Leaders of the state Senate are throwing cold water on hopes for a super-sized Permanent Fund dividend.
In the state House, the Finance Committee added a roughly $3,800 dividend to the latest draft of the budget April 1 before sending it on to the floor for a final debate. It would require drawing down nearly half of the state’s $3 billion rainy day fund.
That would take a three-quarters supermajority in both the House and Senate. If that supermajority vote fails, the House plan would set the dividend at about $1,500. A final House vote on the plan was still pending Wednesday evening.
But not so fast, said Sen. Bert Stedman, a Sitka Republican who co-chairs the Senate Finance Committee on behalf of a bipartisan coalition.
In the opening days of this year’s legislative session, when oil prices were low, lawmakers said they’d aim for a $1,000 dividend. And despite a March revenue forecast projecting an extra half-billion dollars, Stedman said at a news conference Wednesday he’d rather direct any unexpected money toward repairing dilapidated state facilities.
“We have schools that are falling apart, literally falling apart,” he said. “You have to ask yourself, do you want a school for the kids to go to, or do you want to hand them large dividend checks?”
An investigation by ProPublica, KYUK and NPR last year found the state had badly underfunded maintenance at state-owned schools and left many in disrepair.
And it’s unclear how long Alaska will continue to benefit from high oil prices driven by the U.S. and Israel’s war with Iran. Oil markets dropped sharply Wednesday on news of a two-week ceasefire, though prices are still much higher than they were before the war.
Sen. Cathy Giessel, an Anchorage Republican and the No. 2 leader in the Senate, said $1,000 “isn’t enough” but was all the state could afford. She said the state could pay higher dividends if lawmakers and Gov. Mike Dunleavy could find common ground on bills that would raise state revenue.
“There are answers to these issues,” she said. “We just have to have the courage to go forward with them.”
Dunleavy has consistently said he opposes new taxes without a corresponding plan to rein in state spending. Lawmakers roundly rejected a plan he proposed earlier this year — headlined by a statewide sales tax, large dividends and a stricter limit on appropriations — as unrealistic.
Economists say cuts to the dividend hit low-income Alaskans the hardest and are akin to a regressive tax.
Senate President Gary Stevens, a Kodiak Republican, said the fact that the Permanent Fund provides the majority of the state’s general purpose funding was its own kind of dividend.
“If we didn't have that extra dividend paying for services, we'd have to be facing an income tax or sales tax or something,” he said. “Otherwise we couldn't fund the services we have. So, please think about that. The dividend is more than just a check.”
