The Alaska Senate has approved a new formula for the annual Permanent Fund dividend, however the concept is still far from becoming a reality.
On Monday on Monday, the Senate approved 12-7 Senate Bill 107 that calls for an annual percentage of transfer funds to the Alaska Permanent Fund to be reserved for the provision of services and the remainder being reserved to pay dividends. This method is referred to in the form of “75-25” due to the manner in which it divides the transfer. One senator was Senator. Scott Kawasaki, D-Fairbanks was exempted in the voting.
In the event that both the Legislature and the governor agree to another $1.3 billion in revenue by 2030, and the reserve in the Constitutional Budget Reserve rises above $3.5 billion then the formula would be changed to 50-50 split.
If the split were to be in place last year, a split of 75-25 will yield an Permanent Fund dividend of about $1300 for each recipient. Likewise, an equally split 50-50 would result in an amount that is roughly double.
The new revenue may be generated from oil tax or sales tax income taxes, or even carbon sequestration schemes suggested by Governor. Mike Dunleavy.
The bill was drafted by the Senate Finance Committee, whose leadership stated in the Senate floor that the bill is part of a long-term financial plan for the state.
“This is on the table because, when we are writing this, a debate is in the Legislature How do you think the appropriate dividend split should be?” said Sen. Lyman Hoffman D-Bethel.
At current levels of spending 50-50 dividends result in a deficit that is several thousand dollars. It was reported that the Alaska House approved the 12-month spending plan in the month of June that includes an estimated $600 million deficit as well as 50-50 dividend.
The Alaska Senate is preparing a alternative plan that would include the dividend of 75-25 without a deficit.
Since 2016 the amount of the dividend has been the subject of discussion in the legislative session of each year.
“The air has been taken out of this room and we’ve been stuck in tackling important pieces of legislation,” Hoffman said.
While lawmakers recognize the need for a fresh Permanent Fund dividend formula, policies have led to divergent views about the issue.
The Senate approved a 75-25 split in the year 2017 however, it has been the House has repeatedly refused to accept that plan in favor of larger numbers.
It’s not clear what the House will consider the Senate plan during the current legislative session that ends on May 17.
Hoffman as well as other senators on members of the Senate Finance Committee argue that the bill will allow the possibility of a higher number however only if lawmakers and the governor can find the means to be able to consistently the cost.
Senator. Shelley Hughes, R-Palmer and a supporter of a higher figure believes the bill provides an incorrect alternative, as the $1.3 billion needed to fund fifty-50 splitting is not possible to find.
“Envision the road that runs straight into the mountain. This is how I view this bill. The mountain is the inaccessible revenue source,” she explained.
The issue the issue was cited by Hughes was also on display inside the building, lobbyists from oil companies voiced their opposition to Senate Bill 114, a proposal by Senator. Bill Wielechowski, D-Anchorage to alter the state’s tax on oil.
The new rules would bring in an estimated $300-million to $600 million in new revenue each an year to the State, but less than what is needed for a 50-50 split. The oil industry advocates have said that taxes could already too high to attract investments.
Proposals to restore the state income tax as well as introduce a sales tax in the state aren’t yet advancing from the committee in this session, but not a single proposal has raised even half the amount that’s required in SB 107.
“I do not believe that this is part of a budget plan,” Hughes said.
Senator. James Kaufman, R-Anchorage said he was not in agreement, stating that his fiscal strategy will be evident as new pieces of legislation are completed.
“All the things we require to finish will get completed,” he said before the vote on SB 107.
Senator. Bert Stedman, R-Sitka and co-chair of the Senate Finance Committee, also called for patience.
“It is a component of a fiscal plan not an actual fiscal plan. A bit,” he said of SB 107.
The vote was final and showed the caucus of 17 senators was divided over the issue with just 12 of them having a vote in favor.
The senators who voted against SB 107 were the senators. Matt Claman, D-Anchorage; Forrest Dunbar, D-Anchorage; Bill Wielechowski, D-Anchorage; and David Wilson, R-Wasilla, of the majority. Also, Shelley Hughes, R-Palmer; Robb Myers of North Pole along with Mike Shower, R-Wasilla, who are not part of the majority.
The majority of those who voted in favor were Sens. Click Bishop from Fairbanks Jesse Bjorkman, R-Nikiski; Cathy Giessel, R-Anchorage; Elvi Gray-Jackson from Anchorage. Lyman Hoffman (D-Bethel). James Kaufman, R-Anchorage; Jesse Kiehl, D-Juneau; Kelly Merrick, R-Eagle River; Donny Olson, D-Golovin; Bert Stedman, R-Sitka; Gary Stevens, R-Kodiak and Loki Tobin D-Anchorage.
The story first appeared in Alaska Beacon and is republished here with permission.
