We’d call it one step forward and two steps back, except we’re not sure there was a step forward in the first place.
On Wednesday, the Alaska House of Representatives voted to undo any progress being made toward a solution to the state’s fiscal woes by increasing the Permanent Fund Dividend to $2,200. Many House members — 26 of them, to be exact — have come to the conclusion that a long-term fiscal plan isn’t going to happen this session, and are abandoning their earlier measure to cap dividends at $1,250 and use some of the Permanent Fund’s earnings to pay for state government.
While the House’s action would also need to approved by the Senate and signed by Gov. Bill Walker — who, don’t forget, vetoed half the funding the Legislature had allocated for dividends in a failed effort to force lawmakers to come up with a solution last year — should Alaskans actually find themselves the recipients of a $2,200 PFD, we’d offer this advice: put it in the bank and make it last as long as possible, because you’re not going to see one like it again.
If lawmakers decide they’re hopelessly deadlocked, they can, with a two-thirds vote, draw on the Constitutional Budget Reserve for one more year to cover the cost of state government.
Then it’s all but gone, and the only pot of money big enough to cover a $3 billion hole will be the Permanent Fund earnings reserve — the same account from which money to pay dividends is allocated.
The Senate’s version of the budget also would use Permanent Fund earnings and does have a deficit, but if the Constitutional Budget Reserve is gone, that means either a greater draw on Permanent Fund earnings — and therefore, an even smaller dividend — or even deeper cuts to state services, which so many people advocate for but so few seem to be able to come up with ones we can live with.
The House plan includes an income tax, which the Senate will not pass. If the House continues to push that idea, we will find ourselves in the same position next year — with no Constitutional Budget Reserve to draw on — and again, we’ll be looking at the Permanent Fund earnings to cover the cost of government.
Both bodies agree that restructuring Permanent Fund to use earnings to pay for government is the biggest and most crucial part of fixing Alaska’s revenue stream. Yet, with the special session called by Gov. Walker ending today, it appears that we are no closer — not even one step — toward a solution.
So, when that check hits your bank account next fall, however big it is, savor it, because the current Legislature is leaving future ones with no other options.