As the budget advances, the size of the PFD starts to take shape

The House Finance Committee finally wraps up work on the budget with a larger-than-expected majority voting against a big PFD. Now a $500 PFD is on the horizon.

Happy Friday, Alaska! It’s Day 102 of the legislative session.

In this edition: The budget advances, the PFD battle takes shape and the covid-19 disaster (declaration) is over. Also, a weekend reading list and the video as per usual.

The Budget and the PFD

The Senate’s seven-and-a-half-hour floor session to get through the amendments on the disaster declaration bill this Wednesday looked like child play compared to the nearly 13 hours it took for the House Finance Committee to get through amendments to the operating budget on Thursday. Starting at 9 a.m., the committee finally wrapped up right before 10 p.m. after working through dozens of amendments that ranged from minor budget changes to paradigm-shifting proposals. The debate frequently neared vintage House Judiciary Committee levels of getting wrapped around the axle, but in all it was an interesting dive into some of the big questions facing the state’s budget and showcased just how limited the budget is as a tool for addressing the state’s structural budget deficit. 

Rep. Ben Carpenter, R-Kenai, led the charge on some of the biggest amendments like one to swap in a massive amount of American Rescue Plan Act money and another that’d fund the state’s endowment-driven* programs like Power Cost Equalization, college scholarships, WWAMI and others out of the general fund in order to sweep all the endowments* into the Constitutional Budget Reserve (*They’re not really endowments, but it’s just the easiest way to explain the semi-dedicated funding for the programs). Both failed, with everyone else calling them, politely, interesting ideas that needed more consideration. Apparently over hollering about how the Legislature’s health precautions are like the Holocaust, Carpenter seems to have settled in on the “We need to do something about this dang fiscal problem and quick!” On its own, it’s a worthwhile position, but we can’t help but notice that a lot of his amendments would heap the cuts onto rural Alaska communities.

Anyways, the most interesting/important votes of the night were on the dividend. As it stands, the budget doesn’t currently contain a dividend of any size and leadership says they want to save that for a separate bill. Of course, that doesn’t stop anyone from offering amendments on the dividend, which is what Rep. DeLena Johnson, R-Palmer, did. She offered two amendments that both sought to pay out a statutory PFD, one fully funded with an overdraw from the Alaska Permanent Fund and another funded with a mix between an overdraw and general fund dollars freed up by the American Rescue Plan Act cash. 

Both failed by wide margins in what are just the first of what will be many attempted votes on the divided. It also wasn’t particularly close, failing on an 8N-3Y margin. Reps. Sara Rasmussen, Steve Thompson, Bart LeBon, Andy Josephson, Dan Ortiz, Kelly Merrick, Adam Wool and Bryce Edgmon voted against the amendments. Reps. DeLena Johnson, Ben Carpenter and Neal Foster voted in favor. The reasons aren’t universal and the different points does a good job at drawing the ideological battle lines:

  • There’s the anti-income-tax crowd, represented by Rep. Sara Rasmussen (a line we’ve frequently seen from Anchorage Republicans): “With no mechanism in place to really guide the Legislature to actually make the tough decisions we’ve faced during the last several years during my time down here and with no measure in place to assure my constituents that I’m not going to ask them for an income tax to pay for a larger dividend I’m not comfortable voting on this measure and will be opposing it.” 

  • There’s the stick-to-the-rules crowd, represented by Rep. Adam Wool (a line we’ve seen among more of the moderates): “If you’re going to break the piggy bank, what’s to stop you from going there for more nickels later? I don’t want to overdraw, not for the PFD, not really for anything. … I want to keep (the draw from the Alaska Permanent Fund) at 5%. That’s the rule of sovereign wealth funds and I want to stick to the rules. I’m going to vote no on any overdraw that comes before me.”  

  • There’s the overspending-will-lead-to-deep-cuts-to-things-we-care-about crowd, represented by Rep. Bryce Edgmon (a position favored by the more progressive crowd): “A full PFD comes with tradeoffs. If I were to go promising them a full PFD and no cuts to schools, public safety, transportation and VPSOs and PCE, I think a lot of my constituents would laugh and say I don’t trust you. … I’m gonna be darned if I’m going to start cutting schoolteachers and others down the road and not have a balanced approach where we have a sustainable PFD. It’s very important to our villages but at the same time schools, PCE and all the other things are critically important as well.” 

