get approval of his amendment that said the PFD calculation would be sent to the people of Alaska for a vote, but his amendment failed. Sen. Jesse Kiehl, a Juneau Democrat, argued that it is inappropriate to delegate the Legislature’s authority to the people. Only Myers, Hughes, and Shower voted in favor of that amendment.
The Legislature is facing a deadline of May 17, the 121st day, when it must either gavel out or go into special session.
