The Game of Leverage and Concocted Constitutional Crises

The dividend is still $1,100 but the levers of leverage are still leveraging.

Good afternoon, Alaska!

Thanks everyone for the well wishes, advice and help following the car crash I was in last week. That was the first time I’ve been in anything more serious than slowly backing into something, so it was rattling to say the least. Thanks everyone for helping me through that. I appreciate it.

In today’s edition: The Game of Leverage in the Legislature and Senate Finance Committee wises up to the Department of Law’s politically convenient rulings.

The Game of Leverage

There’s not a whole lot about the Legislature’s current special session that can be said with any certainty. Will they overcome the differences and makes strides towards a fiscal plan? Probably not, but stranger things have happened. How big will the dividend be? Who knows! Will the Legislature muster the votes to restore some key vetoes? It’s possible! Will there even be a dividend? Reply hazy, try again!

The one thing we know for sure is that IF there’s going to be a dividend, then it will not be on time.

There’s a Sept. 1 deadline to get the payment out on time in October and it’s now logistically impossible for the special session budget to meet that following the walkout of minority House Republicans last week (though as many have pointed out, it’s not like there was ever a super clear single day where all the payments go out so the real-world impact may ultimately be pretty minimal). With Reps. Sara Rasmussen and Chris Tuck back from excused absences, the House had enough members present today to conduct business without the minority Republicans (who decided to show up after all) and the budget bill is progressing once again through the traditional, generally tortured legislative process.

As of writing, the dividend is set at $1,100 with a combination of general fund dollars and money from the statutory budget reserve. Without a vote to spare, the House today rejected an amendment that would’ve overdrawn the spendable portion of the Alaska Permanent Fund by $2.5 billion in order to pay a full statutory dividend above $3,000.

But that’s not the end of it. Far from it.

The bill still needs to move through the Senate, of course, but a key thing to watch for in the coming days is the fight over the statutory budget reserve and, sigh, the Constitutional Budget Reserve’s sweep (Yeesh, I’m really, really ready to be done with the CBR). The fund contains about half of the $1,100 dividend and based on the plain reading of the ruling in the Power Cost Equalization lawsuit would not be subject to the sweep, meaning that the money should be sitting there ready to pay out a PFD that the majority of the Legislature appears comfortable paying.

But then again that requires the Dunleavy administration to abide by the plain reading of a ruling without inventing its own newfound interpretation of the law that bucks decades of historical precedent… oh, right, that’s precisely what’s happened.

The Dunleavy administration is sticking to its guns and is arguing that the fund is, in fact, subject to the sweep. This is important because it would take the money for half of the $1,100 PFD off the table and, potentially, lend some all-important leverage back into the hands of the minority House Republicans to continue the fight for a larger dividend whether it be through a Constitutional Budget Reserve vote or through an overdraw on the Alaska Permanent Fund. I say potentially because there’s also the option of the Legislature just ignoring the pressure and going with a $525 PFD.

The status of the money didn’t feature particularly strongly during the House floor debate so far, but it did feature strongly during today’s hearing of the Senate Finance Committee…

Concocted constitutional crisis

The maneuvering over the statutory budget reserve was front-and-center at today’s Senate Finance Committee, where we heard less-than-convincing arguments from state budget director Neil Steininger and Assistant Attorney General Cori Mills about why ignoring the court ruling and inventing their own wholly new interpretation of the Alaska Constitution was cool. The state, they explained, would be sticking to the sweep as laid out because the court ruling didn’t explicitly tell them not to (it does, however, have a pretty long list of the non-sweepable funds in the footnotes, but that’s just a footnote) but would also be adopting a completely new way of looking at state finances that conveniently releases not just the scholarship moneys but also funding for several projects in Dunleavy’s hometown.

I’ll spare you the specifics of their legal thinking because, well, it more or less appears that they’ve also spared the specifics in coming up with their new position.

Sen. Bert Stedman, R-Sitka, and the rest of the committee were all roundly critical of the administration’s handling of things, and he went as far as noting that the Department of Law’s interpretations seem to suit the governor’s political ambitions a little too well.

“We have a 90-degree change because there seems to be some political expediency for that. There's too many of these to just be coincidence,” he said.

He also went on to suggest that perhaps the state should reconsider how it selects its attorneys general. Instead of appointments by the governor, perhaps an election would be in order, he said. He said at the very least, they’ll be taking a new look at how the state handles its budget: “So we don't have these concocted, in my opinion, constitutional crises on an ongoing basis. It's getting expensive to the treasury dealing with this stuff.”

Which is all to say that the fate of the PFD and the special session may be waiting for yet another court case.

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