Last week, I introduced a budget containing a $5 billion recovery package to get Alaska back on its feet. There is no doubt we are facing a once-in-a-generation challenge. With 40,000 Alaskans on unemployment and 90,000 having received assistance this year, we are in unprecedented territory. Our three top industries — oil, seafood and tourism — are recovering from devastating blows.
We must act decisively. We must chart a path forward.
Thankfully, we have the tools to ease the suffering of our fellow Alaskans. Over the past decade, the Alaska Permanent Fund has grown by an enormous $39 billion. In fact, the fund’s value has increased by over $11 billion in the past eight months alone.
I am proposing we utilize just over half of this year’s growth to address the 100-year crisis before us. This will allow for distribution of the remaining portion of the 2020 PFD along with a full PFD in 2021, providing nearly $5,000 in relief to every qualified Alaskan.
Hundreds of thousands of Alaskans have been impacted by layoffs and reduced hours. Families have delayed trips to the dentist and medical care; they are behind on house payments and putting groceries on their credit cards. This short-term relief is desperately needed and could begin as soon as March.
Secondly, I have developed the framework for a $350 million bond package that I believe will put Alaskans back to work in the mid-term. This bond package will target roads to resources, renewable energy production and critical infrastructure production. Separately, this year’s substantial capital budget will provide $1.4 billion for badly needed construction and maintenance at a cost to the State of only $59 million.
I want to be clear that a bond package is not something I suggest lightly, but with interest rates below 2.5% and no state bond sales in the past 10 years, I believe this is a prudent and fiscally responsible relief measure. Of course, the final decision will be yours. A bond sale will require a special election this spring where Alaskans will decide for themselves to accept or reject this issuance. Whatever the outcome may be, I will respect the will of Alaskans.
We must also maintain our focus on addressing Alaska’s fiscal challenges. While this year’s budget is unique in that we are required to address an economic emergency on a scale not seen since the Great Depression, taking extra funds from the Permanent Fund’s Earnings Reserve account is a one-time solution. To that end, I am introducing a set of constitutional amendments that will move Alaska toward a sustainable fiscal future.
The first is a permanent fix for the Permanent Fund. The dividend debate must be settled this year. My amendment will protect Alaskans by guaranteeing the dividend and preventing any changes to the dividend formula without a vote of the people. As for the formula, I am proposing a 50-50 split between Alaskans and government spending. This is considerably higher than recent dividends while acknowledging the reality that our state can no longer be funded solely by oil.
As I have promised many times before, any changes to the dividend must receive your support and approval. I have asked the Legislature to include a question on the ballot for the bond package asking if Alaskans agree with this proposed change. This will ensure that your voice is heard well before you are asked to ratify the constitutional amendment.
The final two amendments will complement these efforts by fixing the existing spending cap that Alaskans already approved decades ago, and by ensuring that any new tax proposal is put before the voters of Alaska. When combined with this year’s spending reductions, which amount to $500 million since FY19, I believe this is a budget approach that upholds my commitment to restoring Alaska’s fiscal footing.
I have great hope for Alaska’s future. With the first shipment of vaccines arriving last Monday, the end of the pandemic is in sight. Alaska, thanks to our strategic location and abundant natural resources, has advantages most nations can only dream of. With the prospect of a transcontinental railroad, access to unlimited tidal, hydro, and geothermal power, and new industries like mariculture springing up, I genuinely believe we can lead our nation “North to the Future.”
This is a budget that recognizes the need to dream big and grow our economy again. By providing relief to individual Alaskans, jump-starting our economy with a healthy capital budget, and making the tough decisions required to reduce spending and secure our future, we can come out of this pandemic stronger.
I stand ready to work with the Legislature and all Alaskans as we move forward together.
Mike Dunleavy is the 12th governor of Alaska.