Gov. Mike Dunleavy offered a first look at his proposed budget for the State of Alaska on Friday — a budget that includes almost $5,000 in Alaska Permanent Fund dividend payments in 2021 and a $350 million bond package for infrastructure investment and job creation over the coming years.
“This $5 billion recovery package, although it’s substantial, is needed,” Dunleavy said during a press conference Friday after rolling out the details of his proposed budget. “Alaskans are suffering now. Businesses are suffering now. This is the time for us to act, and this is the time for us to act quickly.”
Dunleavy’s proposed FY22 budget for the State of Alaska calls for about $5.1 billion in state spending and just over $4 billion in federal dollars. Of the $5.1 billion in state spending, $2 billion would be allocated specifically for PFD payments to all Alaskans. The governor said Friday that he would like to see two PFD payments — one payment of $1,916 that would be considered the remainder of the 2020 PFD allocation, and another payment of $3,056 calculated based on a formula that would allocate 50% of any permanent fund draws to dividend payments moving forward.
That change in the statutory calculation of the PFD would have to be passed by the Alaska Legislature in its upcoming session. Dunleavy said Friday he hoped that there would be an “advisory” vote of the people to gauge Alaskans’ support of the measure.
Alaska’s Senate Democrats and the Alaska House Majority — which is made up of Democratic, Republican and Independent legislators — both released statements on Friday in response to the governor’s proposed budget rollout.
“The governor’s proposal calls for spending $3 billion more than what the Alaska Permanent Fund Corporation considers sustainable, and there is no plan for how we will make ends meet beyond next year,” House Speaker Bryce Edgmon, I-Dillingham, said in the Dec. 11 press release from the House Majority. “However, the inclusion of a general obligation bond is promising.”
The House Majority also stated in the press release that Dunleavy “did not engage with lawmakers and other stakeholders in advance of releasing his proposal,” although Dunleavy said during his press conference that budget discussions have been taking place in the background of the pandemic response for several months.
Senate Democratic Leader Tom Begich, D-Anchorage, said in the press release from Senate Democrats that he was “cautiously optimistic” about Dunleavy’s proposed budget.
“As Alaska begins to come out of this pandemic, an overall budget cut of $290 million, and significantly overspending the earnings reserve, could damage our economy,” Begich said in the release. “We will continue to reach out to all members of the Senate to identify consensus with the budget proposal and where we have disagreements.”
The Alaska Senate Majority and the Alaska House Republicans had not released statements on the governor’s proposed budget by press time.
Dunleavy’s proposed budget would draw $3 billion from the permanent fund’s earnings reserve account for government spending and around $3.2 billion for the two dividend payments. When asked how he plans to ensure that such a significant draw from the ERA is actually a one-time occurrence, Dunleavy pointed to his proposed legislation to change the statutory formula for dividend payments, which would potentially include constitutional amendments that address government spending.
“As part of the permanent fund package, there would be no changes to the permanent fund without a vote of the people,” Dunleavy said. “And we hope to get a constitutional amendment, but we would also put forth an advisory vote by the people. That advisory vote could guide us into the next year, if the people of Alaska agree to any changes to the PFD.”
Included as part of the budget proposal are three constitutional amendments that Dunleavy has attempted to pass since he took office. The first would cap government spending at the state level. The second would require a vote of the people for the passage of any new taxes, and the third would officially enshrine the permanent fund and the dividend into Alaska’s constitution.
The proposed capital budget also includes $4 million to address the state’s backlog of sexual assault cases, $26 million for fisheries, wildlife and resource projects, $24 million in construction and maintenance and $4 million for “statehood defense,” according to a fact sheet released by the state Friday.
Citing the urgency of the economic disaster brought by the ongoing COVID-19 pandemic, Dunleavy called on the Legislature to pass a budget quickly and distribute dividend payments early — potentially as early as March.
“The idea that it’s going to be ‘politics as usual,’ that’s going to be difficult during these times,” Dunleavy said. “And I would strongly urge us all to put that aside and do what’s best for Alaskans.”
The full press conference can be viewed on the governor’s Facebook page.
Reach reporter Brian Mazurek at bmazurek@peninsulaclarion.com.
