Alaska budget negotiators reached a tentative agreement Sunday on a state spending package that includes an estimated $1,100 dividend for residents this year.
But the check size could be cut to $525 a person if the House or Senate fails to muster sufficient support surrounding use of budget reserve funds to help pay for the dividends, according to information provided by the Legislative Finance Division.
Dividends have typically been paid using earnings from the state’s oil-wealth fund, the Alaska Permanent Fund. But the budget compromise reached Sunday would cobble together money for dividends from various sources, including the constitutional budget reserve fund that requires three-fourths support in each the House and Senate to tap.
Sen. Bert Stedman, one of the lead budget negotiators, said the budget maneuver “certainly encourages some folks to seriously consider what … position they’re going to take” on the constitutional budget reserve.
Alaska Gov. Mike Dunleavy, on social media, said with the conference committee proposal the dividend is again “a political football subject to the whims of politicians” and called it proof that a dividend should be enshrined in the state constitution.
A longstanding formula for calculating dividends was last used in 2015, and dividends have become a perennial and politically charged debate. Despite various ideas that have been floated, including from Dunleavy, lawmakers have yet to coalesce behind a plan to possibly reshape the program long term. A number of lawmakers have pushed back against the assumptions underpinning Dunleavy’s dividend proposal, which has seen little momentum during the current special session.
Lawmakers in 2018 began using permanent fund earnings to help pay for government and sought to limit withdrawal amounts for dividends and government expenses. One of the debates this year has been over whether to exceed to the draw amount. The limit would be maintained under the budget proposal that advanced Sunday, said Alexei Painter, director of the Legislative Finance Division.
Rep. Bart LeBon, a member of the House’s minority Republican caucus who served on the budget conference committee, supported the dividend language, which he said was “probably more my position” than a caucus position. He said he was concerned about exceeding the draw limit.
Rep. Mike Prax, a fellow Republican who was visiting with LeBon in LeBon’s office after the conference committee meeting, expressed concerns with the dividend approach in the tentative agreement.
“My thought is, if we don’t have a commitment, really, to solve the long-term problem, there’s no point in agreeing to a short-term solution,” he said.
The budget package that advanced from the six-member conference committee must go to the full House and Senate for consideration. Senate President Peter Micciche and House Speaker Louise Stutes said votes in their respective chambers could happen Tuesday.
Lawmakers have until Friday to complete their work in this special session, called by Dunleavy in part to finish the budget. The new fiscal year starts July 1.