  • On the pro-PFD side of things, there’s the it’s-a-one-time-thing-and-it’s-fine-because-the-fund-did-well-this-year-and-also-why-is-the-dividend-always-the-target? crowd in Rep. DeLena Johnson: “The overdraw could be for any number of things. It just happens to be that we’ve decided to make the PFD the caboose on the the train and so therefore it appears to be the last one drawing the last overdrawn dollar.”

  • And there’s PFD-cuts-are-essentially-taxes-for-those-who-rely-on-the-dividend-the-most crowd represented by Rep. Neal Foster: “Folks who earn lower incomes rely on the PFD to pay for things like food and heating oil and electricity. We’ve tried to spread the burden of this fiscal issue that we have but at this point we’ve spent the last few years putting it on the folks who are lower income. For me, I just can’t keep doing that to folks who have to bear this burden.”  

While the vote in the House Finance Committee was an overwhelming 8N-3Y vote, that doesn’t mean it’ll be the same when the operating budget reaches the House floor. The last election has seen things shift a bit in favor of larger dividend payouts so I wouldn’t write it off at this point. 

Amendments are due on the operating budget by noon on Saturday, but it looks like they’re starting with floor amendments tonight and will be continuing through the weekend. (So far, it looks a lot like a retread of the committee process.)

$500

Speaking of a separate dividend bill, $500 is the PFD amount proposed by the House Ways and Means’ Committee HB197. The measure was introduced today and would cost the state about $350 million, which is about where a dividend would need to land to avoid dipping into the earnings reserve.

Pandemic OVER

Gov. Mike Dunleavy today signed House Bill 76, the covid-19 disaster declaration extension bill, and did what pretty much everyone expected. He immediately ended the disaster declaration in favor of a Department of Health and Social Services Commissioner Adam Crum-driven public health order as allowed under the “Disaster Declaration Lite” part of the bill that allows for vaccine distribution, testing, limited responses and receipt of federal funding. In case you had any question about the state of the pandemic, here’s the mask-free bill signing:

The House Coalition was, as everyone might expect, as disappointed by the governor’s action as they were not invited to the signing.

"The House Coalition worked collaboratively with frontline health workers, hospital leaders, and business owners to provide practical tools needed to end the pandemic," House Speaker Louise Stutes said in a prepared statement. "Unfortunately, the governor opted for politics over policy and decided to gamble with the health of Alaskans and with our economic recovery."

Weekend reading

  • Those politically driven firings/politically driven refusals to hire are costing the state. This week, the Dunleavy administration settled with Karen Lowell, who was barred from rehiring to her job at the Alaska State Council on the Arts after publicly speaking out after Dunleavy vetoed all the funding for the Alaska State Council on the Arts, for a cool $85,000 in state money. There are several other pending cases pending, including one brought by former state attorney Libby Bakalar that’s progressing into the deposition phase. From the News-Miner: State settles with worker who lost job after criticizing governor, three cases still pending

  • There’s an ongoing lawsuit from Texas challenging the Indian Child Welfare Act that resulted in a split decision earlier this month. At its core, the lawsuit argues that ICWA—which seeks to place Native children with Native households—is discriminatory against non-Native people who would like to adopt Native children. At this stage, it doesn’t have a direct impact on Alaska but is one to keep an eye on. From KNBA: Federal ICWA lawsuit remains a case to watch despite split decision in 5th Circuit Court of Appeals

  • In a truly bizarre story, the FBI apparently raided a Homer couple’s residence in part of a search related to the U.S. Capitol insurrection. Right now, all we have is interviews with the couple, who say it’s all a case of mistaken identity, so take everything with a grain of salt. From the ADN: Homer woman says FBI search of her home was case of mistaken identity tied to Capitol riot

Weekend warriors

It’s just about time to think about doing something with our still-mushy yards, so here’s this neat video from Smarter Every Day about weed whacker strings that I definitely didn’t watch several times when I was researching one last summer.

Have a nice weekend, y’all!