The Alaska House Finance Committee has voted to set next year’s Permanent Fund Dividend at $1,270 and reduce the amount of money pulled from the Alaska Permanent Fund to help balance Alaska’s multibillion-dollar budget deficit.
There are numerous procedural hurdles before the dividend amount is finalized, meaning that Tuesday’s vote will almost certainly not be the size of the dividend. That will be confirmed only at the end of the legislative session.
Tuesday’s vote, which was 6-4 along majority/minority caucus lines (Rep. Jason Grenn, I-Anchorage and a member of the majority caucus, was absent), doesn’t appropriate money: it was about an amendment that sets the committee’s expectations for how Alaska’s state budget will be paid for.
Gov. Bill Walker had previously expected lawmakers to approve a measure taking money from the Alaska Permanent Fund for some expenses. Walker’s suggested budget expected lawmakers to approve a draw of 5.25 percent of the Permanent Fund’s average value over the past five years. The amendment changes that draw to 4.75 percent.
Neither Walker’s suggestion nor the one approved by the finance committee will completely erase Alaska’s multibillion-dollar budget deficit. The amendment increases the unresolved amount of the deficit by about $260 million, to $1.1 billion. The finance committee expects to cover that figure with money from the state’s Constitutional Budget Reserve.
In addition to reducing the overall draw from the Permanent Fund, the amendment changes how the money will be split between the Permanent Fund Dividend and state expenses. Walker’s original proposal called for a 70-30 split, with the smaller share going to dividends. The amendment approved Tuesday calls for a 67-33 split, resulting in a slightly increased dividend.
Rep. Lance Pruitt, R-Anchorage and a member of the House Finance Committee who voted against the amendment, said its acceptance would increase the chance that the state will eventually require an income tax. The Constitutional Budget Reserve is expected to contain only $2.2 billion by June 30.
Tuesday’s action must be approved by a vote of the full House and must be accepted by the Senate to become law.
The House Finance Committee will take public testimony on the state budget starting at 1 p.m. Thursday and continuing Friday and Saturday.
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