Rep. Ben Carpenter
Alaska House of Representatives, District 8

August Special Session Update

Yesterday was a pivotal day in our year-long struggle towards fixing our structural budget deficit and improving our State’s long-term fiscal outlook. The jury is still out on whether yesterday was a net positive or not! But here’s how the operating environment has changed.

Tuesday’s House Finance Committee (HFIN) received hours of public testimony overwhelmingly in support of a “statutory” dividend or a compromise to the governor’s requested 50/50 split ($2350). Testimony was from a healthy cross-section of the state. Within ten minutes of concluding public testimony, the HFIN committee adopted an $1100 dividend and used general funds and savings from the Statutory Budget Reserve (SBR) to pay for it. By law, the dividend is supposed to be paid from Permanent Fund earnings deposited into the Dividend Fund. But doing so would require the legislature to break the 2017 SB21 POMV statutes limiting draws of Permanent Fund earnings, located in the Earnings Reserve Account, to 5% of the market value. The POMV draw, having already been spent entirely on government services in the previously approved budget, is the statutory language used to justify (by some members) an inability to pay a dividend from the earnings this year even though the permanent fund has experienced exceptional investment returns.

Side note: When I and others say that the dividend must be constitutionalized to ensure one gets paid, this is an example of why. Big government representatives from both major political party’s value spending the Permanent Fund earnings entirely on government services rather than a portion on the private sector. It should come as no surprise that those same individuals prevent any meaningful structural change to our government that would decrease our spending levels. Thus, the argument is perpetuated by them that the budget can’t be cut any further and they don’t want to increase taxes to pay a “larger” dividend. This is how the dividend ceases to exist.

Wednesday, the House majority was unable to muster 21 members for a quorum to do business and was unable to read across the appropriations bill with the $1100 dividend. The Republican minority refused to attend the floor session and give the majority quorum thereby delaying action on the appropriations bill. What the minority communicated to the majority was that we would be willing to help them make quorum if they would commit to acting on the Fiscal Policy Working Group’s recommendations by hearing bills that are languishing in committee and further requested to be given time to read the current appropriations bill before being required to submit amendments to it. Neither of these requests were unreasonable nor dilatory in nature. Both were rejected by the Speaker of the House and her leadership team.

Also on Wednesday, Governor Dunleavy announced that his administration considered the programmatic funding affected by the constitutionally required sweep of funds to repay spent savings to be funded from the accounts prior to the funds being swept into the Constitutional Budget Reserve (CBR). This action affects the current appropriations bill and the House majority’s desire to add back funding for programs that were previously vetoed. The result is that the only thing needing to be appropriated now is the dividend unless there is a desire to fight over the governor’s vetoes.

The House majority leadership has no desire to address systemic change but some of its members do. The question continues to be, will the leadership allow the conversations to occur, or will they gavel out of this special session, as they have the previous two, without acting, and will the 2021 dividend be the first casualty. Yesterday, the Speaker adjourned until Friday to figure out what their next step will be.

And in case you are wondering, any issues like election integrity, vaccine mandates, educational and Medicaid reform, etc., are not in the realm of possibility in the current operating environment. Voters will need to send their A team to the legislature because the B team is unable to achieve the most basic of professional behavior.

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