JUNEAU — The size of the check residents receive from Alaska’s oil wealth fund would be smaller next year under a Senate proposal than if an existing dividend calculation were followed.
That existing formula has been ignored the last three years amid an ongoing budget deficit.
Gov. Mike Dunleavy has said the law should be followed, and spokesman Matt Shuckerow said Tuesday that Dunleavy will not accept changes to the dividend formula without a vote of the people. Some lawmakers say the current formula is unsustainable.
Last year, lawmakers began using Alaska Permanent Fund earnings — the pot of money used to pay dividends — to help cover government expenses, creating tension.
Lawmakers also sought to limit withdrawals from fund earnings, passing a law that calls for a withdrawal amount of $2.9 billion for government and dividends for the upcoming budget year. About two-thirds of that, $1.9 billion, would go to dividends under a full payout.
The measure that advanced from the Senate Finance Committee Tuesday calls for a 50-50 split, which would amount to a roughly $2,300 dividend compared to a roughly $3,100 full payout dividend under calculations provided to the committee.
It would take effect July 1, 2020, and Co-Chair Natasha von Imhof said it would come with a financial implication. By one measure, it could leave a potential $865 million deficit.
Von Imhof, in an interview, said she would not vote for the bill and said she hopes those who do explain where they expect to get the money. She said she doesn’t see putting the bill on the floor as dangerous.
“It’s only dangerous if we pass it,” she said.
The Anchorage Republican said the committee has been trying to get various pieces in play “so hopefully we can get 60 opinions to converge at the end to some agreement and who the heck knows what that’s going to be.”
There are 60 members in the Legislature. The committee also has been working on spending cap legislation.
Sen. Bill Wielechowski, an Anchorage Democrat, said the dividend bill includes language saying the Legislature may appropriate the money. “I think if we’re going to make a change of this magnitude it should be in the constitution,” he said.
Wielechowski last week said the problem with putting something in law is that legislators could violate it.
The dividend debate has loomed large over the legislative session and come to the fore in the session’s final weeks.
The committee, in its version of the state operating budget, proposed a full dividend, estimated to be around $3,000 for this year, and moving $13 billion from fund earnings to the fund’s principal, a move supporters said is intended to help protect funds and force a conversation on the dividend calculation. Fund earnings are spendable with a simple majority.
The full Senate is expected Wednesday to start debating the budget, which with a full dividend would leave an estimated $1.2 billion hole that would need to be filled. Options include the earnings reserve — and taking out more than the law last year called for — and a budget reserve fund that’s been drawn down and requires three-fourths support in each the House and Senate to tap.
The House, in its version of the budget, did not include a dividend amount.
Von Imhof has said the state needs to live within its means and pay a dividend it can afford. She sees the full dividend as a negotiating chip with the House. A dividend the state could afford, with a limited capital budget, is about $1,200, she said.
