The Alaska House passed a version of the state operating budget Monday that leaves for later debate over how much to pay residents from the state’s oil-wealth fund for this year’s dividend.
Time to resolve that debate is running out in the current legislative session, set to end on May 19 unless lawmakers vote to give themselves up to an extra 10 days.
Legislative leaders have said a Permanent Fund Dividend will be paid though it has been unclear whether an amount would be included as part of the budget or handled separately.
The House, as part of its drawn-out budget debate, previously failed to come to agreement on a dividend and money for a dividend isn’t included in the version of the budget that passed the chamber Monday, when debate on the spending package resumed after a roughly week-long delay.
The budget next goes to the Senate. Differences between House and Senate versions of the budget generally are resolved by negotiators as part of a conference committee.
The process is playing out later than usual: often the House, which traditionally gets first dibs on reworking the governor’s budget proposal, passes its version of the budget in March. But it took the House a month to organize after the session started in January. The bipartisan coalition in control of the House has the bare minimum needed for a majority, 21 members.
Another factor has been funds from a federal relief aid package that the state is expecting. Guidance on use of the funds was released Monday. Jeff Turner, a spokesperson for Gov. Mike Dunleavy, said it will take time to review the material “and determine the best path forward.”
Dunleavy had proposed an initial outline for the expected $1 billion. The House version of the budget proposed spending 70%; both proposals came before the guidelines were issued.
Senate leaders have had different ideas for the relief aid, and Rep. Neal Foster, co-chair of the House Finance Committee, said he was comfortable taking the matter to a conference committee.
Last year, lawmakers passed a budget in March amid COVID-19 concerns before taking an extended recess and adjourning in May. There was talk about reconvening later in the year, to take up issues like Dunleavy’s appointments to boards and commissions, but that never happened.
Lawmakers last year also largely ceded decision-making on a prior pandemic-related relief package to Dunleavy, and some lawmakers say they want a greater say in how aid dollars are spent this time around.
Turner by email said there were “ongoing discussions” with lawmakers about how to pass the budget by May 19, and whether a special session would be needed to advance Dunleavy’s fiscal plan and “resolve the ongoing debate about the future of the Alaska Permanent Fund and the annual” dividend.
Dunleavy has proposed a series of constitutional amendments, dealing with issues like dividends, taxes and spending, and has supported paying a dividend in line with a decades-old formula until the formula is changed. He also has proposed a formula change.
The existing formula was last used in 2015 amid a budget deficit. In 2018, lawmakers began using permanent fund earnings, typically used to pay dividends, to also help pay for state government, and they sought to limit what could be withdrawn from earnings for government expenses and dividends, creating tension that has yet to be resolved.
The dividend in past sessions has overshadowed other issues. Coming into this session, a number of lawmakers considered the dividend a key issue that needed to be addressed.
Focus on that issue earlier on this year was derailed by the federal relief money and the lateness with which the House organized, said Senate President Peter Micciche.
“I have not in any way lost hope that we can get together on a sustainable future path for the Permanent Fund Dividend,” the Soldotna Republican said, adding that whether that happens before May 19 “is my only area of doubt at this point. It has to be done this year. “
House Speaker Louise Stutes, a Kodiak Republican, said one topic of conversation with Dunleavy has been a possible special session that deals with the dividend. But she said nothing has been finalized.